Vehicles Dominate Iran’s Import Basket

Vehicles and spare parts that entered the country during the first six months of the current Iranian year (March 20) are estimated to be worth $837 million.

This shows a 68% year-on-year jump in vehicle imports, IRNA reported on October 29.

According to the report, the auto industry has had an 8.1% share in Iran’s import basket during this period, earning the first and second place for vehicles and auto parts on the list of imported goods respectively.

Nasser Beikzadeh, former director of Iran Khodro Company’s Spare Parts and After Sales Services (ISACO), in an interview with Asre Khodro, a local automotive website, named three elements as the main reasons for the significant rise in auto imports.

“These reasons are the Joint Comprehensive Plan of Action (the formal name of Iran’s nuclear deal with the six world powers that led to the removal of sanctions), Iran’s endeavors for joining the World Trade Organization and the low quality of vehicles manufactured by Iranian automakers,” he said.

Beikzadeh said that in order to join WTO, Iran has to open its doors to the international companies and unshackle the country’s trade.

He added that in recent years, tariffs on auto imports have decreased to 40%, which indicate that Iran is willing to make the required changes to join the organization.

“Iran should follow the example of countries like Malaysia, which prepared its national industry for entering the international market without state support and through a phased program,” he said.

The former ISACO director also referred to the new joint ventures forged between Iranian and foreign automakers and said following the joint ventures forged with Renault and Peugeot, several models imported currently will be produced domestically.

“Consequently, auto imports will decrease with the arrival of these cars in the country’s market,” he said.

Beikzadeh also suggested that the best course of action for the expansion of Iran’s auto industry would be to cede both Iran Khodro and SAIPA (Iran’s top two automakers) to their foreign partners, namely Peugeot and Renault.

He also noted that the Joint Comprehensive Plan of Action has eased financial transactions for imports and also enabled Iranian companies to purchase more vehicles.

Asked about the growing number of models available in Iran’s auto market, he said, “A wider range of products will boost competitiveness in the auto industry.”

Beikzade noted that there is no significant ban on the import of vehicles in other countries. “For instance, 80% of the vehicles available in the Chinese domestic auto market are products of non-Chinese brands [but altered for Chinese needs],” he said.

Meysam Rezaei, the head of Iran’s Employer Association of Car Importers, said exchange rate stability and the rise in the demand for foreign vehicles are the main reasons for the rising number of imported cars.

He said Iranian cars are of low quality and cannot meet the needs of Iranian car buyers.

Rezaei also quoted the recent remarks of the head of Iran’s Mechanics Guild, Reza Nikaian, who recently reported that domestic vehicles need to visit repair shops three times more than imported vehicles.