Government - main obstacle for privatizing Iran's auto industry

Tehran, Iran, March 2

By Mehdi Sepahvand - Trend:

On March 2, Iranian President Hassan Rouhani called for privatizing the country's auto making industry, which has suffered a lot through the years, including from the sanctions imposed on Iran.

High tariffs on imported cars and governmental support behind big factories, which by the way are more of assemblage plants, have made the competition meaningless for years, forcing people to buy a limited variation of cars that have been flooding the market for decades.

Acting on the best of intentions, the government led things to where they are, yet surprisingly, Rouhani was the one to criticize the country's policy over the past decades and urged all officials involved in the car making industry to make efforts to satisfy the customers.

"We cannot close the doors and make people buy home-made cars," Rouhani said.

If by saying so Rouhani has detached himself from the professional position and expressed a public hope, there are a number of issues worthy of attention if one means to find a way out of the situation.

First of all, the government needs to abandon supporting present giant car makers the way it's used to.

If it weren't for governmental help in times of crisis, big factories such as Iran-Khodro or Saipa would not have endured so far, Ruhollah Talebi, faculty member at Iran University of Science and Technology, School of Automotive Engineering, told Trend March 2.

"Want it or not, to be able to compete in the world we need privatization. If tariffs on imports were somehow moderated, then you could see none of the cars present in the market attract people. And we need to be a giant world car maker if we want to go on," he noted.

"However, this is not an overnight job. Overnight actions will damage the country. The government needs to offer support, but a soft, long-term one; and it comes with great cost. We should see in what areas we have privileges. Maybe we could be good part makers and should abandon making cars altogether," he said.

However, privatizing the industry is not easy. First of all, the two big car makers in the country have million of employees. One little disturbance in their business will cause great labor crisis. If the government doesn't cover this, great social crisis will emerge.

In late 2015, when a months-long viral social campaign against the Iran-made cars brought the local car-making industry to its knees, the government offered loans to encourage people to buy cars from companies that had a decrease in production.

The other problem is the overwhelming influence of the leading car makers throughout the country.

"If we do not care, we will once more undergo the bitter experience of the past," Talebi underlined.

What was summarized above may seem to be no more than a couple of factors hindering privatization of the auto industry in Iran, but to eliminate them in the business atmosphere means having to handle so many convoluted and inter-related facts that only a well-organized, country-wide effort is needed to reach the point so desired by all, or at least most in the country.

Mehdi Sepahvand is Trend's correspondent in Tehran, Iran

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