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 ...

Tehran, Seoul Sign MoUs for Technology Transfer
Iranian and South Korean private companies signed 22...
Bank Maskan Ready to  Issue MBS Worth $240m
Iran’s agent bank of the housing sector has notified the...
With a 37-kilometer coastline alongside the Persian Gulf, Bushehr accounts for about half of Iran’s maritime trade.
A total of 25.5 million tons of non-oil goods, including gas...
8-Month Auto Output
The automotive industry is the second most active industrial...
Tax Revenues at $19 Billion
As much as 1,000 trillion rials ($23.8 billion) had been...
Metal Exports Earn $2.5b in 7 Months
Iran exported 5.78 million tons of metallurgical products...
Nissan Prepares for Public Tests of Driverless Taxi
Nissan Motor Co and Japanese gaming software maker DeNA Co say...
Mohammad Mehdi Behkish, secretary-general of the Iranian National Committee of the International Chamber of Commerce, addresses TCCIM’s annual anti-corruption event on Dec. 11.
Ahead of the publication of the Global Corruption Report by...

Add new comment

Read our comment policy before posting your viewpoints

Enter the characters shown in the image.