Lack of private sector in Iran's car industry - reason for low quality cars?

Business Materials 16 May 2019 15:17 (UTC +04:00)

Tehran, Iran, May 16


The price hike in Iran's auto industry still continues due to the US sanctions and the rise of foreign exchange rate, and some experts believe that transferring the state owned companies to private sector can solve the problem.

"One of the major issues is that Iran does not have a national auto," Jamshind Pajoyan, the former head of Iran's National Competition Council said.

"Iranian automakers are still selling vehicles that were manufactured 40 years ago, the models didn't improve. If some models did improve, it is only in appearance, and they don't follow new international quality standards," he said.

He went on to say that the costs for domestic automakers are high since some of their investments aren't profitable.

"The lack of private sector in this industry is the reason for bad quality of vehicles," he said. "Privatization should be implemented in the auto industry and the management should be chosen by the shareholders not ministers."

Following the re-imposed new US sanctions against Iran, car prices have increased alongside other commodities while demand for purchasing cars had increased due to national currency devaluation in Iran.

Auto production in Iran has also dropped sharply, as the import of raw materials and auto parts faced increasing restrictions.