Economy, Auto

SAIPA to Repay Debts of Part Makers

SAIPA to Repay Debts of Part MakersSAIPA to Repay Debts of Part Makers

Following up on earlier arrangements with SAIPA, Iran's second largest carmaker, a number of small- and medium-sized auto part manufacturing firms will soon receive part of their debts, said the secretary of Iranian Auto Parts Manufacturers Association.

According to Mohammad Reza Najafimanesh, the amount they receive will hopefully help the firms resume operations, Eghtesad News reported. "The contracts stipulate that the carmakers can pay the auto part makers a few months after they receive the parts," he said.

"If they fall behind the payment schedule, the part makers will not be able to purchase the raw material on time and cannot pay the wages of laborers. Najafimanesh said since local carmakers are forging new partnerships with international auto manufacturers, paying the debts of local auto part makers will remove bottlenecks in the industry.

The latest contracts with foreign carmakers stipulate that at least 40% of the car components must be made in Iran, which percentage should rise to 80% in the long run.

These facts call for reinforcing the auto part manufacturing industry.

Statistics released in October 2015 indicated that the debt to the auto part manufacturing sector is estimated at 40 trillion rials ($1.2 billion at market exchange rate), Khabar Online reported at the time.

"About 10,000 people working in auto part manufacturing units were laid off or temporarily suspended," Najafimanesh had said at the time. The official warned that a major crisis looms, which will take its toll on auto part manufacturing industry and other industries directly or indirectly working with the auto part makers.