Domestic automakers do not have many foreign partners to choose from due to sanctions and experts believe cooperation with available options will not help the industry significantly.
According to automotive experts, the activities of companies operating in the field account for about 20% of the country's total industrial operations.
However, over the past few years, the industry has been the main bone of contention between parliamentarians, especially of the Majlis Industries and Mines Commission, and the Ministry of Industries, Mining and Trade.
In an interview with Donyaye Khodro, Saeed Madani, former CEO of SAIPA and senior automotive consultant, said the Industries Minister Reza Fatemi-Amin is being solely blamed for the mess in the automotive industry by parliamentarians.
“The automotive industry is part of the minister's responsibilities but the monitoring of car manufacturers' plans lies with people like the head of IDRO [Industrial Development and Renovation Organization]. The director general of the Automotive and Driving Power Bureau of the Industries Ministry should take care of the relevant matters so that the minister is able to manage more important issues,” he said.
"The minister has announced cooperation plans with Russian carmakers, while the conditions of Russian companies are similar to those of Iranian carmakers, and Renault has left the country after the Ukraine war. Therefore, automotive cooperation with Russia will not help the domestic automotive industry. The standards of Russian car industry are different from the standards of the global industry. They consider themselves unique, in terms of such issues, but the Russian car industry is far behind the latest knowhow in this industry."
Many experts believe that knowledge-based startups, with the support of automakers, can play an effective role in increasing production. But the question is why these companies cannot meet the industry’s need for high-tech parts.
The former official said the prototype production of high-tech automotive products shows the ability of knowledge-based companies, but the main issue is the mass production of these parts, which requires large investments.
“As these investments are beyond the power of automakers, the minister, as the authority for managing the budget, land and other facilities of mass production, is held accountable,” he said.
Asked about automakers’ options for finding a suitable foreign business partner, Madani said, “Unfortunately, all activists are looking at the Vienna nuclear talks. At present, given the status of the Joint Comprehensive Plan of Action, domestic automakers have only two options for industrial and economic cooperation, namely China and Russia.”
Import of Cheaper Cars Will Hurt Domestic Automotive Industries
If the prices of imported cars are lower than those of Iranian cars, the domestic car and component industries will face problems, according to a member of the board of directors of the Association of Homogeneous Propulsion Industries and Component Manufacturers.
“In the field of imported car, the government is considering a special mechanism that sets higher or lower tariffs for cars with different engine power. Such a mechanism, while creating competition and improving the technical knowhow of car and parts makers, will not harm domestic production,” Alireza Khalili was also quoted as saying by Khabar Khodro.
“Cars that enter Iran must be at a price level that helps create balance in the domestic market, and achieve an equilibrium in comparison with the prices of imported cars in the international market,” he added.
Noting that tariffs determine the price, the official said, “The prices of imported cars are naturally lower than the prices of domestic cars, and what increases the final price is the [customs] tariff rate. Therefore, the establishment of balance in this field can prevent any harm to the domestic car and parts manufacturing industries.”
Khalili stressed that the tariff should not interfere with the import of parts and raw materials.
Asked whether the priority is importing cars or parts, raw materials, technology, machinery and equipment, he said the ban on imports in the last few years deprived Iran of the latest technology.
“The current quality problem of domestic cars is due to the lack of access to machinery, state-of-the-art knowhow and good quality raw materials. If access to these resources is provided, many problems in the car industry will be solved,” he added.
In other words, the import of machinery and technology must be prioritized over car imports.
“Iran has a history of producing Jeep, Benz and Fiat cars, but problems in political relations have impacted the car industry’s condition. It is not possible to be content with just producing domestically. We should use the technological knowhow of foreign automakers to eventually increase the quality of domestic cars,” the official said.
Referring to Turkey as a manufacturer of cars and parts, as well as an automotive importer and exporter, he noted that following the example of other countries' policies in the field of automobile manufacturing, in the long run, will turn Iran into an automobile manufacturing country with competitive products.
Khalili stressed that the government should ease car imports and currency transfer because the current unreasonable methods are associated with high risk and very low reliability, so the government’s flexibility can improve the situation.
