Iran Automotive Industry Analysis Quarterly – Winter 2015 Part 1
Feb., 2015
Table of Contents
1 Notes 4
2 Introduction 4
3 History of the Auto Industry in Iran 5
4 The Outlook for the Auto Industry on the 2025 Horizon 8
5 The Comparison between the Auto Industry and Other Industries 9
5.1 The Role of the Auto Industry in Economic and Industrial Growth of the Country 9
5.2 The Role of the Auto Industry in Creating Added Value 9
5.3 The Greatest Share in Tax Payments 9
5.4 Saving the Most Foreign Currency 10
5.5 The Most Number of Connections with the Upstream Industries (connected to 60 industries) 10
5.6 The Highest Payments to the Government and Governmental Institutions 10
6 Indices of Iran’s Auto Industry at the End of 2011 11
7 World Auto Production (2013) 11
8 Iran Auto Production in 2013 14
9 Auto Imports and Exports in 2013 14
10 Auto Manufacturing Groups 15
11 Auto Industry in the Capital Market 16
12 Problems within the Industry (Cons) 17
13 Advantages of the Industry (pros) 19
14 Analysis of the Factors Affecting Profitability 20
15 Solutions to the External Problems 21
16 Auto Industry 1393 (2014) Status 22
17 Main Iranian Car Manufacturers 24
17.1 Iran Khodro Industrial Group 24
17.1.1 Founding 24
17.1.2 Structure 24
17.1.3 Size and production 24
17.1.4 Certifications 24
17.1.5 Production sites 25
17.1.6 Products 25
17.1.7 Subsidiaries 26
17.2 Saipa Group 27
17.2.1 Products 27
17.2.2 Subsidiaries 28
17.3 Pars Khodro 28
17.4 Bahman Group 29
17.4.1 Products 29
17.4.2 Subsidiaries 31
17.5 Other Auto Manufacturers 31
18 Conclusions 31
The automotive industry is one of the largest industrial sectors in the world. The automotive sector contributes from 4% to 8% of the GDP and accounts for 2% to 4% of the labor force in the Organization for Economic Co-operation and Development (OECD) countries. Today, nearly 700 million motor vehicles are registered worldwide with over 550 million vehicles (75% passenger cars) registered in OECD countries.
This industry leads all other industries in research and development (R&D) investments and its level of productivity is well above average. It is generally recognized that one qualified job in the automotive industry indirectly creates seven to ten qualified jobs in related industry sectors.
Today’s global automobile manufacturers have a direct impact on a variety of other industries ranging from raw material and component suppliers, to machine manufacturers, research and technology institutes, car repair shops, retailers, driving schools and financial institutions.
Vehicle manufacturers worldwide are among the largest customers of aluminum, copper, iron, plastics, rubber, textiles, steel and computer chips. Thus, they contribute enormously to the economies of many different countries. (United Nations Environment Program (UNEP)).
The Iranian automotive industry first developed in the 1960s with the arrival of foreign vehicle manufacturers. Today, the industry is growing year-by-year and has become one of Iran's key economic activities, after oil production.
The auto industry in Iran is the driver of many other industries in such a way that 60 other industries are connected to it. It has a 22-percent share in the country’s industrial sector. In addition, some 700,000 people are employed in this industry.
The “Prior Correlation Coefficient” and “Posterior Correlation Coefficient” in economics are indicators that determine the degree of interrelation between disparate industries. The prior correlation coefficient of the auto industry ranks second among the top 10 industries of Iran.
Among other significant industries closely related to auto manufacturing are steel, aluminum, copper, glass, rubber, textile, electronics, coating, and chemical industries, which are considered as upstream industries (input) in auto production.
The auto industry, with a turnover of $6.7 billion, is one of the focal points in the minds of country’s policy makers. Of course, such conditions are not limited only to Iran, but also in other countries with leading auto industries as well.
Prior to the third construction plan (1963-1967), the approach toward the development programs was not industrial. It was after this period that the industry became central to the development schemes.
Since 1968 (the fourth construction program) extensive credit was allocated to the establishment of colossal primary industries including steel, machinery, petroleum and petro-chemical. Parallel to that, assembly of automotive products and production of household appliances were foreseen to be conducted by the private sector, which led to the foundation of strategic industries such as Tabriz Machinery Manufacturing (Mashin Sazi Tabriz - M.S.T. Group) in middle of the 1970’s.
The formation and production of these industries, unlike previous ones, was not due to local or regional factors but because of market demands on a national level.
The history of the Iranian auto industry dates back to 1958. Apparently, the Jeep assembly line was constructed in that year with an initial investment of 20 million Tomans (1 Toman=10 IRR). At that time all machine parts were imported via CKD (Completely Knocked Down), and only the assembly was carried out domestically.
1960 was the year that the assembly of cars started. In the same year the “SAIKA” Company was founded in Ab’ali and started to assemble FIAT-1100 under Italian FIAT’s license. Between 1966 and 1967, two more auto manufacturing companies declared their existence, and the production of the PAYKAN at IRAN KHODRO (formerly known as IRAN NATIONAL) and the ZHIAN (Citroën Dyane) at SAIPA started ...
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