Economy, Business And Markets

APMA Demands Strict Controls on China Auto Parts

APMA Demands Strict Controls on China Auto PartsAPMA Demands Strict Controls on China Auto Parts

As much as 60% of auto parts in the market are poor quality products imported mainly from China, said a member of Auto Parts Manufacturers Association (APMA) board of directors, Farhad Behnia on Saturday. He urged urging Iran’s Customs Administration and the National Standards Organization to exercise effective supervision over the import of auto parts.

If the foreign auto parts had to pass quality tests before being imported, many of them would be rejected, he said. “There are 670 laboratories across the country through which officials can test the quality of imports,” IRNA quoted him as saying.

Behnia also drew attention to the low-cost Chinese cars flooding the Iranian markets, noting that the production cost of Chinese cars is about 34% lower than the final cost of manufacturing cars in Iran. He expressed hope that the recent deal between Iran’s major auto manufacturer, Iran Khodro, and the French giant carmaker Peugeot can act as a deterrent to the irregular import of Chinese cars.

Iran Khodro recently held a meeting with domestic auto parts manufacturers regarding production and supply of parts required for the new Peugeot models, said Behnia, stressing the need for transfer of technical know-how from advanced countries for production of high quality auto parts.

He further mentioned the production sector’s difficulties in securing funds, saying: “The Central Bank of Iran has recently passed a resolution in support of domestic manufacturers by granting them loans; however the loans are required to be collateralized by the manufacturers, which is a major barrier.”

Auto part manufacturers have been grappling with numerous problems in recent years including lack of liquidity, western sanctions (imposed against Iran over its nuclear energy program) impeding the import of raw material and machinery, high value added taxes levied and the automakers’ delayed payments.

Deputy minister of industry, mine, and trade, Mohsen Salehinia had earlier announced that the ministry is taking measures to help carmakers speed up the payment of their debts to the parts manufacturers. “The auto manufacturers used to pay off their debts within 18 months upon receiving the parts but the industry ministry is trying to convince them to shorten the period,” he remarked.

Despite the lack of cooperation on the part of banks, car manufacturers have managed to pay their creditors a huge part of their debts by selling assets or pre-selling their cars. The two industries are so intertwined that even a small impediment in one sector poses a threat to the survival of the other.