Economy, Business And Markets

Parliament Backs Auto Industry

Parliament Backs Auto Industry
Parliament Backs Auto Industry

Lawmakers are ready to lay the required legal framework to facilitate cooperation between Iranian and foreign carmakers, IRNA reported.

Representatives from major companies - more than 400 top-ranking industry executives – are expected to participate in the 2nd International Conference on Iran’s Auto Industry, which is to be held on December 1st in Tehran. “This is a proof to the potentials of our domestic auto industry, which is one of the highest-performing in the Middle East,” Ramezanali Sobhani, member of industry and mining committee of the parliament said. The event would certainly bring about positive results, he added.

He called on the government, the parliament and other top executive bodies to look at this important industrial event as a national issue and said, “It’s a fact that in the past, the auto industry had not taken a right approach toward the cooperation with foreign carmakers.” The new approach to cooperation with foreign firms should focus on technological development of the auto industry through active interaction with the world’s major automakers, he asserted.

Sobhani noted that the development of auto industry with the help of foreign investors requires a new legal framework, adding that parliament is committed to work with the government in order to take a coordinated approach to this matter.

Sobhani called on the domestic carmakers to employ export-oriented production standards and considered it an important factor for the development of the auto industry.

Earlier in October, Mohammadreza Nematzadeh, minister of industry, mine and trade had called on the carmakers to try their best to reach the production target of 1.2 million cars by the end of the year (March 2015).

Since the begging of the year, Iran Khodro Industrial Group (IKCO) has manufactured more than 365,000 sedans and pickups, IRNA quoted Hashem Yeke Zareh, IKCO’s managing director as saying on Thursday. The figure accounts for the company’s total car production last year.

“Car manufacturing within the period demonstrates a 95 percent growth compared with the same period last year,” Yekeh Zareh told IRNA. He added that the highest volume of production went to Peugeot Pars with 90,000 and Peugeot 405 with 70,000 cars, accounting for 24 and 19 percent of total IKCO’s output, respectively.

He also said that 5 percent of IKCO’s production has been allocated to Runna (Peugeot 206 platform) within the same period. In addition, 1,400 Dena’s have been manufactured.

Speaking about the production of Tondar 90 (Dacia Logan) within the first 7 months of the current Iranian year, he went on to say that Tondar 90 accounted for 2 percent of IKCO’s production, although indicating 130 percent growth during the same period last year. He also emphasized that Tondar 90 production will increase this year.

According to the IKCO’s head, 56,000 pickups have been manufactured, accounting for 15 percent of the total production. IKCO reported that Samand and Peugeot 206 comprised 17 percent of its production.

 New Terms for Foreigners

Iran’s car industry has been turning the strong interest shown by foreign companies to its advantage by setting tougher conditions in any cooperation agreement.

Iran Khodro, the country’s largest manufacturer of cars, has quite successfully convinced its partner, in this case PSA Peugeot Citroen, to agree to such tighter conditions in a joint venture.

Yekeh Zareh stated in October that “we are not going to work with foreign firms in the way we used to do.” He pointed out that “mutual investment is the prime condition to cooperation with foreign companies,” in a sign that IKCO wants explicit transfers of technologies, physical capital and know-how to Iran.

Zareh stated that both domestic factors and the international sanctions have caused companies like France’s Peugeot to stop producing cars in Iran.

“One can say that only 30 percent of the problems [with Peugeot] were caused by the sanctions while the remaining 70 percent was caused by domestic issues,” he added.  

Iran’s car making industry has suffered for the past few years by international sanctions imposed by the West amid a dispute over Tehran’s nuclear energy program. In 2011, Iran was Peugeot’s largest market after France, accounting for more than 13 percent of the firm’s global deliveries.

Spooked by international sanctions, Peugeot left Iran in spring 2012. It sold 458,000 vehicles in the country in 2011.

Last April, the CEO of French carmaker PSA Peugeot Citroen held talks in Tehran with his Iranian joint venture partner to consider returning to the country.

“Fulfillment of the previous commitments, transferring technical know-how, mutual production of cars as well as selling Iran Khodro’s vehicles through the French exporting network were discussed and reviewed during the meeting,” Zareh said at the time.

Since sanctions were eased, PSA Peugeot-Citroen has been very eager to re-enter the Iranian market.  A new contract between Iran Khodro and Peugeot stipulates the creation of a joint venture in which the companies hold equal shares.

Renault, the other leading French automobile company, has also signed contracts with IKCO to start production of its popular Clio4 and Captur models.