Saipa, Iran's second largest carmaker, has failed to pay its debts to auto parts manufacturers and is in arrears by five months, auto news website Asre Khodro reported on Monday. According to Ahmad Nematbakhsh, secretary of the Iran Vehicle Manufacturers Association, contracts signed between carmakers and auto parts manufacturers stipulate that buyers must pay for parts within three months. Iran Khodro, the domestic auto giant, is in a stronger position than Saipa, as it has reduced its debts and is back on the three month payment schedule. Bahman Group, an automaker which also buys parts from local auto parts makers, holds the cleanest record, the official said. Though manufacturing costs have increased, automakers cannot increase prices as the Competition Council has opposed any price hike, Nematbakhsh noted. "That is among the primary reasons behind the escalating debts." Like most other industries, cash flow is also tight for auto manufacturers and "banks refuse to lend to car makers," the official rued.
