Iran’s auto industry has headed into recession, according to new report from the vehicle manufacturers’ association, which backs up previous reports of the country unable to sell enough vehicles since the start of the current Iranian year (started March 20).
According to a report from Trend News, automakers have not managed to fulfill their potential since the end of the sanctions in January and are now struggling to attract buyers who are tired of the same substandard vehicles being touted around by the manufacturers at inflated prices.
The output of automakers in the first two months of the current Iranian year fell by 2.8% and reached 158,571 vehicles.
Managing Director of Rakhsh Khodro Diesel Company Akbar Mirza-Hosseini said Iran’s automotive industry has entered a recession and the automakers have not fully benefited from the advantages of the implementation of the Joint Comprehensive Plan of Action.
Unlike many observers who hoped for a surge in the industry as a number of international and European automakers demonstrated initial enthusiasm to get a foothold in the Iranian car market, Mirza-Hosseini believes that international companies appear circumspect in making big strides in the country.
“There are political reasons behind the reluctant behavior of the international companies,” he said.
Mirza-Hosseini said once Iran’s automakers manage to maintain their full capacity for production, the unemployment rate in the Islamic Republic will drop and the economic situation will improve.
Hope for Auto Industry
Iran’s car output during the 12-month period ending March 19, 2016, decreased by 13.7% y/y, as Iranian companies manufactured 976,836 cars.
Experts say the state of the Iranian automotive market is volatile.
Since 2011, the number of car sales has decreased dramatically, falling 53% from 1.5 million to 0.7 million in 2013, according to Consultancy.uk. The market has picked up only slightly in recent years, averaging 0.9 million between the start of 2014 and the end of 2015.
In 2012, 2013 and 2014, Iran was the 18th, 20th and again the 18th largest car manufacturer worldwide, IRNA reported.
As western-imposed sanctions on Iran over its nuclear energy program intensified in 2013, car production and Iran’s global ranking fell once again. The country manufactured only 730,000 units and dropped from 13 to 20 in global rankings.
However, other macro trends have been reported in the industry. Imports of cars and parts have risen 5% in the first two months of the current Iranian year-on-year.
The report released by the customs administration also notes that during the first two months of the year, $244.7 million worth of auto products and finished vehicles entered the country. This shows a 5.46% rise compared imports of over $232 million in the same period of last year.
Imports to Iran have mainly come from Turkey, Italy, China, South Korea, Taiwan, Japan, France, Belarus, Spain, Macedonia, Kuwait and Belgium, Iranian media writes.
Iran exported vehicles, components and spare parts to Venezuela, Egypt, Poland, Kuwait, Qatar, Kazakhstan, France, Russia, Iraq, Sudan, Ivory Coast, the Czech Republic and Uzbekistan during the two months.
As the industry moves ahead with its overhaul and buyers continue to remain hesitant to invest due to lack of credit by lending institutions, the industry is likely to remain sluggish in the coming months.
