Economy, Auto

Auto Parts Makers in Dire Straits

Auto Parts Makers in Dire StraitsAuto Parts Makers in Dire Straits

As Iranian carmakers have failed to pay their debts to auto parts makers, some companies have had to lay off up to 50% of their workforce.

According to Mohammad Reza Najafimanesh, a member of the board of directors at Iran's Auto Part Makers Guild, over 1,200 auto parts manufacturing companies are operating in Iran and local carmakers are in debt to almost all those firms, IRNA reported.  

"The plunge in vehicle production figures has taken its toll on the industry. If the debts are not settled anytime soon, several auto parts manufacturing firms will have to shut down," he warned.

Noting that domestic auto parts are exported, Najafimanesh urged the government to take action to help this sector.

To discuss the same issue, Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh met with members of Majlis Industries Commission last week.

Ali Alilou, a parliamentarian, elaborated on the details of the meeting and said the minister had made certain promises to help improve the situation for auto parts manufacturers and carmakers.

"Several solutions had been discussed during the meeting. Carmakers admitted that they were in debt to auto parts makers and asked the government to provide them with loans to settle their debts," Tasnim News Agency quoted the MP as saying.

"Parliamentarians, however, believe that the loans should not directly be granted to the automakers. Instead, the banks will give the money to auto parts makers on behalf of carmakers who will then have to pay the amount back to the banks."

Since auto parts makers are short of working capital, the MPs also put forth another proposal to defer the dates by which the auto parts makers are expected to pay their taxes and the due dates of their previous loans.

According to Alilou, MPs criticized the fact that the ministry does not have a solid solution to sort out the industry's troubles.

  Privatization Must Commence

"Several officials claim that the auto industry is privatized, but one would be naïve to believe this when the government is responsible for appointing and removing the directors of this industry."

Alilou stressed that to tackle this issue, this industry needs to be fully privatized.    

In this regard, the MPs suggested that shares of auto manufacturing companies be given to auto parts makers so that the government would not interfere in the affairs of carmakers.

Head of Iran's Management and Planning Organization, Mohammad Baqer Nobakht, said last week that 2 trillion rials ($58 million at market exchange rate) are to be given to productive industries as aid.  

Alilou noted that industries must be prioritized and the ones lacking working capital must be the first to receive the funds.