Iran's Auto Imports Dipping

New data revealed by Iranian Automobile Importers Association indicate car imports to the Islamic Republic are heading for a decline over the fourth quarter of 2016 and into 2017 following weak demand throughout the year.

According to IAIA, imports over the first six months of the current Iranian year (started March 20) totaled just 6% of the overall car trade, accounting for 32,428 units of 56 manufacturers, with predictions that this figure could fall further to 4.25% during the winter.

In the same period, Iranian automakers produced 530,000 units, with an increasing number of them being recently released models like the Sandero and various Chinese models.

During a recent press conference, Farhad Ehteshamzad, director of the association, addressed issues afflicting the industry, including the government’s lack of relations with the professional body and car import problems.

He said 94% of Iranian auto importers are members of the association, of whom 20 are official representatives of automotive giants, including Atlas Motor (Kia), Asan Motor (Hyundai) and Negin Khodro (Renault).

Ehteshamzad said members of the association have a vast knowledge of the auto industry and they have established firm ties with foreign companies.

“These foreign car firms have a good handle on consumer needs and can help develop the industry,” he said.

Earlier this year, Iran’s Ministry of Industries, Mining and Trade issued a new directive that required auto importers to establish a direct link with the mother company and offer after-sales services.

According to the IAIA chief, several deals have been signed between Iranian and foreign parties.

“However, foreign firms are still hesitant about the Iranian market, although sanctions have been removed,” he said.

Ehteshamzad noted that vagueness in import laws has confused Iranian companies about the boundaries and their obligations.

The official reiterated previous statements that controlling the market through legislation is having a detrimental effect on imports.

“The outcome of imposing a ban on importing products of some companies is decreasing competitiveness in Iran’s auto market,” he said.

“Since Middle East countries only have a 2% share in international automotive revenues, a ban on imports would not force them into setting up official representation offices in Iran.”

Ehteshamzad addressed the issue of cars with engines larger than 2.5 liters, which the Industries Ministry has deemed “luxurious”, and said engine size should not be a measure to determine whether a car is luxurious or not, since several models with smaller engines are priced at obscene levels and yet they are available in Iran.

The association chief named the UAE and China as the main source for auto imports followed by a distant Kuwait.

Ehteshamzad also said Hyundai, Kia and Toyota have the largest share in Iran’s auto imports, but Renault and Lexus are rapidly claiming a bigger position in this market.

According to a previous report released by the Market Monitoring Unit of Car Iran, a local automotive website, Renault and Lexus have a 20% share of the country’s imported vehicles market.

On the same issue, Kourosh Morshed Solouk, deputy director of the association, said Iran’s Standard and Quality Inspection Company is being pedantic in its regulations on imported vehicles.

“For instance, ISQI insists that imported cars must have fog lights, while some areas in Iran do not have fog even once a year,” he added.

Solouk also said ISQI rules on engine size are causing issues, like for example cars lacking Euro-5 emission standards have been banned.