Iranian carmakers owe 200M rials to spare parts manufacturers

Business Materials 7 May 2019 18:22 (UTC +04:00)

Baku, Azerbaijan, May 7

By Elnur Baghishov – Trend:

Iranian carmakers owe about 200 trillion rials ($4.76 billion per the official exchange rate, $1.34 billion in the black market) to companies manufacturing spare parts, Babak Karimkhan, chairman of the Kermanshah branch of Iranian Specialized Manufacturers of Auto Parts Association, told ISNA, Trend reports.

According to Karimkhan, Iran's car parts manufacturers have a number of problems. One of these problems is that the debts owed to them remain unpaid.

He added that the raw materials needed by spare part manufacturers are mainly supplied via imports. "At present, restrictions on foreign currency and its transit have made it difficult to provide manufacturers with raw materials," he said.

At the same time, the rise in the prices of raw materials has created more problems for these producers, according to Karimkhan.

"All these reasons will force the spare parts manufacturers to reduce the scope of the work. If this situation persists, businesses will lay off their employees," he said. This, in turn, threatens some 350,000 to 400,000 people employed in the spare part manufacturing industry in Iran, he added.

Karimkhan went on to say that the manufacturers can not continue the production without money. This has led to a large number of cars remaining in factories due to a lack of spare parts. According to his calculations, the number of vehicles manufactured by Iran's two carmakers (Irankhodro and Saipa) and left without necessary spare parts is about 160,000.

Commenting on the possible ways out of the current situation, Karimkhan said that relations with Europe and Asia in this field should be normalized, and (at least) financial relations with these countries should be improved.

In his view, the government should support producers and provide loans for them to enable the carmakers to pay a portion of the debt they owe to spare parts manufacturers.