Iran Motorcycle Industry Now on Life Support

Production of motorcycles in Iran has declined sharply in recent years and more than 200 companies have been forced to down their shutters and send thousands of workers home.

Outdated technologies used by local producers have made them unable to meet local standards and undermined the sector. Furthermore, the low quality rendered them unable to compete with foreign firms present in Iran through imports.

In a talk with the Financial Tribune, Director of Iran Motorcycle Manufacturers’ Syndicate Bahman Zia Moqadam said “During the past decade more than 85% of motorbike producers had no option but to call it quits.”

“From the total 240 manufacturing companies 10 years ago the number has dwindled to 25.”

Those still in business are producing at a much lower rate because there are no buyers of the overpriced substandard two-wheelers. According to Moqadam, during the first five months of the current fiscal that started in March less than 40,000 units were produced – down 86% compared to the same period last year.

 New Regulations

The huge drop in motorcycle production is partly due to the introduction of new regulations. Last October, the government of President Hassan Rouhani put an end to production of carburetor-equipped motorcycles.

The move is part of the administration’s efforts to cut production of vehicles and motorcycles notorious for high emission and fuel consumption. One of the main rulings introduced by the government in this regard is a ban on production of carburetor-equipped vehicles (introduced in 2003). However, up until 2016 motorbikes were exempted from the general ruling.

Motorcycles are often singled out as the main air-polluters sitting next to old and dilapidated heavy vehicles and substandard locally-made cars.

Industry insiders say before the new rules the government should have helped in equipping local companies with modern technology enabling them to produce according to acceptable standards.

 Void in the Market

Sharp fall in production of motorbikes created a void in the market importers were waiting for. Prior to the new government restrictions a normal motorbike could be gotten for 15 million rials ($385). Two models available in this price range were the 2-stroke Honda-based CG125 and CDI 125.

The two models are still available in the market but at a much higher price -- close to 35 million rials ($900).

According to observers, imported motorbikes are now dominant and are getting gradually more popular.

One of the prevalent brands is the Italian brand Benelli. The companies TNT 250 model, which is manufactured in China under license of the Italian company, is  sold for 210 million rials ($5,380). The same model can be bought for $2,890 in the international market.

Another imported brand is India’s Bajaj which is also popular with the younger generation. This company is doing well with prices ranging from 60 to 110 million rials ($1,500-$2,820) depending on the options.

 Glimmer of Hope

Domestic motorbike producers are in the process of upgrading their production lines and according to Moqadam the sector should be on its feet by the end of the current year in March.

He went on to say that his organization has plans to offer local companies incentives and encourage them to focus on electric bikes.

Electric motorbikes have become trendy in Iran with government bodies offering incentives for their production and universities conducting research on design and improving the power and life of batteries.

In June 2016, students at Tehran’s Amirkabir University of Technology said the electric motorbike they had designed was undergoing commercialization and would be ready for production soon.

Later this year, Iran’s second largest automotive company, SAIPA said it will  import electric motorcycles for Tehran Municipality and is planning to set up an assembly line for producing such bikes.

Tehran City Council, saddled with the unending problem of air and noise pollution plus the torturous traffic congestion in the capital, is offering grants to people wanting to buy electric motorbikes.

Long-awaited Collaboration between the industrial sector and academia should be able to revive the local motorbike industry by producing electric bikes.