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Iran's automobile production crossed the 1 million mark in 2005. Iran Khodro is the largest car manufacturer in the Middle-East. It has established joint-ventures with foreign partners on 4 continents.

Iran’s automobile industry is the second most active industry of the country, after its oil and gas industry.[1]

As of 2001, there were 13 public and privately owned automakers in Iran, of which two - Iran Khodro and Saipa - accounted for 94% of the total domestic production. Iran Khodro, which produced the most prevalent car brand in the country - the Paykan, which has been replaced in 2005 by the Samand -, was still the larger with 61% of the market in 2001, while Saipa contributed 33% of Iran’s total production in the same year.[2]

The Iranian manufacturers currently produce six different types of vehicle, including passenger cars, 4WD, trucks, buses, minibuses, and pickup trucks. The sector directly employs about 500,000 people (roughly 2.3% of the workforce), and many more in related industries. About 75% of local output is passenger cars, with pick-ups the next largest category, accounting for around 15%.[3]

Contents

Development

The 6 phases of Iran’s automotive industry:[4]

1. Assembly 1969 – 1989
2. Spare Parts Industry Development 1990 – Present
3. Auto Design 1975 – Present
4. Mass Production 1975 – Present
5. Establishing Export Bases 2006[5][6] – Present
6. Mass Auto Export 2008[7] – Present

Market and domestic production

Runna is the third Iran-made car. Features include airbags, antilock brakes, power steering and power windows.

In 2008, IDRO reported that SAIPA accounts for 54 percent and Iran Khodro for 46 percent of the output.[8] Although carmakers are listed on the stock exchange, the government still owns about 40 percent of both companies.[9]

The other car manufacturers, such as the Bahman Group, Kerman Motors, Kish Khodro, Raniran, Traktorsazi, Shahab Khodro, and others together produced only 6%. These automakers produce a wide range of automobiles including motorbikes, passenger cars, vans, mini trucks, medium sized trucks, heavy duty trucks, minibuses, large size buses and other heavy automobiles used in commercial and private activities in the country.

Iran with having a fleet of 7 million passenger cars, buses and trucks ranked the world’s 16th biggest automaker (largest in the Middle East) with production above 1 million units in 2006 (1.3 million in 2009),[10] resulting in almost 1.5 percent of total world production of vehicles.[3] Sixty percent of passenger cars produced in 2008 will use natural gas as fuel or will be dual-fuel, and the remaining 40 percent will run on regular gasoline (2008). Some problems faced by the industry are slow deliveries of cars, lack of after sales services and low quality in the production of some cars.[11]

Samand's Iran-made engine "L3"

More than half of the vehicles in Iran are over 25 years old (2007).[12] The government has sought to upgrade the local fleet and the authorities aim to pull some 200,000 outmoded vehicles off the road each year, underpinning demand.[3] Auto manufacturing industry's share in gross national product is two percent and Iran's auto production rate in the global markets is 1.7 percent (2008).[13]

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Exports

In 2007 Irans car exports stood at around $500 million.[14] Iran car exports are projected to reach $1 billion by March 2009.[15] Overall production is expected to rise to 1.13 million units by 2012 ($200 million in exports expected by 2010) and 60,000 units exported by 2013.[16][17]

Auto parts

Sazegostar and Sapco, are the respective purchasing arms of Iran Khodro and Saipa (the two largest Iranian auto manufacturers). The Iranian automotive parts industry consists of approximately 1200 companies (15,000 factories), which include those affiliated to vehicle manufacturers as well as independent firms. The industry consists of two primary sectors: Original Equipment Manufacturing (OEM) suppliers, which produce parts for auto makers, and After-Market Parts Manufacturers (AMPM), which produce replacement parts for vehicles. [18] Over 39 countries purchase Iranian auto parts (2008).[19][3]

Foreign direct investment and imports

Mercedes-Benz E Class is produced in Iran by Iran Khodro

There are over 25 automakers in Iran, actively producing both light and heavy vehicles. These automakers are in joint venture with several popular international automakers such as Peugeot, Citroen (France), Volkswagen (Germany), Nissan (Japan), Toyota (Japan), Kia Motors (South Korea), Proton (Malaysia), Chery (China) and many other established producers of light and heavy vehicles such as Renault (France), B.M.W, Mercedes Benz (Germany) and Daewoo and Hyundai (South Korea) have emerged since 1991.[20][21][3] Italian carmaker Fiat has also announced of plans to begin production of its Siena sedan in Iran in 2008.[22]

Chery Automobile (China) in August 2007 entered into a US$370m joint venture with Iran Khodro, Iran to produce cars for the Middle East. Chery Automobile is to hold 30% of the venture, and Khodro will hold 49%. Solitac, a Canadian designer of car-parts, is to hold the remaining 21% of the venture. The factory will be in the Iranian city of Babol.[23] Anhui Ankai Automobile (also of China) signed a deal in January 2008 with ARG-Diesel Iran to supply it with 600 buses, valued at €51.35m. The deal is to be complete by October 2008.[23]

Iran annually needs some 4,000 buses for its domestic transportation. Since the 1970s, Iran has been producing a number of different buses, such as German Mercedes and Mann as well as Swedish Scania and Volvo that it has exported throughout the Middle East.[24] Daewoo Bus Corp. and an Iranian automaker Ardebil Sabalan Khodrow-Maywan have teamed up to build buses in Iran. The plant, which is slated to be completed by March 2010, would have a production capacity of 2,000 buses per year and would produce some 800 city and intercity buses in the 18 months after its inauguration. Based on the agreement, the engines and gearboxes would be manufactured in South Korea. But production would increasingly shift to Iran, where about 60 percent of the parts would be made.[25]

