Falling output over the past two years has made clear the limits of the Iranian government’s ability to grow the automotive sector without foreign partnerships and new investment.
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All tagged automotive
Falling output over the past two years has made clear the limits of the Iranian government’s ability to grow the automotive sector without foreign partnerships and new investment.
Iran’s giant automakers, Iran Khodro and Saipa, are in a tug of war with the Rouhani administration over demands to lift price controls. The state-owned firms are seeking to increase prices by 40 percent.
◢ Iran’s automakers have pre-sold more than 1 million vehicles, most of which are earmarked for delivery to customers in the Iranian fiscal year that started in March. But with vehicle production declining at a steep rate, fulfilling these orders will be no easy task.
◢ The combination of reimposed sanctions, a slowing economy, and a devalued currency have put Iran’s automotive sector under severe pressure With nearly 1 million jobs linked to the automotive industry, the price of a new car could be even more important than the price of oil for the Iranian economy. In an interview with Bourse & Bazaar, Saeed Madani, the former CEO of SAIPA, warned that price controls are squeezing state-owned automakers.
◢ Swiss auto parts company Autoneum has entered into a new license agreement with Ayegh Khodro Toos to manufacture components for a new locally-produced Peugeot SUV beginning in 2019.
◢ The deal points to the potential in Iran's auto parts sector, where private sector companies, which are often SMEs with specific areas of expertise, dominate. Projections suggest exports of Iranian auto parts could rise to USD 6 billion by 2025.
◢ Iran's blue-collar workforce is the backbone of the country's economy, but has been largely overlooked by international policymakers and business leaders as a key stakeholder group.
◢ The new populist political environment in the West requires new ways of positioning the Iran Deal. Increasing awareness of Iran's working class could be a powerful way to connect to Western electorates.
