When French auto companies Renault and PSA Group (Peugeot and Citroen) started leaving Iran last year, observers held the strong view that Chinese companies would rush to expand and take their place. Official data shows otherwise.
The number of cars made in Iran in collaboration with Chinese firms declined 9.9% during the nine months to December 2018 compared to a year earlier.
Data released by the Ministry of Industries show that during the period, 144,148 Chinese-derived cars were produced -- a slight decline from last year’s 159,916.
Following the re-imposition of US sanctions last summer, French carmakers with decades-old ties with Iran suspended operations fearing the wrath of the beleaguered US President Donald Trump.
Compared to the sharp fall in production of French-derived vehicles in Iran (42.7%), the 9.9% decline in manufactures with Chinese origin might seem trivial. However, the drop indicates that Iranian carmakers' collaboration with the Chinese is on a slippery slope and could face more setbacks.
Chinese Partners
Vehicles designed by 14 Chinese automotive companies are sold in Iran in collaboration with local firms. Chinese carmakers present in Iran include Besturn, Brilliance, BYD, Changan, Chery, Dongfeng, Geely, Haima, Haval, JAC, Jiangnan Automobile, Lifan, MG, and Zotye.
The leading Chinese brand is Chery. It operates independently and sells cars under two brand names, Modiran Vehicle Manufacturing Co. (MVM) and Chery’s own name.
During the nine-month period, 36,072 cars were made by Chery in Iran – down 31.4% compared to a year earlier.
Private carmaker Kerman Automotive Industrial Company through its four subsidiaries Kerman Motor, Bam Khdoro, Rigan Khodro, and Karmania have partnerships with Lifan, JAC, Geely, Jiangnan Automobile, and BYD.
In the nine months, 26,199 cars were made through the China collaborations – down 11% compared to last year’s output of 29,446.
IKCO, SAIPA
The semi-state-owned automotive company, SAIPA has strong ties with China and interacts with Changan, Zotye and Brilliance. SAIPA made 43,904 vehicles in collaboration with the three companies during the period, indicating a 4.4% year-on-year decline.
Chinese-derived vehicles made by SAIPA have 11% share in the latter’s total output, four percentage points more than last year. However, this does not mean that SAIPA’s Chinese partners are expanding collaboration. The slight increase is due to the sharp fall in SAIPA’s total output.
Vehicles designed by 14 Chinese auto companies are sold in Iran in collaboration with local firms. Chinese carmakers in Iran include Besturn, Brilliance, BYD, Changan, Chery, Dongfeng, Geely, Haima, Haval, JAC, Jiangnan Automobile, Lifan, MG, and Zotye
In nine months SAIPA made 300,776 cars, -- down 30.5% compared to the 432,885 units made in the corresponding period last year.
Over the years, SAIPA’s arch-rival, Iran Khodro has also built ties with Chinese automotive companies and collaborates with Haima and Dongfeng. During the nine-month period, the number of cars made through these collaborations fell 10.2% -- down from 29,997 last year to 26, 924 units.
Chinese-derived cars had 8% share in IKCO’s total output, two percentage points higher than last year. The conditions that led the share of China vehicles increase in SAIPA production figures also applies to IKCO.
Car production at IKCO plummeted by a massive 35.8%. During the period, 327,792 cars were made significantly lower than last year’s 511,142.
Industry Overview
During the nine months, Iran’s auto production plunged to 763,519 cars and commercial vehicles -- a 31% year-on-year drop.
In the three quarters 713,233 cars were produced, down 31.2% compared to 1,037,374 units made during the same period last year. At the same time 50,101 trucks, buses, minibuses and pickups were made indicating a 27.4% YoY decline.
Following the re-imposition of US sanctions last summer, the rial tanked and Iran’s economy is facing multiple challenges. The national currency has lost more than 60% of its value this year.
The industrial sector is believed to be hit the worst due to dependence on imports and the increasing reluctance of foreign companies to sell to Iran fearing the wrath of the openly hostile US administration.
