Three major problems have reduced the domestic production of automotive spare parts in the current fiscal year (started March 21).
Delays in the payment of spare parts manufacturers’ dues, foreign currency allocation and price adjustment are the three main problems that have beleaguered the automotive component and spare parts industry, the secretary of the Iranian Association of Parts Manufacturers said.
“Unfair price adjustment delayed by several months is one of the major issues currently troubling parts producers,” Mansour Mansouri also told the Persian automotive daily Donyaye Khodro.
“The increase in the factory prices of cars is half the growth in the open market price. This is not considered price adjustment. Therefore, parts manufacturers have to receive half the increase in car prices,” he added.
The secretary noted that the lack of forex allocation for the import of raw materials is hindering production.
“We have deposited money in the bank for two months [to receive foreign exchange for imports], but the banks do not accept any responsibility and direct the currency applicants to foreign exchange offices,” he said.
“The foreign exchange is being supplied to parts manufacturers at a higher price, but these factors are taken into consideration by car manufacturers.”
According to Mansouri, the production of car parts declined last week mainly because manufacturers could not clear their goods from customs.
“Because we cannot provide the currency needed for imports, we cannot clear the needed materials. At present, we can neither get the SATA code, nor complete the customs clearance process” he said.
The SATA code is the goods’ customs declaration permit that is issued when the origin of the currency is approved by the Central Bank of Iran.
Referring to other challenges in the auto parts industry, Mansouri said the sale method of cars is another challenge impacting the spare parts industry.
“Nowhere in the world do we have a ministry that functions like the sales organization of automobile manufacturers. We are surprised that the sale is being handled by the Ministry of Industries, Mining and Trade,” he said.
“Even customers do not have sufficient information about the prices of the products that they are buying. Those who have registered for a car in the national online car ordering portal in the current fiscal year and are going to receive them next year are clueless about the prices.”
Mansouri said the two parameters of production and sale are determined by the ministry.
“Due to its unreasonable interference, the ministry has created problems for both car producers and parts manufacturers, and on the other hand, people are also dissatisfied with the current condition of the automotive market.”
Brake-Pad Producers Cry Foul
Masoud Hassanpour, secretary of Iran's Brake-Pad and Clutch Manufacturers Association, told Donyaye Khodro that brake-pad producers are facing production problems, as the supply chain of raw materials has run aground.
He stated that the main problems of brake-pad manufacturers pertain to import order registration for raw materials and currency allocation, which should be completed before undergoing the customs procedures.
“Many raw materials are either not available in the country, or do not meet the needs of producers. We are also having problems in procuring foreign exchange for imports,” he said.
"When the producer or the import company registers its order, it has to wait for the currency allocation, while there is no currency. According to the rules, the company has one month to furnish the currency after placing an order.”
Hassanpour noted that producers must block 5% of the import order value in their bank accounts.
“If one month passes and the manufacturer wants to extend it by one more month, it should block an additional 10% of the order’s value. This is while producers are facing a liquidity crisis and this 15% becomes considerable,” he said.
"Currently, we are seeing a big crisis in the manufacturing sector and I think it will show its impact in the next five or six months. The number of products in the market will decline due to disruption in the supply of raw materials."
According to the official, imported and smuggled brake pads meet 30-40% of domestic needs.
“While domestic production can meet the market demand for brake pads, imported and smuggled parts constitute 30-40% of the domestic market,” he said.
“Since the market is aflush with imported brake pads, there is no demand for the domestic product. As there is no incentive, production has declined and it is lower than the domestic capacity. About 60-70% of domestic products and 30-40% [20,000-30,000 tons] of imported and smuggled goods meet the 75,000-ton demand of the Iranian market.”
Hassanpour said the domestic brake-pad production capacity currently exceeds 100,000 tons.
