EghtesadOnline: During the nine months to Dec. 21, 2018 Iran’s auto production plunged to 763,519 cars and commercial vehicles -- a 31% year-on-year drop.
According to Ministry of Industries data, during the nine-month period, 713,233 cars were produced, down 31.2% compared to 1,037,374 units made during the same period last year. During the period, 50,101 trucks, buses, minibuses and pickups were made, indicating a 27.4% YoY decline.
Following the re-imposition of US sanctions, the Iranian economy is facing challenges and the rial has tanked, losing more than 60% of its value this year. The industrial sector is believed to be hit the worst due to its dependence on imports and the increasing reluctance of foreign companies to sell to Iran fearing the wrath of the openly hostile US administration.
Despite the fact that senior officials in Tehran often promise to weather the storm and put the economy back on track, data released by government organizations show that the conditions are deteriorating, Financial Tribune reported.
On Thursday, Mohammad Qana’ati, the ministry’s director for Automotive Industries Office told ISNA, “Due to the sanctions we cannot import auto parts. If things don’t change, we might not be able to produce [vehicles] next year.”
After Qana’ati’s comments went viral on social media, a statement was published on the government website dolat.ir. It said “Through collaboration between the Industries Ministry and carmakers, auto part supply chain is to get a boost and automotive output will increase. The impact of sanction’s Qana’ati said is limited to a few models and mass-production vehicles will not be affected.”
A closer look at available data indicates bigger challenges are in store. During the past Iranian quarter that ended in December, car production halved compared to last year with output plummeting to 167,907 cars from 391,801 a year earlier — down 57% YoY.
During the quarter, 14,892 trucks, buses, minibuses, and pickups were manufactured, down 46.6% from last year’s 27,897.
Furthermore, in the Iranian month ending in December, 38,275 cars and 3,870 commercial vehicles were made respectively, indicating year-on-year declines of 72% and 59.4%.
IKCO and SAIPA
The two main auto companies, Iran Khodro and SAIPA, are in disarray with both reporting 35.4% and 30.3% declines in production.
During the nine-month period, IKCO’s total production fell from 520,480 cars and commercial vehicles made last year to 335,953 units this year -- a steep 35.4% Y/Y fall. Data has it that IKCO produced 327,792 cars during the period – down 35.8%.
In the month to December the firm’s output sank further, from 65,769 last year to 19,372 cars, a 70.5% year-on-year drop. Its daily output plummeted from 2,192 cars to 645 units.
IKCO’s rival SAIPA too is facing an uphill task. Over the nine-month period, SAIPA churned out 328,355 cars and commercial vehicles, -- a 30.3% decline compared to the 471,405 units made during the corresponding period last year.
In the month ending Dec. 21, SAIPA reported 75.9% fall in output with 15,572 cars and commercial vehicles. Daily production of the second largest carmaker has dwindled from 2,156 to 519.
While most companies are quick to point the finger of blame towards the US sanctions and President Donald Trump’s unending animosity, independent observers say mismanagement at SAIPA and IKCO has also had a terrible negative impact on the industry.