Iran Khodro, SAIPA to Expand Foreign Operations

EghtesadOnline: Iran's major automakers, Iran Khodro and SAIPA, have announced schemes to expand overseas operations.

News ID: ۷۴۴۱۶۳

24 October 2017

The two have made exports to several countries and entered into joint ventures with foreign carmakers.

The move comes in the wake of a sharp fall in Iran’s auto exports during the last fiscal year (ended March 20, 2017).

According to the data released by Iran’s Trade Promotion Organization, during this period, the auto industry’s total exports reached $217.4 million, indicating a 38% decline year-on-year, Financial Tribune reported.

Experts believe that the significant decline was due to socioeconomic instability in several export destinations, including Iraq and Syria.

During the current fiscal year (started March 21), local carmakers have not been able to meet export targets set by the Ministry of Industries.

During the first half of the current fiscal year, 2,579 units were shipped overseas, with SAIPA taking a 61% share.

In the same period, IKCO only exported 994 cars.

>Iran Khodro

According to IKCO's Managing Director Hashem Yekezare, the company has put “export of cost-efficient cars on top of its agenda”, local automotive website Khabar Khodro reported.

IKCO’s main target destinations are Algeria, Azerbaijan, Iraq, Oman, Senegal and Tunisia.

Yekezare said the company is set to expand its presence, particularly in Azerbaijan and Iraq.

Azerbaijan: Based on a joint venture deal signed between IKCO and the Republic of Azerbaijan's Azermash OJSC in 2016 with an initial investment of $15 million, the two companies are constructing a production plant in Neftchala Industrial District located in southeast Azerbaijan.

According to official reports, the plant will become operational in the coming months and the first units of the vehicles, namely Dena, Runna, Samand and Soren, are expected to roll out of the production lines by 2018.

The IKCO chief noted that the two sides have agreed to expand collaborations.

“The Azeri side has agreed to increase its investment in the joint venture,” he said.

Yekezare noted that the JV products will be exported to other regional markets.

Under the deal, some 20% of the vehicles will be exported to Commonwealth of Independent States.

CIS member states include Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan. Iran’s automotive industries have ties with several of these countries.

According to Yekezare, IKCO-Azermash products will initially be exported to Belarus and Kazakhstan.

Hamidreza Arshadi, Iran's consul in Almaty, Kazakhstan, said IKCO products, especially the company’s low-cost Samand, has a good chance of claiming a share of Kazakhstan’s market.

“Prominent international brands like Toyota and Mercedes Benz are present in the country. However, IKCO's products can claim a share of Kazakhstan’s mid-range vehicles market,” he added.

Arshadi called on other local automakers to consider tapping into Kazakhstan's auto market.

IKCO started operations in Azerbaijan in 2005 by launching the sales of locally designed Samand. In the past decade, 4,500 Iranian vehicles were sold in that country.

Earlier in September, Azeri President Ilham Aliyev visited the site of the IKCO-Azermash under-construction factory in Neftchala, saying the joint venture is “a manifestation of Iran-Azerbaijan relations”.

Iraq: One of the other major foreign markets of IKCO products is the neighboring Iraq. The company has been present in the Iraqi auto market for several years and 50 units of Samand sedan are currently produced daily in IKCO’s Iskandariya plant in central Iraq.

Peugeot 405 produced by IKCO and the Arisun pickup truck are also offered by the company in the country.

Yekezare announced that the company is set to expand its sales and after-sales network in Iraq.

>SAIPA

SAIPA is planning to increase its offshore presence by expanding its products portfolio.

Mohsen Javan, the firm’s export manager, said, “By offering a wider range of vehicles, SAIPA is aiming to claim a bigger share of foreign markets.”

Products such as Pride and Tiba have already been exported there.

According to Javan, SAIPA is set to unveil several new models in foreign markets simultaneously with their launch in Tehran.

“The sale of SAIPA’s automatic Saina and Quick will be launched concurrently in Iran and Iraq in the coming months,” he added.

In the past six years, SAIPA has sold some 150,000 vehicles in Iraq.

The company has established its own production plant in the Arab country in Iskandariya with an outlook of producing 20,000 units by 2018. The company’s operations have been hindered in Iraq due to heightened armed conflicts.

In addition to Iraq, SAIPA manufactures vehicles in Syria. The company is setting up a production plant in Algeria.

SAIPA is currently exporting to several other countries, including Lebanon, Azerbaijan, Armenia, Turkmenistan, Uzbekistan, Egypt, Tunisia, Libya, Senegal, Ivory Coast, Sudan and Djibouti.

According to SAIPA’s export manager, the company is set to increase its exports and in the near future will send consignments to Russia, Turkey and several East European countries.

Javan said 30% of SAIPA's cars are to be exported annually by 2025.