Automotive industry in Iran

Iran’s automotive industry is the 2nd most active industry of the country, after its oil and gas industry, accounting for 10% of Iran’s GDP and 4% of the workforce (700,000 persons). [1] [Two] [Three] [Four]

Iran developed a significant automotive industry with annual production of up to two hundred thousand units under the Shah’s regime. But after the Islamic revolution of one thousand nine hundred seventy nine production drastically decreased. Since the early 2000s, automobile production in Iran has grown exponentially. Iran’s automobile production crossed the one million mark in 2007/2008. Today, Iran is the 18th largest automaker in the world and one of the largest in Asia, with annual production of more than 1.6 million. [Five] In two thousand nine Iran ranked fifth in car production growth standing next to China, Taiwan, Romania and India. [6] According to OICA statistics, production dropped dramatically to under 750,000 automobiles and commercial vehicles in 2013. [7]

As of 2001, there were thirteen public and privately possessed 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 Peykan, which has been substituted in two thousand five 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. [8] Iran Khodro is one of the largest car manufacturers in Asia. It has established joint-ventures with foreign fucking partners on four continents.

The Iranian manufacturers presently produce six different types of vehicle, including passenger cars, 4WD, trucks, buses, minibuses, and pickup trucks. The sector directly employs about 500,000 people (toughly Two.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%. [9]

Contents

In the 1960s, lacking the technical know-how and incapable to produce its own automobiles, Iran invited western firms in order to commence a domestic automobile industry. Since then, Iran has developed its domestic industry where it can design and assemble cars on its own, including a fresh car factory in Kashan. The average operating margin of the five major Iranian automakers dropped by 1% from 13% to 12% in 2011. [Ten] The seven development phases of Iran’s automotive industry have been: [11] [12]

In 2008, IDRO reported that SAIPA accounts for fifty four percent and Iran Khodro for forty six percent of the output. [17] Albeit carmakers are listed on the stock exchange, the government still possesses about forty percent of both companies. [Legal] In July 2010, the government sold a further 18% stake in both Iran Khodro and Saipa for about $Two billion in total, bringing down its participation in both companies to about 20%. [Nineteen] [20] In August, both deals were cancelled by the Iranian Privatization Organization. No clear reason was given for the cancellation of the deals, but analysts believe that discontent over the prices at which the blocks were traded is the most likely reason. [21] Unofficial estimates put the sector’s debt to Iranian banks as high as one hundred trillion rials ($Four billion). [22]

The other car manufacturers, such as Azhitechs, [23] Bahman Group, Rakhsh Khodro, Kerman Motors, Kish Khodro, Raniran, Traktorsazi, Shahab Khodro, and others together produced only 6%. These automakers produce a broad range of automobiles including motorbikes, passenger cars, vans, mini trucks, medium-sized trucks, strenuous duty trucks, minibuses, large size buses and other strong automobiles used in commercial and private activities in the country. Iran Khodro Diesel has a superior market share (+70%) in bus, truck and van production. [1]

Iran with having a fleet of seven million passenger cars, buses and trucks ranked the world’s 16th largest automaker and one of the largest in Asia in two thousand six with annual production above one million units and 1.Trio million in 2009, [24] resulting in almost 1.Five percent of total world production of vehicles and one car per ten person. [9] By two thousand ten Iran’s fleet reached 11.Five million cars and fourteen million by two thousand fourteen (half of which are dilapidated). [22] [25] [26]

Sixty percent of passenger cars produced in two thousand eight will use natural gas as fuel or will be dual-fuel, and the remaining forty 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. [27] [28] Car production in Iran has enhanced 445% inbetween one thousand nine hundred ninety eight and 2008. [1] In July 2013, sanctions imposed by the USA prevented Iranian companies from importing the vehicle parts upon which domestic cars rely; this caused Iran to cede its place to Turkey as the region’s top vehicle manufacturer. [29] [30] [31] Because of sanctions on spare parts by France’s Peugeot and Renault, car production in Iran dropped by as much as 40% in two thousand twelve before recovering somewhat in two thousand fourteen following the Geneva interim agreement. [32] In 2014, Iranian car companies produced 1,090,846 cars and commercial vehicles, of which 925,975 were cars and 164,871 were other vehicles. [33]

More than half of the vehicles in Iran are over ten years old (2009). [34] 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 request. [9] According to estimates the request stood at 1.Five million vehicles in 2007, which could not be met by the local producers. [35] 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). [36] Previously buyers had been purchasing vehicles outright in cash, but now over half of all fresh car sales are through finance companies or on lease purchase schemes. [37]

Motorcycles Edit

There were more than eight million motorcycles in Iran by two thousand ten [38] and 1,500 motorcycles receive registration number plates each day. Motorcycles account for 30% of air pollution in Tehran. [39] Domestically manufactured motorcycles conform to Euro two standard and they don’t even use catalyst transducers while the world has now considered Euro five standard for motorcycles. [39]

Exports Edit

In two thousand seven Irans car exports stood at around $500 million. [40] Iran car exports reached $1 billion by March 2009. [41] Overall production is expected to rise to 1.13 million units by two thousand twelve ($200 million in exports expected by 2010) and 60,000 units exported by 2013. [42] [43]

Sapco and Sazeh Gostar are the respective purchasing arms of Iran Khodro and Saipa (the two largest Iranian auto manufacturers). [Four] The Iranian automotive parts industry consists of approximately one thousand two hundred 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. [44] Over thirty nine countries purchase Iranian auto parts (2008). [9] [45] As of 2014, ten tire manufacturing units are operating across the country with a production capacity of 240,000 tons per annum. They meet seventy percent of the domestic tire request (11 million tires per year). [46] As of 2015, 60% of auto spare parts in the Iranian market are imported from foreign countries. [47] Most cars are produced in Iran under licence from foreign manufacturers and it depends on them for critical imports, ranging from airbags to computer chips (incl. engine control units and sensors). [48] [49]

