Five reasons why Iran's car manufacturing suffers blow after blow

Iran Materials 27 November 2012 13:23 (UTC +04:00)
Iran's car manufacturing business has been diminishing for some time now, and there are five major reasons why it continues to suffer blow after blow.
Five reasons why Iran's car manufacturing suffers blow after blow

Azerbaijan, Baku, Nov. 27 /Trend/

Trend Commentator S. Isayev

On Nov. 27 the ISNA news agency reported that several car companies in Iran have halted their production, which caused the amount of car brands in Iran to diminish.

Iran's company for quality and standard inspections revealed the October statistics for car manufacturing quality in the country, which were less than satisfactory.

The report included research on 19 car brands in Iran, the number of which was 25 several months ago.

Such car brands as Nissan, Peugeot (sedan and hatchback), Toyota for several reasons, stopped their car manufacturing in Iran several months ago.

Because French Peugeot Company and Iran Khodro stopped the co-operation, the manufacturing of Peugeot 206 in Iran has stopped. As for Nissan's Maxima brand, the giant car manufacturer from Japan halted its business in Iran after 11 years.

However, in both cases with Nissan and Peugeot, several models are still being sold in Iran, such as Peugeot's 405 model, and Nissan's Teana.

The report said that aside from Nissan and Peugeot, such car brands as Chinese Lifan, Mazda, Suzuki, and Hyundai are still being manufactured in Iran.

They add up to Iran's own car brands, such as Samand, Peugeot Pars, Thunder 90.

Online news sources have revealed that Iranian car manufacturing has drastically diminished within just one year.

In October 2012, ISNA reported that car production in Iran fell by 66 percent in September 2012, compared to same month of 2011.

Considering the intense, pressuring international sanctions on Iran because of its nuclear program, many car manufacturing companies such as Fiat and General Motors, who had a significant market for Iran, stopped sending car parts to the country.

Consindering the fact that many car brands have left Iran, and Islamic Republic's unstable foreign currency rate, the number of people willing to buy cars has significantly diminished as well.

ILNA reported recently that the average car prices in Iran have increased in September 2012 by some 35 percent since March 2012.

The unstable foreign currency rate and the absense of many international car manufacturing brands forced Iran's own car manufacturers to increase prices, as Iran Khodro increased its prices on cars by 10 percent, while Saipa - by 20 percent.

Thus, there are five major reasons for Iran's car manufacturing sector diminishing.

- unstable foreign currency prices at Iran's open markets
- foreign car companies no longer deliver car parts to Iran because of sanctions
- allocation of subsidies for automotive industry stalled
- raw material prices increased
- government does not provide financing for car parts manufacturing

All of the factors above have led to many car manufacturing units in Iran being closed down, or substantially reduced their productivity.

Iranian automakers say that if the situation does not change in the near future, Iran's car industry might suffer further, which can eventually lead up to 80-90 percent downfall in car manufacturing.

With participation from T. Jafarov