Iran Auto Production Declines in 1st Fiscal Month of 2019-20

EghtesadOnline: The latest data of Iranian automotive companies show their output plummeted to new lows in the first month of the current Iranian year (started March 21).

News ID: ۷۴۷۳۰۸

12 May 2019

Industries Ministry’s data show that Iran produced 40,602 cars and 2,021 commercial vehicles in the month, registering a 47.2% decline compared with a combined output of 80,794 units in the corresponding month of the year before.

During the month, car production plummeted 47.1% from last year’s 76,807 cars.

Commercial vehicle production also registered a 49.3% year-on-year decline, as the number of trucks, buses, minibuses and pickups fell significantly from the previous year’s 3,987 units, according to Financial Tribune.

Van production halted during the month, while 74 vans rolled out of Iranian factories a year earlier. Bus and minibus production rates were also drastically lower. During the period, seven buses and five minibuses were manufactured locally, indicating a 91.2% and 92% YOY fall respectively.

IKCO, SAIPA

During the one month, the country’s largest automotive companies Iran Khodro (IKCO) and SAIPA respectively observed a 36.9% and 45.1% decline in output.

IKCO’s production rate plummeted to 21,393 from 33,919 a year earlier while SAIPA’s output reached 20,702 cars, significantly lower than last year’s 37,698 units.

The data show that IKCO’s daily output plunged to 690 from 1,094 a year earlier, while SAIPA produced 667 vehicles on a daily basis, down from 1,216 last year.

Overview

The US unilateral sanctions and pressures on foreign auto partners to end cooperation with Iran have taken a toll on the key sector.

The economy is facing major challenges, not the least of which is growing US hostility loaded with a variety of restrictions on Iran’s oil, banking, insurance and transportation sectors.

The national currency went into freefall over the past few months and has lost over 60% of its value. This has had a major negative impact on the domestic auto companies’ ability to import spare parts and raw materials.

An earlier report released by Organisation Internationale des Constructeurs d’Automobiles shows that Iran’s automotive output suffered its sharpest year-on-year decline in 2018 since the onset of the 21st century.

Local companies produced 1.34 million cars and commercial vehicles in 2018, marking a 40% YOY decline.

The domestic industry faced a dismal year in 2012 when car output dropped 39%. However, 2018 was the worst year for the key industry in recent memory. Most market observers and analysts worry that 2019 could fare much worse.

Data gathered by the Industries Ministry reveal that the fiscal 2018-19 was a bad year for the sector.

In the last fiscal year (ended March 20, 2019), a total of 955,923 cars and commercial vehicles were produced in Iran, indicating a 37.8% year-on-year decline.

Data released by the Industries Ministry show that during the 12 months to March 20, a total of 891,786 cars were made in the country, 38.2% lower than 1,442,598 units made a year earlier.

Commercial vehicle production also registered a 31.1% year-on-year decline.  During the period, 64,137 trucks, buses, minibuses and pickups were produced, significantly lower than the previous year’s 93,158 units.

With domestic carmakers faring poorly in the first month of the new Iranian year, market watchers believe that the fiscal 2019-20 will be a challenging year for the sector, as production is expected to nosedive further.