The choice of cars available to Iranian customers has shrunk over the past year after the US reimposed harsh sanctions against Tehran.
Almost all foreign partners of Iranian carmakers pulled out of the country after US sanctions targeted Iran’s automotive industries.
Even international auto parts makers with decades-old ties with Iran halted sales to Iranian firms, as the US embargo threatened the former’s access to American markets and disrupted the latter’s global banking relations.
As a result, even if a foreign firm wanted to work with domestic companies, Iranian payment for the goods and services couldn’t get through.
All these have taken a harsh toll on Iran’s auto manufacturers and assemblers.
According to Financial Tribune’s sister newspaper, Donya-e-Eqtesad, the production of 20 car models has been halted over the past year.
Some of the cars, which were largely assembled in Iran, such as Renault’s Sandero and Sandero Stepway, as well as Suzuki’s Grand Vitara, stopped rolling out of Iran Khodro.
IKCO also makes several Chinese Haima and Dongfeng models. The company is yet to announce whether it be able to sustain the production of these models. Industry insiders say their production rates have been declining rapidly.
The firm also makes several Peugeot models, including 405, 206 and 2008. Reportedly, IKCO will be able to sustain the production of 206 and 405 since it has been making them for decades and only relies on the foreign supplier for some of the key parts. However, the CKD production of 2008 will most likely end.
Iranian car company SAIPA also used to make several models in collaboration with China’s Brilliance Auto and South Korea’s Kia. The production of these cars has been halted.
SAIPA subsidiary Pars Khodro also used to make Renault Sandero and Logan. The production lines of these cars have also stopped.
South Korea’s Hyundai Motor also had a deal with Iranian private carmaker Kerman Motor and Hyundai i10 and i20 were manufactured in Iran. That partnership has been suspended.
Several other Chinese brands were assembled by private Iranian automakers. BYD, Great Wall, MG and Lifan have totally stopped their production activities in Iran.
Poor Performance
Despite an automotive background of nearly six decades and a four-decade-long history of auto management since the 1979 victory of the Islamic Revolution, the sector has remained under state control and failed to stand on its own feet.
The highly monopolized sector, which has prevented the entry of affordable imports, is chronically bankrupt, despite extracting exorbitant prices for its substandard products from presales.
Since June 2018, Iran’s auto production has been plummeting.
Data released by the Industries Ministry show that the decline has continued in the second month of the current fiscal year (ended May 21). Since past four months, the ministry has stopped releasing auto production stats, leaving analysts in the dark.
Iranian carmakers produced 87,821 cars and commercial vehicles in the month ending May 21, registering a 16.1% decline compared with a combined output of 104,684 units in the corresponding month of the year before.
According to the old data, car production dropped 17.3% compared to the previous year to reach 81,418 units.
Iranian firms manufactured 185,478 cars and commercial vehicles during the first two months of the last fiscal year, which figure plummeted to 140,917 this year.
As long as the Iranian automotive sector lacks an efficient strategy and accountability, it will remain in a tunnel without any ray of hope.
