Since June 2018, Iran’s auto production has been plummeting.
Data released by the Industries Ministry show that the decline has continued in the second month of the current fiscal year (ended May 21).
Iranian carmakers produced 87,821 cars and commercial vehicles in the month, registering a 16.1% decline compared with a combined output of 104,684 units in the corresponding month of the year before.
According to the data, car production dropped 17.3% compared to the previous year to reach 81,418 units.
One of the figures that stand out in the report is a notable rise in SAIPA’s output. The company has recorded a 17.5% YOY increase in production rate during the month.
This is the first time that an Iranian car company has recorded an increase in output after the imposition of harsh US sanctions against Tehran, which have strained ties between local automotive companies and their foreign partners.
During the period, SAIPA received the much-needed auto parts and completed thousands of unfinished cars that were gathering dust in its warehouses.
A total of 6,403 commercial vehicles were completed during the period, indicating a 1.9% year-on-year increase. Among commercial vehicles, only the production of pickup trucks has hiked.
During the period, 5,931 pickups were made, up 23.3% compared to 4,810 units manufactured a year earlier.
While the production of vans came to a halt, the manufacturing rate of minibuses, buses and trucks declined by 51.9%, 61.7% and 67.4% respectively.
Reviewing data on auto production during the first two months of the current fiscal year reveals a 24% YOY decline in output.
Iranian firms manufactured 185,478 cars and commercial vehicles during the first two months of the last fiscal year, which figure plummeted to 140,917 this year.
IKCO
Iran’s largest automotive company Iran Khodro (IKCO) fared poorly during the month, as its production rate plunged 25.2%.
During the month to May 21, IKCO churned out 40,539 cars and commercial vehicles.
A closer look at the data shows car production has declined by 24.1% at IKCO, while pickup manufacturing has almost come to a halt.
IKCO manufactured 88 pickups, which are significantly lower than the 1,059 units made a year earlier.
During the corresponding month of last year, the firm made 48 vans. It has since stopped van production.
Daily auto production rate at IKCO has declined to 1,307 units from 1,748 a year earlier.
SAIPA
This is while IKCO’s archrival, SAIPA, recorded a 17.5% increase in production rate during the month.
According to the statistics, SAIPA produced 43,536 cars and commercial vehicles during the period, an outstanding increase compared to 37,047 units made a year earlier.
Daily auto production at SAIPA reached 1,404 units, which are considerably higher than the 1,195 produced a year earlier.
SAIPA manufactured 38,543 passenger vehicles—up 14% compared to a year earlier. Van production hiked 64% YOY at SAIPA.
Overview
The US unilateral sanctions and pressures on foreign auto partners to end cooperation with Iran have taken a toll on the key sector.
The Iranian economy is facing major challenges, not the least of which is the pressure reimposed by US sanctions that have beleaguered Iran’s oil, banking, insurance and transportation sectors.
The national currency went into freefall over the past few months and lost over 60% of its value. This has had a major negative impact on the domestic auto companies’ ability to import spare parts and raw materials.
An earlier report released by Organisation Internationale des Constructeurs d’Automobiles shows that Iran’s automotive output suffered its sharpest year-on-year decline in 2018 since the onset of the 21st century.
Local companies produced 1.34 million cars and commercial vehicles in 2018, marking a 40% YOY decline.
The domestic industry faced a dismal year in 2012 when car output dropped 39%.
However, 2018 was the worst year for the key industry in recent memory. Most market observers and analysts worry that 2019 could fare much worse.
