Kerman Auto Show: Chinese Companies More Assertive

EghtesadOnline: The eighth Kerman Auto Show was held over the weekend in the central city and was denominated by Chinese-derived cars assembled in Iran.

News ID: ۷۸۰۹۲۴

31 December 2017

Major Iranian firms were present in the Dec. 26-29 event, ILNA reported.

Kerman is home to several firms producing Chinese-derived models, including Kerman Motor, Karmania, and Modiran Vehicle Manufacturing (MVM).  In recent years Chinese cars have become more visible on the streets of Kerman and other Iranian cities. Seemingly the relatively low price of some Chinese brands and their wider range of options appeal to car buyers who cannot afford European, Japanese or South Korean vehicles.

During the show, Kerman Motor, the local partner of China’s JAC Motors, unveiled the JAC J4. The local firm assembles several other JAC models namely S3, S5, J3 and J5, according to Financial Tribune.

The J4 is a small family sedan, equipped with a 1.5 liter, 110-hp engine tailed by a five-speed CVT transmission. The model comes with a better engine compared to its siblings and has improved power, better fuel economy and less carbon emissions.

Kerman Motor is yet to announce the price for the model. However, it is expected to be in the same price range as Brilliance H330 and Besturn B30 which are in the range of 500 million rials ($12,000).

Official representative of China’s BYD in Iran, Karmania, unveiled a new and pricey model, the BYD S7 which is priced at 1.29 billion rials ($30,700).

The S7 comes with a 2-liter, 207-hp turbocharged engine. A 6-speed dual-clutch gearbox sends power to the front wheels. The car’s price starts at 119,000 Yuan ($18,290) in China.

Iran Khodro and SAIPA were also present in the Kerman show. Along their Chinese-derived cars, IKCO showed two Peugeot models (the 2008 and 508) while SAIPA came with the Citroen C3.

In recent years, Chinese cars have made inroads in the saturated local auto market. Chinese brands had an 11% share of the 977,355 cars produced/assembled in Iran during the first eight months of the current fiscal to Oct. 22. The share is expected to increase in the coming months as the government has imposed higher import tariffs on expensive vehicles in a bid to curb hard currency spending on luxury items, namely cars.

No EVs for Iran

The global automotive industry is undergoing profound changes. Almost all international automotive companies are investing heavily on development of electric vehicles and governments are introducing regulations to gradually phase out gasoline and diesel cars.

However, Iran seems to be divorced from the looming reality. The shocking indifference of industrial policy and decision makers and carmakers toward the critical need for EVs was conspicuous in the Kerman Motor Show.

Chinese carmakers are spearheading development and production of EVs since Beijing has set a 2019 deadline according to which the share of electric and hybrid vehicles need to be increased to10% of auto makers’ total output in the world’s second-largest economy.

However, Chinese carmakers in Iran have a different agenda. None of them present in Iran showcased an EV during the four-day event.  Market observers say low demand for such cars in the local market is to blame.

Low price of gasoline is seen as the main reason why EVs do not have appeal for Iranians.

Gasoline prices are less than one-third of global average and regular gasoline is sold at approximately 25 cents per liter. Recently, the government announced a plan to increase gasoline price 50% in the next fiscal that starts in March but is facing strong opposition from its powerful political opponents.

It merits mention that there is no electric vehicle charging station in Iran.

So far, government bodies and carmakers have announced plans for producing EVs but none has come to fruition.

Earlier, the Iranian National Tax Administration introduced a value-added tax exemption on production of hybrid electric cars, according to which local companies are exempt from paying VAT on such products.

However, when not a single domestic carmaker or assembler is producing hybrids, it is not clear of what use is the tax exemption. VAT for the current fiscal that ends in March is 9%.