Iran Economy News Car Import and Assembly Mafia in Iran

Car Import and Assembly Mafia in Iran

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The automotive industry in Iran is the second largest industry in the country after the oil industry; but the position of the Iranian car industry among its peers in the world is not very admirable and so far, it has not even been able to win the title of a second-class car manufacturer.

Inside the country, several names came up and went and carried the name of ‘national car,’ but it did not work. Peykan, Renault, Pride, Samand, Dena, Rana, Tiba and Saina are different names of an assembly industry, some of which have reached the end of their lifespan.

‘Most of the automotive industry in Iran has been assembling products of larger global companies during its years of activity. Even now, most assembled cars are made in China. It can be said that the history of cars in Iran has never been able to be as fruitful as it should be and has always failed to compete with other countries for internal or external reasons.” (State-run website Divar, August 19, 2020).

The Iranian government in the administration of the assembled automobile industry has always faced the fluctuation of life and death of factories that make a living from the pockets of the people or the treasury of the country with the intention of making exclusive profits for its owners and managers.

The cooperation of the Iranian regime with the two French companies Peugeot and Renault has been done in the form of these assemblies.

But all sorts of unplanned programs, a lack of foreign exchange resources, breaches of contracts due to political issues, international sanctions and, most importantly, a lack of independent and internal car design, have forced the regime to build parts that has become an unsolvable in this industry. This cycle of part import and forced internalization has been repeated several times in the last four decades.

IRGC Tries to Steal From Iran’s Car Industry

 

‘According to car industry experts, after 40 years, the car industry is still an assembler, because it cannot have a car design, and even sanctioning the production of a car like the Pride with the least technology and the cheapest car faced many challenges. This shortage of parts is not only related to ‘high-tech’ parts, and some simple parts are also imported from abroad as domestic production.’ (State-run daily SMTnewspaper, January 30, 2021).

‘We do not have much to say about the achievements of this industry,’ said Fazlullah Jamalo, an expert in the automotive industry of this government. The reason was the constant preference for importing ready-made parts (CKD). Of course, there is no technology transfer in this regard. In addition to assessing the managers of automotive companies as mundane and careless in the field of work, he considers wasting millions of dollars for assembly work as an irreparable damage to the industry:

‘It is very important how much currency has been taken out of the country to import parts and cars. Millions of dollars were spent in collaboration with Peugeot, Renault, Mazda and other foreign brands; But without having a coherent and clear strategy.’ (State-run website Asr-Khodro, January 30, 2021)

This car expert considers one of the problems of this industry as the mafia and preventing their internalization and says:

“The car mafia, with its power and leverage, did not allow the deepening of domestic production to take place in previous years, because imports were in their favor. There were so many behind the scenes that imports were more profitable for them than to strengthen the parts industry.” (SMTnewspaper)

The story does not end with the confrontation of the mafia importers of cars and ready-made parts with domestic parts manufacturers. But in the parts manufacturing industry, flawed and monopolistic structures have been formed so that there is no way to save the automotive industry. The automotive industry expert said:

“Unfortunately, many component makers also played on foreign soil. Recent trends in the piece industry have been indicative of this. The component importers import the products from China and selling them in the market as domestically manufactured parts. In this industry, a clone is formed that usually does not allow small companies to enter the supply chain. There are people in the parts industry association who have been sitting on the chair of this center for many years. (SMTnewspaper)

Reza Hashemi, another activist in the parts manufacturing industry, compares the Iranian auto industry in the last 40 years with countries such as Turkey and South Korea and said:

“The fact is that we are far behind global progress. We lagged behind the neighboring countries in terms of industry, because inefficient people took over the management of it, who did not come from the heart of the industry. If we move forward in the same way, with the state of progress that science has, in less than five years, other countries will make many times more progress than Iran, and Iran will have to assemble, even few decades later.” (SMTnewspaper)

Siamak Hojjat, CEO of the automotive industry, also said: “Our country does not have an automobile industry, and it is better to say that we have an assembly industry, especially in the last two or three decades, we have been 100% an assembler, and unfortunately we have seen a decline in car quality and high cost in this industry.” (ISNA, December 14, 2020)

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