Iran Auto Industry Recorded Growth in Spring

Iran Vehicle Manufactures Association has released the latest statistics on local auto production which indicates that 306,545 cars, pickup trucks and heavy duty vehicles have been produced during the first quarter of the fiscal year that started in March.

The report says the industry registered 15.2% year-on-year growth during the three month period.

Local companies manufactured 290,432 vehicles, an 18.9% y/y growth while production of pickups decreased 32% compared to the same period last year, reaching 12,925.

 IKCO

During the three-month period, the largest automaker Iran Khodro produced  148,296 cars -- a 10.1% y/y jump.

Cars have a 98% share of the company’s output while its subsidiaries producing pickups and other utility vehicles are still lagging behind.

Several subsidiaries of IKCO, which are in charge of production of pickup trucks and heavy vehicles, have seen sharp decline during the period. Iran Khodro Diesel which produces heavy vehicles has recorded a whopping 96.4% y/y fall in output.

Furthermore, IKCO has increased the share of Chinese cars in its production by 15 times. The company produced 8,171 units of Haima S7 and Dongfeng H30. Compared to last year’s 504 units, this indicates a change in policy that does not sit well with rising public demand for quality cars.

Public opinion aside, IKCO’s love for Chinese brands also does not meet the new guidelines announced by the Industrial Development and Renovation Organization of Iran (IDRO) on collaboration with foreign private firms active in the automotive sector.

The new guidelines require carmakers to enter into partnership with “internationally reputable” firms. According to independent experts and local media reports, Chinese carmakers simply don’t meet the IDRO criterion.

During private meetings with automotive firms, officials at the IDRO have reportedly made it known that the organization does not advocate the expansion of Chinese firms in the domestic auto sector.

 SAIPA

SAIPA outpaced its arch rival IKCO in terms of production growth  — recording a 15.4% jump in total output. During the three months the company produced 114,539 cars, 8,099 pickups, and 675 heavy vehicles.

In recent years, SAIPA has strived to reduce the yawning gap between its production and IKCO. The company is trying to claim the title of Iran’s largest automaker which has always been held by IKCO.

Although the company’s production rate has observed significant growth, the quality of SAIPA cars remains the main hurdle in expanding the company’s share in the international market.

 Low-Quality Here to Stay

Several models of IKCO and SAIPA products which have always suffered from low quality are still dominant when it comes to sales.

During the three-month period, IKCO produced 34,822 units of Peugeot 405 and 23,146 units of locally designed Samand. The two models had a 39% share of the total IKCO output.

Moreover, Pride has a 41% share of SAIPA’s total output, despite the fact that the people, environmentalists, economic experts and government officials have often demanded a halt to the production of this poor quality, but the cheapest, brand.

According to auto evaluation reports, published by Iran Standard and Quality Inspection Company, none of the models have been able to earn more than one star in the organization’s five-star ranking system.

 Foreign Deals

In recent months officials in Tehran and automakers have trumpeted the deals with foreign carmakers which are supposed to help economic growth. However, so far none of the deals have come into effect.

The only joint venture production line which has been “launched” so far is the Peugeot 2008. The model is to be produced through a JV between IKCO and the French carmaker, Peugeot.

According to reports, three months from the “official launch” of the production of Peugeot 2008, so far only four units of the model have been made!

Moreover, when the Industries Minister was asked about the delays in implementing the foreign deals, Mohammad Reza Nematzadeh requested the public to be “patient” saying “Such deals are complicated and their implementation takes time.” He did not elaborate.