Swedish truck maker Scania will open a branch in Karbala, its fourth brance after Baghdad, Erbil and a planned third in Basra.
On Wednesday, Scania signed a contract with the Iraqi company al-Raw’aa regarding cooperation on this project.
Swedish ambassador Karl Magnus said, “This will open a new door for Swedish companies to enter Iraq.”
With an estimated 5,000 aging Scania’s trucks in Iraq and a growing need for more buses and trucks, Scania sees Iraq as a good place to invest.
Scania has sold trucks in Iraq since the 1960s. In the 1980s, Iraq was one of the company’s biggest markets with peak sales of 3,900 trucks in 1981. Sales declined dramatically during the war in 2003.
Following an agreement between Scania and the Ministry of Industry, Iraq’s State Company for Automotive Industry (SCAI) began producing 500 trucks in Iskandariyah in 2009 to be purchased by governmental institutions.
Trucks and buses for private customers are built in Scania’s own factories, customized in the Middle East, and distributed through Iraqi partners such Al Bunnia Group and Scania’s and Al Bunnia’s joint venture company Mada al-Rafidain.
Mada al- Rafidain, founded in 2010, restored Scania's old branch in Baghdad and opened a new one in Erbil in May 2010. A third branch in Basra was announced for late 2010 but has not yet been opened.
In recent years, Scania management has been under investigation by Swedish authorities for alleged violations of the United Nations’ “Oil for Food Program” involving sales of buses and trucks to the former Iraqi regime in the early 2000s.
Scania is controlled by Volkswagen AG, Europe’s largest carmaker.
(Sources: AKnews, Bloomberg)