Iran's automakers hope for gov't help to pay off debts to car part makers

Business Materials 1 February 2019 17:37 (UTC +04:00)

Tehran, Iran, Feb.1


One of the crises that the Iran automotive industry faces today is the unpaid demands of the car part makers.

The problem has led to reduction in production of car parts and further - to decline in employment in this sector. As a result of debts, some car maker companies in Iran had to sell their equipment to banks.

"The government has decided to allocate some $9.5 billion to the country's two biggest state-owned carmakers, and it was expected that 85 percent of that sum would be used to pay off debts," Farhad Behnia, the spokesman of the Iranian Auto Parts Manufacturers Association told Trend.

"However, Saipa, has yet answer to its car part makers due to changes in its management," he said.

When asked about the exact amount that the automakers owe to the car part makers, he said there's no exact figure.

"Some car part makers provided information, others didn't, but the estimated amount is about $3.5 billion," Behnia said.

He went on to add that due to the situation, the production cost of one car part has increased by about 100 percent.

Speaking about whether all of the debts will be paid, Behnia said many pin hopes that they will, however, there are some issues.

"If the Central Bank suddenly decides not to grant any money to automakers, then no debts will be paid," he said.

At the same time, he mentioned another Iranian aut0maker - Iran Khodro, which, reportedly, said to be paying off its debts to car part makers.

"The car part makers have reduced their production capacity due to lack of liquidity, and if the car makers want to succeed in delivering pre-sales vehicles, the first solution is to increase the production of parts and components," Behnia said.