Iranian Automakers Urged to Increase R&D Budget

The government has called on local car manufacturers to increase investment in their research and development.

Ministry of Industries has issued a mandate that requires local carmakers to allocate 1.5% of their total revenues to R&D, ISNA reported. As per available data local automakers barely invest 0.5% of their total income in the key R&D sectors.

This is while the international car industry is routinely increasing its spending on research and development as companies try to stay ahead of a rapidly shifting market and tough competition wherein all are sellers.

For instance, the German carmaker Volkswagen is the top investor in R&D among all industries for the past five years. The company’s research and development bill in 2016 was $13.6 billion, or 7.3% of its total revenue.

Toyota is also among the top ten companies with extensive investment in R&D. Last year it spent 3.9% of its income on R&D. The respected Japanese brand reported spending in this sector at one trillion yen ($8.9 billion) in 2017.

In recent years some Iranian carmakers have increased their investment in R&D. the largest automaker Iran Khodro announced in May that it would increase its collaboration with centers of higher learning, namely the prestigious  Sharif University of Technology and the Amir Kabir University of Technology. IKCO, which is facing increasing competition from both local and foreign rivals, has said it is in the process of designing new models with help from the universities.