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EghtesadOnline: Iran’s automotive output increased by 16.3% during the eight months to Nov. 20 compared with the year-ago period.

According to data released by Securities and Exchange Organization on, Iran’s major automakers, namely Iran Khodro (IKCO), SAIPA and Pars Khodro, produced 566,844 sedans during the eight months.

IKCO’s output during the period rose to 291,234, which is 43.6% higher year-on-year when the company produced 202,695 passenger vehicles. Several Peugeot and Dena models formed a huge share of the company’s production rate.  

In addition, IKCO manufactures commercial vehicles, such as pickups, vans, trucks and buses, the stats of which have not been announced. 

SAIPA produced 209,534 vehicles in the eight months, marking a 19.2% year-on-year decline by producing 259,362 vehicles.

Tiba models were the best-selling vehicles on SAIPA’s production list. 

Pars Khodro, a subsidiary of SAIPA, registered a 7% increase by producing 66,076 vehicles during the period under review compared to 61,717 cars year-on-year.

Monthly comparisons, however, show that the total production rate of the three companies increased. During the eighth month (Oct. 22-Nov. 20), auto output reached 69,968 to mark a 1.3% rise compared to the previous month.

IKCO’s production rate hit 40,901 during the eighth month, marking a 5.7% rise compared to the previous month. SAIPA’s output was 21,263, marking a decline of 1.3% month-on-month. 

Pars Khodro last month produced 7,801 cars, registering an 11.5% fall compared to the previous month. 

Mismanagement and the pressure of US sanctions, now coupled with the Covid-19 outbreak, have derailed Iran’s auto industries. 

Industry insiders have speculated that the two companies perpetually remain on the verge of bankruptcy and constantly beseech the government to help bail them out on the pretext of saving thousands of jobs at risk in the chronically dysfunctional automotive companies.



Fewer Choices

The types of cars available to Iranian customers have declined after the US reimposed sanctions against Iran in the summer of 2018. In response, almost all foreign partners of domestic carmakers pulled out of the country.

Even international auto parts makers with decades-old ties halted sales to Iranian firms, as the US embargo threatened Iran’s access to other markets and disrupted the latter’s international banking relations.

As a result, even if a foreign firm wished to work with domestic companies, Iranian payment for goods and services could not get through. All these have taken a harsh toll on Iran’s auto producers and assemblers.

In effect, the production of 20 car models has been halted over the past year. Some of the cars assembled in Iran, such as Renault’s Sandero and Sandero Stepway, as well as Suzuki’s Grand Vitara, have stopped rolling out of Iran Khodro.

IKCO also produces Chinese Haima and Dongfeng models, but the company is yet to announce whether it would be able to sustain the production of these models.

The Iranian firm also produces several Peugeot models, including 405 and 206. Reportedly, IKCO will be able to continue the production of these two models since it has been making them for decades and only relies on the foreign supplier for some key parts.

The production of the former was set to end, but that decision has been rescinded for now. 

SAIPA also used to make several models in collaboration with China’s Brilliance Auto Group and South Korea’s Kia, the production of which has stopped.

Pars Khodro has halted the production lines of Renault Sandero and Logan.

South Korea’s Hyundai Motor also had a deal with Iranian private carmaker Kerman Motor to produce Hyundai i10 and i20 in Iran, which partnership has been suspended.

Several other Chinese brands were assembled by private Iranian automakers, such as BYD, Great Wall, MG and Lifan, which have entirely stopped their production activities in Iran.



Unwelcoming Future

Iran’s auto sector was inefficient and ailing even before US President Donald Trump reimposed economic sanctions in 2018 after pulling out of Iran’s historic nuclear deal. 

As expected, the US penalties gradually obstructed the supply of raw materials and auto parts. Foreign carmakers and parts suppliers walked away from the lucrative market fearing Washington’s ire.

Various solutions have been proposed by officials to minimize the negative impact of the US president’s open animosity and economic war against Iranian industries. 

The proposals have produced nothing worthwhile, while car prices have continued to soar.

The Industries Ministry is in charge of regulating the loss-making car manufacturing industry. Over the decades, the ministry’s thick ties with the undeserving sector and vested interests of some state actors have impeded efforts to implement reforms.

Corruption scandals involving hundreds of millions of dollars have further tarnished the auto sector’s public image. The scandals have made economic experts and informed observers wonder whether the paralyzed industry has a future.

As part of the ministry’s agenda to revitalize the monopolized sector, localization of parts and technologies has been prioritized by the government and carmakers. This flies in the face of permits issued for importing such trivial auto parts like mudguards.

In a 2018 report, data from the Islamic Republic of Iran Customs Administration revealed that such permits had been issued for years. Such data are no longer accessible and it could not be ascertained whether the practice is continuing.



Output Iran Auto