Expert: Iran's auto part makers need liquidity

Tehran, Iran, Sept.23

Trend:

The rise of foreign currency rate affected the costs of auto part manufacturing and eventually Iran's auto industry that requires liquidity, said a member of Board of Directors of Iranian Automotive Parts Manufacturers Association Mohammad Reza Najafi told Trend.

"Currently, the auto part makers do not have liquidity to provide the parts to auto makers," he said.

In his words, it was expected that the Central Bank of Iran would provide 110 billion rial (around $2.6 billion) to help auto part makers in last Iranian year (started March 21,2018).

"Total of 4,000 billion rial (around $952 million) and €844 million was expected to be paid by the end of the last year, but on;y 3,850 billion rial (around $916 million) from this figure was actually paid to auto part makers and no foreign currency was provided so far," he indicated.

"The government will eventually provide the foreign currency, but it has been said that they will calculate the amount based on daily foreign currency rate. Considering the past experience, the auto part makers have asked for equivalent in rial, and not in the foreign currency, but the issue still was not addressed," he said.

"If the process of providing the advances was completed in February 2018, today there will not be incomplete autos that have caused 22 percent production cut. Auto part makers cannot be active when the liquidity is not provided," he added.

"In all countries, there is a mechanism of insurance exports goods; if the other side does not pay the costs of exports, the money is paid by the insurance. This mechanism should also be implemented in auto production," he indicated.

“Banks and financial system provide 85 percent of finances needed by automakers in America," he said referring to necessity of more financing in auto part industry.

"Today, the foreign currency rate has been tripled and all the costs including those for raw materials have grown accordingly; hence the expenses of the auto part makers and auto makers have tripled, then the volume of advances should also grow by three times more and by provided to the industry by bail to improve the production," he added.

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