Research and development Edit

There are different ongoing R&D projects both at the governmental and private sectors. These projects research are mostly aimed at local market of Iran and its particular problems. Fresh lines of locally designed and manufactured diesel, gasoline and dedicated CNG engines are being developed. There are also some research being done on hybrid and electrified vehicles for the future Iranian market. In addition to this nanotechnology is being researched for introduction into production lines in order to improve the quality standards and customer satisfaction by suggesting anti-bacterial seats, anti-scratch paint, hydrophobic glass panes, maintenance-free air filters, anti-stain dashboards, nano-catalytic converters and nano-diamond containing lubricating oils. [50] [51]

In 2011, the Nanotechnology Initiative Council announced plans to export to Lebanon a series of ‘home-made’ nano-based engine oils manufactured by the Pishgaman–Nano-Aria Company (PNACO); these nano-based oils reduce engine erosion, fuel consumption and engine temperature. In 2009, researchers at Isfahan University of Technology developed a strong but light nanosteel as resistant to corrosion as stainless steel for use in road vehicles but also potentially in aircraft, solar panels and other products. [52] [30] [31]

As of 2016, Iran had no known R&D project in the field of autonomous cars.

There are over twenty five automakers in Iran, actively producing both light and strong 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 strenuous vehicles such as Renault (France), BMW, Mercedes Benz (Germany), Daewoo and Hyundai (South Korea) have emerged since 1991. [9] [26] [44] Italian carmaker Fiat has also announced of plans to begin production of its Siena sedan in Iran in 2008. [42]

Chery Automobile (China) in August two thousand seven entered into a US$370m joint venture with Iran Khodro, Iran to produce cars for West and South Asian markets. Chery Automobile is to hold 30% of the venture, and Khodro will hold 49%. Solitac, a Canadian front company, is to hold the remaining 21% of the venture. The factory will be in the Iranian city of Babol. [53] Anhui Ankai Automobile (also of China) signed a deal in January two thousand eight with ARG-Diesel Iran to supply it with six hundred buses, valued at €51.35m. The deal is to be finish by October 2008. [53]

Iran annually needs some Four,000 buses for its domestic transportation. Since the 1970s, Iran has been producing a number of different buses, such as German Mercedes and MAN as well as Swedish Scania and Volvo that it has exported across Asia. [54] 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 ended by March 2010, would have a production capacity of Two,000 buses per year and would produce some eight hundred city and intercity buses in the eighteen 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 sixty percent of the parts would be made. [54]

Since two thousand sixteen and the lifting of the international sanctions, almost forty foreign automakers, including Peugeot, Mercedes, and Toyota, are considering using Iran as a hub for their ME and regional exports. [55]

Imports Edit

Car imports have risen, from $184 million in two thousand two to $1.Five billion in 2007. [41] In 2006, the government lowered the automotive import tariff levels to ninety percent for light weight vehicles and since then a fat influx of imported vehicles has been witnessed in the country. [26] The tariff level for import of strenuous vehicles is even lower at twenty percent, due to low levels of local production and high request. As a result, a multitude of automotive brands are being presently imported into Iran including Toyota, Nissan, BMW, Mercedes Benz (these three being the expensive and/or luxury brands), Rover, Ssangyong, Audi, Subaru, Volkswagen, Renault, SEAT Leon and multitude of intense vehicles, construction and mining equipment from leading manufacturers such as Mercedes Benz, Renault, Iveco, MAN, Kamaz, Caterpillar, Kawasaki. [26]

Following the lifting of international sanctions, French car manufacturer Renault imported over 93,000 cars (fully built and CKD units) to Iran in 2016. [56]

As of two thousand fifteen [update] , Iran has Trio,200 gas stations for fifteen million automobiles. [57] Request is supported by the fixing of fuel prices well below market levels. There are two pricing schemes for petrol, one subsidized the other not. Each month, qualified vehicle owners are allocated a specific number of subsidized liters of petrol (taxi’s have a significantly higher allocation). The cost of regular unsubsidized petrol in Iran is IR7,000/liter (approximately thirty seven US cents/liter) and premium grade petrol IR8,000/liter, whereas the subsidized equivalents go for IR4,000/liter and IR5,000/liter, respectively. [ citation needed ] 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. [9] Some 1.8 billion liters of oil products worth ten trillion rials ($1 billion) are smuggled out of Iran per annum. [58]

Given Iran’s limited refining capacity, there has been a shortfall in petroleum products in latest years, requiring Iran to import an estimated 100,000 barrels per day (16,000 m three /d) 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 coerced to take activity in June two thousand seven when it announced both a petrol increase to twelve cents/litre and the imposition of fuel rationing, much to the chagrin of vehicle owners. The policy, which allocates one hundred twenty litres maximum per month (following revisions in December) to private car owners, will run until end-2008/09. [9]

CNG Edit

In two thousand eight and 2009, Iranian government spent over three billion dollars on CNG infrastructure as part of its plan to convert its fuel policy from gasoline to CNG. [59] Iran, with the world’s second-largest natural gas reserves after Russia, in two thousand eleven became the world leader in natural gas vehicles with some Two.9 million on the road, narrowly edging Pakistan, which is trailed by Argentina, Brazil and India, respectively. (The United States, which does not subsidize and promote the fuel like other countries do, ranks 16th.) [60] Iran has 1,262 vehicles per refueling station compared with eight hundred fifty six vehicles per refueling station in Pakistan. [60]

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