In the last fiscal year that ended in March, 863,263 passenger vehicles were produced in Iran, indicating a 9.6% year-on-year decline.
According to a report published by Iran’s Securities and Exchange Organization on Codal.ir, Iran produced 92,660 fewer cars compared to the year before. No data have been released on commercial vehicle production.
The country’s leading automotive company, Iran Khodro (IKCO), produced 393,812 cars, indicating an 8.1% YOY drop. The figure is 32,012 lower than the previous year’s output.
Besides passenger vehicles, IKCO manufactures commercial vehicles, including vans, pickups, trucks and buses. However, during the period under review, IKCO halted the production lines of several models of commercial vehicles.
The firm’s arch-rival SAIPA produced 363,379 vehicles during the year, marking a 13.5% year-on-year decline. The figure was 56,945 in the year before.
Pars Khodro registered a 21.4% decline, producing 106,072 vehicles. Last year, the company produced 134,958 vehicles.
Month-on-month comparisons also show that the production rate of all three companies has declined.
IKCO produced 35,953 passenger vehicles in the month ending March 20, registering a 20% decrease compared to the month before.
SAIPA’s output shrank to 23,696 vehicles, 18.8% less than the month before.
Pars Khodro also produced 9,300 vehicles in the last month of the last year, recording a drastic 92.6% fall compared to the previous month, when the company managed to make 86,084 vehicles.
Previously, the Industries Ministry regularly published statistics about car production. However, following consecutive declines, the ministry stopped releasing such data.
The current data are extracted from financial statements submitted by automakers to the domestic stock exchange.
Mismanagement and corruption, plus the sharp pressure of US sanctions, have derailed Iran’s auto industries. The semi-state car companies, SAIPA and IKCO, have struggled with numerous scandals over the past few months, including the arrest of several managers of the two companies on charges of implementing an unauthorized price hike and committing fraud.
Industry insiders and local media have speculated that the two companies are on the verge of bankruptcy and, as usual, need the government to help bail them out to save thousands of jobs at risk in the chronically dysfunctional automotive companies.
Shrinking Options
The types of cars available to Iranian customers have declined after the US reimposed harsh sanctions against Iran in the summer of 2018.
Almost all foreign partners of Iranian carmakers pulled out of the country after US sanctions targeted Iran’s automotive industries.
Even international auto parts makers with decades-old ties with Iran halted sales to Iranian firms, as the US embargo threatened the former’s access to US 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 the goods and services could not get through. All these have taken a harsh toll on Iran’s auto producers and assemblers.
Therefore, 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 IKCO.
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 206 and 405 since it has been making them for decades and only relies on the foreign supplier for some key parts.
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.
Weak Performance
Despite an automotive background of nearly six decades and a four-decade-long history of auto management since the 1979 victory of the Islamic Revolution, the sector has remained under state control and failed to stand on its own feet.
Despite the Industries Ministry’s hefty tariffs on car imports and the exorbitant prices charged by domestic automakers for their substandard products, that too through presales, Iran’s highly monopolized automotive sector is chronically bankrupt.
Buckling under the burden of US sanctions, Iran’s auto production has been plummeting since June 2018.
Data issued by the Industries Ministry indicate that the slump has continued in the second month of the current fiscal year (ended May 21, 2019). Since then, analysts are in the dark, as the ministry stopped releasing auto production data.
As long as the Iranian automotive sector lacks an efficient strategy and accountability, it will remain dependent on the kindness of state officials and continue to earn the wrath of the general public.
