The condition of car component makers is worse than it was last year, a member of the Association of Homogeneous Propulsion Industries and Component Manufacturers said.
“Their financial situation, which goes back to the payment conditions of car manufacturers, has created conditions worse than that of the previous fiscal year,” Yousef Haqiqi was also quoted as saying by the news portal of Donyaye Khodro.
"The automotive industry was expected to receive credit facilities worth 100,000 billion rials [$326 million] to help boost their liquidity and turnover, but this did not happen,” he added.
Haqiqi stressed that the president's order to increase production was also supposed to help the car industry, but so far nothing has happened.
“Due to the increase in the prices of raw materials compared to last year, there is a need for a 100% increase in liquidity to materialize these plans. This is while we are approaching the end of the first quarter and there is no news about this,” he said.
“Iran Khodro’s production plans in the current fiscal year have undergone more changes than SAIPA’s plans.”
A plan to increase production to 1.5 million vehicles was forecast for this year and automakers were asked to double production.
While the financial outlay for this initiative has not been defined, the Industries Ministry announced a change in approach whereby incomplete cars will no longer be produced and ordered automakers to complete the cars deficient of parts.
With this measure, the production of new cars declined, according to the market players and managers of automotive and parts industries.
According to car parts managers, automakers cannot continue their purchase from parts manufacturers because of their mounting debts.
While the government has stopped the allocation of subsidized foreign currency for the import of essential commodities such as wheat, animal feed and oilseeds, automakers are pushing for the liberalization of the prices of substandard cars that are already being sold at exorbitant prices in the monopolized domestic market.
Automakers Ordered to Submit Quality Improvement Roadmap
Lawmakers have ordered Iran’s two major auto producers to submit roadmaps for enhancing the quality of their vehicles.
According to the Majlis news outlet, SAIPA Group and Iran Khodro have been given 72 hours to submit a roadmap to the parliament, in which they should elaborate on their plans for improving customers' satisfaction, as well as the quality and security of vehicles.
Rouhollah Nejabat, a lawmaker, referred to the direct impact of domestic vehicles on the high number of road casualties and said lawmakers made the decision during a meeting with representatives of Traffic Police, Roads Ministry, Ministry of Industries, Mining and Trade, Iran Khodro Industrial Group, SAIPA and the National Standards Organization.
Ezzatollah Akbari, another lawmaker, called on the government to prepare the grounds for the entry of private producers and foreign companies in the automotive industry, as it would help improve the industry's competitiveness.
He also criticized carmakers for their irresponsibility and said they must fulfill their commitments in contracts that must uphold the interests of both sides.
Hojjatollah Firouzi, another lawmaker, also said that the import of new cars could be a useful method for compelling domestic producers to improve their performance.
"The presence of foreign cars in the market would naturally help reduce prices and at the same time force domestic producers to improve the quality of their products," he said.
The measure follows widespread public complaints about the poor quality of domestically-produced cars.
The previous government had imposed a ban on car imports to prevent the outflow of foreign currency made scarce by US sanctions and lower oil sales in the fiscal 2018-19. However, the incumbent government has placed the import of 70,000 cars on next year’s agenda to meet its financial needs.
IKCO and the second major automaker SAIPA enjoy a near monopoly in the domestic market and so far, car imports remain banned.
Iran's total auto output during the last Iranian year (ended March 20, 2022), stood at 963,179, down 2.9% year-on-year. IKCO posted a 6.7% decline in output last year, whereas the decline was 5.5% for SAIPA.
One person dies in a road accident every half hour in Iran, taking the annual death toll to 17,000, the Iranian Legal Medicine Organization announced.
The organization also said close to 30,000 people are annually embroiled in accidents.
According to Majlis Research Center, the costs of road crashes amount to 8% of Iran’s gross domestic product. In the years ending March 2012 and March 2017, car collisions cost the economy 519 trillion rials ($2.1 billion) and 535 trillion rials ($2.17 billion) respectively.
