Slight Increase in Auto Output

EghtesadOnline: Iran’s automotive production increased by 7.3% during the nine months to Dec. 20, 2020, compared with the year-ago period.

News ID: ۷۵۱۷۷۸

05 January 2021

According to data released by Securities and Exchange Organization on Codal.ir, Iran’s leading automakers, namely Iran Khodro (IKCO), SAIPA and Pars Khodro, produced 628,547 sedans during the period.

IKCO’s output during the period rose to 342,173, which is 34.4% higher year-on-year when the company manufactured 117,700 passenger vehicles. Several Peugeot and Dena models formed a large share of the company’s production. In addition, IKCO manufactures commercial vehicles, such as pickups, vans, trucks and buses, but the production rates of these vehicles have not been released yet.

SAIPA produced 256,185 vehicles in the nine months, marking a 16.6% year-on-year decline. Tiba was the best-selling vehicles on SAIPA’s production list. Pars Khodro, a subsidiary of SAIPA, registered a paltry rise by producing 72,740 vehicles during the period compared to 72,681 in the same period of last year.

Monthly comparisons show that the total production of three companies increased. During the month ending Dec. 20, 2020, auto output reached 84,822 to mark a 25% rise compared to the previous month.

During the ninth month, IKCO’s production rate hit 55,249 jumping by 35.2%, SAIPA’s output reached 22,550, growing by 18.4% and Pars Khodro produced 6,723 cars, coming down 13.8%, compared to the previous month.

Last year (ended March 2020), domestic automakers produced 860,000 vehicles.

They had decided to expand output by 50% to 1.3 million cars by the end of the current fiscal year (to end March 20), which means over 670,000 vehicles need to be produced in the next three months.

In view of the companies’ monthly reports and the production trend, that target will not be achieved.

Mismanagement and the pressure of US sanctions, now coupled with the Covid-19 outbreak, have derailed Iran’s auto industries.

However, the state has stepped in to streamline the sector and cut its reliance on foreign resources.

During the past year, IKCO and SAIPA have forged ties with knowledge-based teams to indigenize auto electronic parts in the hope of improving quality and quantity of their output.

Slashing Capital Flight

Farshad Moqimi, CEO of IKCO, said last week that his company has curbed capital flight by $138 million through the localization of vehicle parts in the first eight months of the current Iranian year (March 20–Nov. 20). He maintains that this is achievable, thanks to the support of industrial units affiliated with the Defense Ministry and knowledge-based companies.

“Several projects have been launched to gradually slash capital flight caused by auto parts imports, which amount can reach $248 million per year,” he added.

Moqimi noted that the projects are curbing production costs and reducing IKCO’s annual import bill by $180 million while the company used to spend $360 million on the import of parts every year.

He called on the banks to extend support to domestic parts makers for upgrading their machinery and asked relevant authorities to cut their tax rates.

“Encouraging local parts makers for manufacturing high-tech imported components are on IKCO’s agenda,” he said.

Moqimi has signed an agreement with Shiraz Electronic Industries Organization and its partners, to develop electronic components for IKCO vehicles.

According to Mohammad Mehdi Izadi, the head of the organization, the agreement envisages the design and production of automobile electromechanical modules.

The automaker says the organization will soon become one of its largeest auto part suppliers.

SAIPA Attempts

In late November 2020, SAIPA announced that it is implementing 81 projects to localize high-tech auto parts, hoping to curb the sector’s dependency on foreign resources.

Based on the automaker’s website Saipanews.com, the projects have been established in collaboration with the Defense Ministry, Aerospace Force of the Islamic Revolution Guards Corps and the Iranian Army’s Air Force.

Daryoush Golmohammadi, SAIPA’s deputy for strategic planning, said 28 joint ventures are being implemented along with industrial units, affiliated to Defense Ministry.

“So far, seven sophisticated electronic car components have been localized and are ready for mass production,” he said.

Golmohammadi noted that SAIPA is producing 26 advanced parts with the help of IRGC’s Aerospace Force.

“The production of these items is undergoing tests and will enter the production line, as soon as the prototypes are tested and verified,” he said.

The army’s Air Force is also cooperating with the automaker in 27 other localization projects, which the official said are in the design phase.

The targeted auto parts, which used to be imported, include Engine Control Unit, modulator, injector, airbag, multimedia system, DC engines, electric sensors and digital ammeter.

“With the local production of these components, SAIPA can curb capital flight by up to €94 million annually,” Golmohammadi `said.

The automaker is also negotiating with the ministry for the joint production of GPS and radar systems for electric vehicles.