Iran Auto Exports Decline, Imports Rise in 2016-17

EghtesadOnline: Iran’s Trade Promotion Organization, affiliated to the Ministry of Industries, Mining and Trade, has released the latest data on automotive exports.

News ID: ۷۴۱۲۷۸

01 May 2017

It says that during the last Iranian year (ended March 20), the auto industry’s total  exports reached $217.4 million indicating a 38% year-on-year decline.

The Auto Importers Guild has also released statistics on imports with the head of the guild saying that auto imports will fall behind numbers reported last year.

Iran Auto Exports

According to the available data, Iranian automakers exported vehicles worth $36.6 million in the last fiscal (ended March 20). Iraq, Algeria, Lebanon, Turkmenistan and Syria were the main export destinations, Financial Tribune reported.

According to the ministry, the main obstacle in the way of auto exports is compliance with the target countries’ automotive standards.

Iranian companies — including Iran Khodro — are also producing cars in Iraq.

Heavy Duty Vehicles

During the 12-month period, Iran exported heavy duty vehicles —including trailer trucks and tractors — and generated $35.8 million.

The number indicates a 28.5% year-on-year fall in the export of heavy duty vehicles.

According to the trade body, the main target markets for the heavy vehicles were , Iraq, Afghanistan, Sudan, UAE and the Netherlands.

Exports to Netherlands mainly include farming machinery and tractors.

Difficulties in banking transactions is said to be the main barrier in the way of expanding Iran’s share in the international market for heavy vehicles.

The drawn-out conflict and civil strife in Iraq plus poor economic conditions are  the main reasons for the fall in exports of heavy vehicles to the neighboring Arab state.

Moreover, strained political ties with Sudan hurt auto exports to the African country. Sudan cut diplomatic ties with Iran in January of last year due to pressure from Saudi Arabia.

Auto Part Exports

In the last fiscal automakers in Iran exported auto parts with the total value of $145 million -- a 52% decline compared to the previous year. Almost 79% of the auto parts went to Iraq, Afghanistan, the UAE, Turkmenistan and Turkey.

The government in Baghdad has set import tariffs for auto parts to 15%. In the past importing car parts into Iraq was tariff free. Imposition of import tariffs slashed Iran’s auto parts exports to the country to less than half compared to the previous  year that ended in March 2016.

During the 12-month period, Iranian tire export reached $24.4 million — the main target markets were Afghanistan ($13 million), Pakistan ($2.6 million), Iraq ($2.4 million), Nigeria ($1.7 million) and Turkey ($1.1 million). Iran’s tire industry saw a 29% y/y fall in its exports compared to the year before.

Iran Auto Imports

According to data released by the Auto Importers Guild, 76,059 cars entered Iran in the last fiscal showing a 49% growth compared to the year earlier.

The guild put the total value of imported cars at $1.99 billion with government earning $670 million in import taxes. This is while the Majlis had said that the government should earn $918 million from vehicle import tariffs.

In a recent interview with Financial Tribune’s sister newspaper, Donya-e-Eqtesad, the guild director Farhad Ehteshamzad estimated that the auto imports will fall in the current fiscal (started March 20). He blamed recent regulations restricting auto imports plus the import of other “unnecessary foreign goods” for the anticipated decline in car imports.

The government has put a ban on imports of cars with engine capacity over 2.5 liters. It has obliged all auto importers to have a “direct partnership” with the foreign producer along with an efficient and verifiable after sales service. The new rules have further cut off many companies and middlemen that had long been importing cars but paid little or no heed to the supply of spare parts and after sales services.