Auto Output Surges by 17%

EghtesadOnline: Iran’s automotive production increased by 17.16% during the 11 months to Feb. 18, compared with the same period of last year.

News ID: ۷۸۶۱۴۴

02 March 2021

According to data released by Securities and Exchange Organization on Codal.ir, Iran’s leading automakers, namely Iran Khodro (IKCO) and SAIPA, produced 817,069 sedans during the period.

IKCO’s output rose to 432,006, which is 21.7% higher year-on-year when the company manufactured 354,982 passenger vehicles.

Peugeot models had the lion’s share with 312,563 cars in the 11 months. Samand was IKCO’s second most popular model with 48,947 units.

IKCO also manufactures commercial vehicles, such as pickups, vans, trucks and buses, but the production rates of these vehicles have not been released yet.

SAIPA produced 309,735 vehicles during the period, marking a 19.4% YOY decrease. Pride and Tiba models topped the company’s production chart with 50,413 and 214,128 units respectively.

Pars Khodro, a subsidiary of SAIPA, registered a 2.6% fall, producing 93,843 vehicles during the period compared to 96,382 in the same period of last year.

Monthly comparisons show that the production rate of IKCO and SAIPA dipped during the month ending Feb. 11 compared with the same month of the previous year.

During the month leading to Feb. 18, output reached 86,192 to mark a 16.8% fall compared to the previous month.

During the period, SAIPA’s output reached 29,452, marking a decline of 26.1%, and IKCO’s production rate totaled 43,912, falling by 15.4%.

Pars Khodro, however, produced 12,828 cars, indicating a rise of 7.8%, 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 480,000 vehicles need to be produced in the next month.

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

Mismanagement and the pressure of US sanctions, 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 imported parts.

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

Slashing Capital Flight

In December 2020, Farshad Moqimi, CEO of IKCO, said 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, 2020). He maintained 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 part imports, which can annually reach $248 million,” 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 annually on the import of parts.

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

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

Moqimi signed an agreement with Shiraz Electronic Industries Organization and its partners in late December to develop electronic components for IKCO’s 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 largest auto part suppliers.

SAIPA’s Initiatives

In late November 2020, SAIPA announced that it is implementing 81 projects to localize high-tech auto parts for curbing 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 high-tech 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 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.