Iran Automotive Industry Analysis Quarterly – Spring 2015
June, 2015
Table of Contents
1 Notes 4
2 Introduction 4
3 Automotive Market Evaluation in the World 4
3.1 Auto Industry Performance 4
3.2 World Production Statistics 6
4 Rules and Events Affecting the Auto Industry 8
4.1 Major Policies to Empower Auto Industry 9
4.1.1 The project to establish the country’s third car manufacturing pole 9
4.1.2 Auto Manufacturers’ merger plan 10
4.2 Emphasis on Domestic Production in Contracts with Foreign Companies 10
4.3 No Subsidy Granted to the Auto Sector in the 2nd Phase of Subsidy Reform Plan 11
4.4 Formulating a Bylaw for Sales 11
4.5 Opportunity to Absorb Foreign Investments in the Auto Sector 11
4.6 Calls for Liberalization of Car Prices 11
4.7 Resumption of Imports of Parts from Renault 12
4.8 Money and Credit Council to Increase Loans to Buy Cars 12
5 Review of Production, Import, and Export in the Auto Industry 12
5.1 Private Automakers Negotiate with Global Giants 12
5.2 Import of New Cars in the Year 1394 13
5.3 Auto Sector’s Portion of Foreign Investment 14
5.4 Auto Sector’s Share in GDP 14
5.5 Iran’s Auto Industry in Comparison with the Global Sector 15
5.6 Investigating Domestic Production of Cars 15
5.6.1 Production of non-sedans 21
5.7 Import 23
5.7.1 Government’s decision to maintain the ban on imports of cars with engines of up to 2500 cc capacity 23
5.7.2 Decision of the Fuel Committee regarding scrapping of aging cars and import of new cars 24
5.7.3 Directive of the Ministry of Industry, Mines & Trade on after-sales services for imported cars 24
5.7.4 Monopolization of car imports and pricing 24
5.7.5 The import trend of cars 25
5.7.6 The import trend of non-sedan vehicles 29
5.8 Export 33
5.8.1 The export trend of cars 34
5.8.2 The export trend of non-sedan vehicles 39
6 Customer Satisfaction Survey 43
6.1 Car Sales Services 43
6.2 Quality of Cars 44
6.3 Impact of Energy Carrier Prices on Car Demand and Use 45
7 Challenges and Possible Solutions for Auto Industry 46
7.1 Uncontrolled Presence of the Chinese 46
7.2 Shrinking Purchasing Power of Customers 46
7.3 Western Sanctions against Iran 46
7.4 Implications of Possible Mergers 46
7.5 Challenges to Domestic Manufacturing of Parts 46
7.6 Lack of Comprehensive Import Policy 47
7.7 Quality 47
8 Auto Industry SWOT Analysis 47
9 Auto Industry Financial Analysis 49
9.1 Raised Capital and EPS 49
9.2 Production Rates and Sales 51
9.3 Fiscal Costs 56
9.4 Profit Margins 57
9.5 Current Assets and Liabilities 58
9.6 Shareholders’ Equities 59
9.7 Retained Profits/Losses 60
This report will analyze the Iranian auto industry in the last quarter of the Year 1393 (December 21, 2014 - March 20, 2015.)
All legal, environmental, social and political events which could have affected the sector in some way have been assessed precisely to come to an understanding of the production, import and export trend of the auto market in Iran. Then, customer data have been assessed and eventually the report has come up with solutions to possible challengers the auto manufacturers could face. The report also talks about Strengths and weaknesses, opportunities and threats of the industry.
What need a special attention in the report are the incidents connected to the factors affecting the industry in the subsections of customers, raw material for production, external and export markets, upstream documents, the government, carmakers and financials.
In this section the external market of the automotive industry is discussed and a forecast for the external market will be presented.
Performance analysis of the global auto market in 2014 and its 2015 forecast based on LMC Automotive show that the world light passenger car market was lucrative in 2014. According to the Just Auto website, LMC Automotive reported that 87.2 million light cars were sold in 2014, showing 3.5 percent growth compared to 2013. The growth seems to be because of the increase in car sales in North America, China, and West Europe, the market that neutralized the weak demand in emerging markets, including East Europe and South America.
In 2015, forecasts say sales in North America will continue to grow, but sales growth in the United States is expected to fall. With the slow economic growth in China, sale of cars should slow down in that country, but it is forecast car sales will see considerable growth in the Asian country in 2015.
Auto market in West Europe will also see minor growth. At the moment, uncertainty caused by the Greece's status in the euro zone, coupled with Russia's economic woes, are expected to affect the European auto market in a negative way. Yet, the perspective of world light auto market will generally be positive.
Frost and Sullivan's consultants forecast that sales of light cars will exceed 90 million this year thanks to considerable economic growth in the US and Europe, which will neutralize the slow growth of the emerging markets. Frost and Sullivan believes that among key factors affecting the auto market in 2015 will be: sharing cars, smart transportation, and Big Data analysis. (Big Data is an evolving term that describes any voluminous amount of structured, semi-structured and unstructured data that has the potential to be mined for information.) The consultancy depicts an optimistic perspective for 2015, suggesting that the market will become more lucrative.
Frost and Sullivan argue that the reason behind its optimistic forecast is the price of gasoline, which is declining, and the rising number of old cars. According to the center, the average age of cars trafficking on the US streets is 13 years. The figure is 10 years for the cars in Europe. The entity's consultants believe some factors will help boost sales ...
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