Without Innovation Iran Auto Industry Will Soon Be a Dinosaur

EghtesadOnline: Iran should hasten to catch up with global automotive trends, a senior auto industry strategist at the Industrial Development and Renovation Organization says.

News ID: ۷۸۰۵۸۱

25 November 2017

Referring to the rapid international interest in hybrid electric and fully electric cars, Manouchehr Manteghi said, “Iran’s auto industry should be overhauled in the coming five to 10 years” if it wants to be relevant in the fast changing car industry and avoid getting fossilized, IDRO News reported.

In addition to holding different government positions during the past three decades, Manteghi was director of Iran’s largest automotive group Iran Khodro from 2002 to 2009.

“We simply do not have much time. We must not dawdle, if not Iran will remain as a mere assembler of foreign vehicles,” Financial Tribune quoted him as saying.

Local automotive companies are often censured by the people, industry observers and experts for their lack of initiative and focus and failing to catch up with global auto companies that are leaving behind fossil fuels in favor of hybrids at unprecedented speed.

The big car companies in Iran are mostly, and rightly, seen as mere assemblers of imported parts, including engines and gearboxes.

With the increasing demand for EVs, almost all automotive giants are investing heavily in R&D since the current technologies and energy storage systems do not meet the demand.

Furthermore, the batteries available now are either not cost effective or cannot be used for long distances. Many aspects of the global car industry are in the process of redesigning to meet the high rising demand for environmentally-friendly vehicles. At the same time many governments in the developed world are getting stricter about next generation cars and have officially announced that within the next decade gasoline-powered vehicles will be banned from their roads.

The truth of the matter is that innovation and verifiable progress in the auto R&D sector cannot and should not be ignored. The relevant government bodies and local automotive companies long aboard the gravy train can disregard this critical need at their own peril.

Manteghi says “We should put an end to shortsightedness. Producing and selling a single model will not change anything. The automotive industry needs to be reinvented and overhauled fundamentally.”

If carmakers fail to improve Iran’s dented auto sector, car prices will remain unreasonably high and get more expensive when the EVs arrive. Furthermore, with the current poor attitude of automakers towards industrial growth and modern ways to doing business, they will not be able to meet the future demand of car buyers.

Manteghi says, “Switching to electric and hybrid-electric vehicles in the near future is indeed a compulsion not a matter of convenience.”

The IDRO strategist is not unaware of the visible lack of infrastructure for switching to EVs. Iran does not have a single electric charging station.

Critics are of the opinion that pushing automakers towards EVs and hybrid electrics before putting in place the basic infrastructure will lead to the same problems the government encountered in promoting CNG hybrid cars as a “cleaner substitute” to the large numbers of gas guzzlers.

CNG hybrids produced by local carmakers turned out to be of low quality and unable to meet local emission standards. Add to this the limited number of CNG fueling stations that has become a big nuisance to car owners, who normally have to wait in long queues to get a refill.

Government Intervention Essential

IDRO boss Mansour Moazemi is of the opinion that “Left to their own devices, local carmakers will not be able to catch up with the global changes in the automotive industry.

The government should provide local businesses with support and meaningful incentives.”

However, Moazemi says government support should not be unconditional. “When offering incentives to automakers their attitude towards customers should be considered.”

Local automakers are infamous for murky practices, from jacking up prices on short notice to delayed delivery. The companies are often condemned for low quality cars and unacceptable after-sales services.

Moazemi has called on local media to help raise awareness about dangers of excessive use of fossil fuels and the need and significance of moving to electric and hybrid vehicles.

“Considering the dire environmental condition we are facing, the global approach towards transportation is changing. It is not far away when an end will be put to fossil-fuel powered cars.”

Earlier, the Iranian National Tax Administration announced local companies are exempt from paying value-added tax on electric and hybrid electric-petrol cars. The VAT rate for the fiscal that ends in March is 9%.

So far government bodies, businesses, and universities have announced plans for producing EVs and some have created prototypes.

A knowledge-based firm affiliated with the Islamic Azad University, Qazvin Branch, has developed one vehicle named ‘Yooz’ and produced several units.

Iran’s Electric Vehicles Center (EVC) operating under the auspices of the Energy Ministry has designed a hybrid gasoline-electric car, based on Iran Khodro’s Runna platform.

Furthermore, hybrid electric cars are available in Iran through imports, namely the Toyota Prius and Volvo XC90.