Baku, Azerbaijan, Jan. 26
By Farhad Daneshvar – Trend:
Iran’s economic policymakers appear to consider the automotive industry as a major engine of economic growth as it is a main industrial and economic force worldwide.
Iranian automotive industry is projected to form at least 4 percent of the country’s economic growth by 2025.
The country’s carmakers accounted for 2.2 percent of Iran’s economic growth over the last fiscal year (ended March 20, 2016) with a contribution of about $9.1 billion (294 trillion rials).
According to World Bank estimations, Iran’s gross domestic product (GDP) in 2015 stood at $393.7 billion.
This is while Iran’s car industry in 2015 witnessed a downward trend as the industry’s share in the country’s GDP was 0.5 percent lower than in preceding year.
However, the latest statistics on the output of the country’s automotive industry suggest a huge surge. The industry made more than 946,000 vehicles over the first nine months of the current fiscal year, indicating a 38.7 percent growth year-on-year.
Due to the removal of sanctions following the implementation of the nuclear deal, Iranian car manufacturers reestablished cooperation with European companies, including Peugeot, Citroen and Renault. This resulted in a strong growth of nearly 151 percent for automotive sector, which ended 2016 as the top performing sector on the Tehran Stock Exchange.
In the meantime, at least two European carmakers have earlier announced that they experienced a considerable surge in their sales in Iran over 2016.
On the other hand, multinational companies have demonstrated a surge in interest in investment in Iran’s car sector following the implementation of the nuclear deal between the Islamic Republic and the world major powers in January 2016.
Coming to shortcomings, Iran Standard and Quality Inspection Company has highlighted the vulnerability of the industry, i.e. substandard products.
According to Iran Standard and Quality Inspection Company, at least 11 car brands produced by domestic carmakers in a period of one month between Nov. 21 and Dec. 21, 2016 did not meet the required standards.
Economic experts suggest that the automotive industry is capable of giving boost to the country’s depressed economy and creating new job opportunities as each direct auto job supports more indirect jobs.
Meanwhile, a number of sub-sectors of economy, including industries such as steel, iron, aluminum, glass, plastics, glass, carpeting, textiles, computer chips, rubber and more are linked to the automotive industry.
Observers and economic experts believe that increasing the automotive industry’s share in the country’s economic growth to about 5 percent is realistic, if the policymakers and industry officials come up with a well-laid plan for the coming years.