70006
old vehicle-production contracts do not have to obey  localization rules.
old vehicle-production contracts do not have to obey  localization rules.

Small Rollout Rates Impair Localization Policy

Small Rollout Rates Impair Localization Policy

One main difficulty in producing foreign cars in Iran with local automotive parts is their small production numbers, according to one CEO.
Bahram Shariat, chief executive officer of Chery Automobile Company’s local operation, said the production rate of several models do not reach the feasibility threshold therefore, localization and manufacturing the auto parts in Iran is not cost-effective, Financial Tribune’s sister newspaper Donya-e-Eqtesad reported.
“Many foreign vehicles produced in Iran do not reach the minimum roll out rate which is over 100,000 units per year.”
The Ministry of Industries, Mining and Trade announced earlier this year that a minimum localization of automotive content should be 40% and rise to 80% as production expands.
According to the ministry, one of the reasons for insisting on the role and involvement of local auto parts makers is “feasibility and cutting production costs.”
Shariat concurs that local automakers have long focused on boosting quality and capacity of parts production instead of relying on foreign producers.
“But the (localization) plan cannot apply to several foreign vehicles, in particular the wide range of Chinese models in the country that account for 19% of the market.”
Driving the point home, he says, “Each design needs a minimum production rate of 100,000-units in the country if suppliers want to get involved. Should that not be the case, the price of the locally produced part will be over and above the imported product.”
On the issue of genuine Chinese auto parts, several Iranian firms have partnered with Chinese automakers and are importing from that country.
Auto parts in huge volumes are being produced by Chinese companies under the license of European businesses.
Shariat added that such (localization) rules apply to newly-signed contracts and Chinese producers are exempted. He did not say why the rules should be different for the Chinese companies.
In his opinion blanket enforcement of such stringent rules on auto companies will have the opposite effect since the cost of importing would still be cheaper than local production.

 

Short URL : https://goo.gl/5d3Nqd
  1. https://goo.gl/R16Ugd
  • https://goo.gl/dMxCWg
  • https://goo.gl/cgGtdf
  • https://goo.gl/BK8rwo
  • https://goo.gl/pn1GBA

You can also read ...

All SP Gas Field Phases to Be in Full Swing by March 2019
The South Pars mega project has registered a work-in-progress...
Tehran, Tashkent Sign Deals Worth $25m
As part of the visit of a delegation from Uzbekistan to Iran...
Russia Grain Exports to Iran Reach 220K Tons
Over the first nine months of 2017, exports of Russian wheat,...
Multilateral Push to Revive Housing Leasing
A special multilateral task group is amending regulations to...
A delegation headed by First Vice President Eshaq Jahangiri was in Ankara on Thursday and reached several deals.
Following several rounds of negotiations between Iranian and...
US Won’t Block  European Trade  With Iran
US Secretary of State Rex Tillerson said the Trump...
Evaluating Economic Impact of Shifting Iran-KRG Relations
Iran and the Iraqi Kurdistan Regional Government have...
TSE Gauge Ends Trading Week 1.2 Percent Higher
Tehran Stock Exchange’s main index TEDPIX gained 1,024 points...

Add new comment

Read our comment policy before posting your viewpoints

Image CAPTCHA
Enter the characters shown in the image.

Trending

Googleplus