Iran’s auto parts import bill for the first month of the current fiscal which started on March 21 has come in with the total value of the goods standing at $192 million.
According to statistics released by Islamic Republic of Iran Customs Administration, in terms of value, auto parts have a 7.6% share of the goods entering Iran through legal channels, topping Iran’s import bill. This is not something out of ordinary and testifies to local carmakers’ overreliance on foreign suppliers.
The published data indicate a 189% year-on-year growth in auto parts imports.
Furthermore, the shipments are categorized into three groups depending on the share of locally manufactured parts in the final product: vehicles with under 30% localization, 30-50% and over 50%.
The first group (with less than 30% localization) has the biggest share in Iran’s auto parts import bill, with $121 million and 63%.
Localization is one of the oft-mentioned mantras of the government in regulating automotive contracts with foreign firms. As per a notification issued by the Ministry of Industries in November 2017, at least 40% of the vehicle parts used in joint ventures with foreign carmakers should be manufactured in Iran since March.
According to the directive, if local companies fail to comply, the government will consider their cars completely-built-up imported units and this would translate into much higher tariffs.
However, as initially speculated by industry observers reaching the 40% threshold has been a tall order for Iranian automakers.
