Capital deficit, not sanctions, is major problem for Iranian automakers: official

Business Materials 31 December 2012 10:50 (UTC +04:00)

Azerbaijan, Baku, Dec. 31/ Trend G.Mehdi/

The main problem facing the Iranian car industry is not the international sanctions, but is the shortage of revolving capital, the Fars News Agency quoted Industrial Development and Renovation Organization's chairman Gholamreza Shafei as saying.

Iranian carmakers are manufacturing at 50 percent of their nominal capacity, he said. This is due to the shortage of capital, he added.

On December 18, ISNA quoted head of the union of Iranian car part makers Sasan Qorbani as saying that Iranian carmakers and car part makers have called for receiving financial facilities in order to give a boost to their outputs.

Most of carmakers and car part makers have not managed to receive foreign currency from the Forex Center, he said.

Prices of some certain raw materials have increased by 300 percent, he said, adding that the situation has led to a 50 percent fall in car production in the country.

The Central Bank has set the official rate of the dollar at 12,260 rials, while the street rate is currently at 30,200 rials and the Forex Center of Iran offers the dollar at 24,591 rials.

Iran's automobile market is highly protected against imports, allowing import of only 40,000 vehicles last year, despite steadily growing demand mostly met through domestic production of some 1.6 million cars per year.

Currently there is an estimated amount of 14 million vehicles in Iran - more than double of the six million registered in 2005.

Iran's car output in the first six months of the current calendar year (ended on September 21), fell by 42 percent compared to the same period last year.

On October 8, Iranian giant carmaker Iran Khodro (IKCO) increased its product prices by 10 percent, while the other Iranian carmaker, Saipa, boosted prices by 20 percent.

Decrease of domestic production and rise of import limitations as well as dollar price growth led to unprecedented increase in car prices in Iran.

On September 15, the ILNA news agency reported that prices of different cars increased by around 35 percent on the average since March 2011.

According to the report, supply has decreased but demand is still high.

Iran plans to manufacture at least three million cars by 2025 and export some one million sets, the Trade Minister Mehdi Ghazanfari said on June 16.