Iran Auto Output Suffers Sharpest Decline in 18 Years

EghtesadOnline: Iran’s automotive output suffered its sharpest year-on-year decline in 2018 since the 21st century.

News ID: ۷۴۷۰۰۸

09 April 2019

Local companies last year made 1.34 million cars and commercial vehicles -- a 40% YoY decline, data published on the Organisation Internationale des Constructeurs d’Automobiles website (OICA.net) show.

The sector had a bad year back in 2012 when local car output dropped 39%. However, 2018 was the worst year for the key auto industry in recent memory. Most market observers and analysts worry that 2019 will be worse.

In the past decade, 2003 was the worst year for the sector in terms of production rates when 743,680 vehicles were made, Financial Tribune reported.

Iran’s worldwide ranking in terms of the number of vehicles produced has declined. Currently, the country is the 17th largest carmaker in the world. In 2017 it was 16th.

In the past year, 851,000 cars and 491,000 commercial vehicles were made in the country. In 2017 auto output stood above 1.5 million units.

In the past year, over 91.5 million cars and commercial vehicles were made in the world -- a 6.29% YoY decline. Iran has a 1.47% share in global auto production.

Respectively the leading countries in terms of production in that year were China with 25.7 million units made, the US (10.9 million), Japan (9.2 million) and Germany (5.1 million).

Hit Hard

After the US reimposed sanctions last year, Iran’s car industry took a big hit as output fell, spare parts were in short supply and thousands of jobs were lost, in particular in the struggling car parts industry.

Carmakers and their minions love to blame the sanctions for their worsening problems that indeed have been around for decades. Independent observers and car buyers often point to the inherent mismanagement, nepotism and chronic corruption in the seemingly lucrative industry as the primary culprits making a bad situation worse.

The first four months of this year too have been bad for the struggling carmakers. Up until Feb. 19 daily auto in Iran plummeted to 1,969 units from 4,880 a year ago, showing an unusually 59.6% decline.

Industries Ministry data show that in the one month to Feb. 19, hardly 59,089 cars and commercial vehicles were made, down from 146,424 units manufactured during the same period last year.

It said local carmakers produced 54,965 passenger vehicles during the period, slightly higher than one-third of their last year output of 138,913 cars.

In the one month 4,124 vans, pickup trucks, buses, minibuses, and trucks were made, 45% lower than last year’s 7,511units.

The past fiscal year that ended in March was more like a nightmare year for the car companies. The ministry said auto output fell 37.8% YoY from the 1,404,100 cars and commercial vehicles in 11 months to Feb. 19, 2018, to 873,243 units this year.

Observers said with monthly auto output falling short of 60,000 units, production target for the 2018-19 fiscal year could not reach one million units before the year ended on March 20.

Local companies in total manufactured 1,534,799 cars and 1,350,377 commercial vehicles in the past two fiscal years (March 2017-18 and March 2016-17).

SAIPA, IKCO

The two major local auto companies, Iran Khodro and SAIPA, have reported a freefall in output.

In the 11-month period to Feb. 19, IKCO made 386,523 cars and commercial vehicles, down 40.9% compared to last year when it sold 653,593 units.

In the month to Feb. 19, IKCO barely made 27,543 vehicles -- down 57.5% from last year’s 64,735.

The firm’s daily production plummeted to a shocking 918 units from the last year’s 2,157.

SAIPA was no better as its production too halved. During the one month period to Feb. 19, it made 28,245 cars and commercial vehicles, down 57.2% from last year’s 66,007 units.

By Feb. 19, the company’s daily output had plummeted to 941 vehicles from 2,200 units a year ago.

During the 11-month period to mid-February, SAIPA rolled out 381,085 vehicles – down 37% from last year’s 605,348 units.