Imports

Car imports have risen, from $184 million in 2002 to $1.5 billion in 2007.[26] In 2006, the government lowered the automotive import tariff levels to 90 percent for light weight vehicles and since then a huge influx of imported vehicles has been witnessed in the country.[27] The tariff level for import of heavy vehicles is even lower at 20 percent, due to low levels of local production and high demand. As a result, a variety of automotive brands are being presently imported into Iran including Toyota, BMW, Mercedes Benz (these three being the expensive and/or luxury brands), Rover, Ssangyong, Audi, Subaru, Volkswagen, Renault Leon, Altea variety of heavy vehicles, construction and mining equipment from leading manufacturers such as Mercedes Benz, Renault, Iveco, Mann, Kamaz, Caterpillar.[28]

Fuel rationing

Demand is supported by the fixing of fuel prices well below market levels. Regular petrol in Iran costs IR800/litre (9 US cents/litre) and premium grade petrol IR1,100. The nation's abundant oil reserves have enabled the government to keep prices low (Iran is the second-largest exporter in OPEC). However, low prices have encouraged wasteful consumption and the smuggling of petrol into neighbouring countries such as Turkey, Pakistan and Afghanistan.[3] Some 1.8 billion liters of oil products worth 10 trillion rials ($1 billion) are smuggled out of Iran per annum.[29]

Given Iran's limited refining capacity, there has been a shortfall in petroleum products in recent years, requiring Iran to import an estimated 100,000 barrels/day in 2006/07. As a result, there is a recognition among many policymakers of the need to raise prices, and gradual increases have been implemented. However, these have tended to lag the prevailing rate of inflation, and given that raising petrol prices is politically difficult the provision of cheap fuel is likely to persist in the medium term, encouraging the purchase of vehicles. The government was nevertheless forced to take action in June 2007 when it announced both a petrol increase to 12 cents/litre and the imposition of fuel rationing, much to the chagrin of vehicle owners. The policy, which allocates 120 litres maximum per month (following revisions in December) to private car owners, will run until end-2008/09.[3]

Perspective

Iran Automotive Forecast (Source: EIU)[3] 2007 2008 2009 2010 2011 2012
New passenger car registrations ('000) 1,294 1,447 1,563 1,669 1,806 1,962
Stock of passenger cars (per 1,000 population) 94 107 119 133 146 159

Like other sectors, the automotive industry is suffering from a lack of foreign direct investment (FDI) and capital imports. The privatization process is moving extremely slowly (2008). International sanctions, high inflation, exacerbated by fuel price hikes, and dampened consumer demand have depressed growth in the passenger car segment, but industrial growth coupled with infrastructural development is spurring demand in the commercial vehicles segment. Iranian automotive market will contract in the 2008/09 Iranian year (running from 20 March) and that annual domestic sales are unlikely to exceed 1mn units over the next five years.[22]

List of cars produced and assembled in Iran

See also

References

  1. ^ http://www.atiehbahar.com/Resource.aspx?n=1000042
  2. ^ SAPCO: Iran Automotive Industry’s Market Shares (September 2001) Retrieved November 14, 2008
  3. ^ a b c d e f g h "Iran Automotive Forecast", Economist Intelligence Unit, August 18, 2008  
  4. ^ http://web.archive.org/web/20080617154335/http://www.atiehbahar.com/Resources/Automotive.htm
  5. ^ http://www.digitaljournal.com/article/259354
  6. ^ http://www.payvand.com/news/08/apr/1101.html
  7. ^ http://www.payvand.com/news/08/oct/1227.html
  8. ^ http://www.iran-daily.com/1387/3267/html/economy.htm
  9. ^ http://www.iran-daily.com/1387/3281/html/economy.htm
  10. ^ Iran Daily - Domestic Economy - 06/12/07
  11. ^ Iran Daily - Domestic Economy - 06/15/08
  12. ^ http://iran-daily.com/1386/2865/html/economy.htm
  13. ^ http://www2.irna.ir/en/news/view/menu-234/0811250265191822.htm
  14. ^ http://www.iran-daily.com/1387/3317/html/economy.htm
  15. ^ Payvand:Iran car exports projected to reach $1b by March Retrieved October 24, 2008
  16. ^ http://www.companiesandmarkets.com/Summary-Market-Report/Iran-Autos-Report-Q4-2008-52871.asp
  17. ^ http://www.iran-daily.com/1388/3479/html/economy.htm
  18. ^ http://www.atiehbahar.com/Resources/Automotive.htm
  19. ^ http://www.iran-daily.com/1387/3287/html/economy.htm#s349554
  20. ^ http://iran-daily.com/1386/2865/html/economy.htm
  21. ^ http://www.atiehbahar.com/Resources/Automotive.htm
  22. ^ a b http://www.companiesandmarkets.com/Summary-Market-Report/Iran-Autos-Report-Q4-2008-52871.asp
  23. ^ a b "COUNTRY BRIEFING: Iran", Licensing and intellectual property, Economist Intelligence Unit, 19 Mar 2008  
  24. ^ http://www.forbes.com/feeds/ap/2009/04/30/ap6360229.html
  25. ^ http://www.forbes.com/feeds/ap/2009/04/30/ap6360229.html
  26. ^ Payvand:Iran car exports projected to reach $1b by March Retrieved October 24, 2008
  27. ^ http://iran-daily.com/1386/2865/html/economy.htm
  28. ^ http://iran-daily.com/1386/2865/html/economy.htm
  29. ^ http://www.iran-daily.com/1385/2597/pdf/i3.pdf

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