Carmakers, Armed Forces Expand Tech Ties to Overcome Sanctions

EghtesadOnline: Iran’s armed forces are expected to play an increasing role in auto industry by helping curb the impact of US sanctions on the key sector.

News ID: ۷۸۶۲۵۷

14 March 2021

After the US reimposed sanctions against Iran, foreign automotive firms pulled out of the country. The armed forces, along with local tech firms, have filled up the void left behind by foreign suppliers’ withdrawal from the Iranian market.

Iran’s Army, Defense Ministry and the Islamic Revolution Guards Corps’ Aerospace Force are leading the effort, the Persian economic daily Donya-e-Eqtesad Reported.

Sharing their modern technologies, the armed forces helped Iran Khodro (IKCO) and SAIPA, Iran’s major automakers, and local parts makers to boost their output.

The assistance helped boost the manufacture of high-tech components and upgrade machinery and industrial skills.

Earlier, speaking to Fars News Agency, Deputy Defense Minister for Legal and Parliamentary Affairs Brigadier General Reza Talaei-Nik said, “Our support will continue to fill the technological gaps in the domestic auto sector and improve the quality and volume of their production.”

Backing the military's role in the auto sector, the Iranian Parliament is developing a plan to further expand their operation. The plan calls for the establishment of a new auto production facility, which would be entirely run by military forces.

The proposal is still in the early stages of development and there is no assurance that it will be approved by the Guardians Council. However, efforts are being made to incorporate military technology in the domestic automobile industry.

Thanks to the limiting US sanctions, the domestic auto industry faced difficulties to stay afloat in the past several years.

The rial has lost about two-thirds of its value and prices of almost all goods have soared to unprecedented highs. The greenback was trading at 248,000 rials in Tehran on Wednesday, though it hardly fetched 42,000 rials a year earlier.

With the imported raw material and parts gradually running out, parts makers’ problems began.

The outdated machinery and knowledge in these companies failed to feed the auto production lines and disrupted the industry.

To lift the pressure off the sector, Iranian authorities decided to transfer the know-how and capabilities of armed forces to the auto industry.

Overview

In late September 2020, the Iranian Army’s Air Force launched an initiative to strengthen relations with the major automaker SAIPA for sharing technologies, bolstering domestic auto production and reducing foreign dependency.

Commander of Iran Air Force Brigadier General Aziz Nasirzadeh said the army is willing to offer its knowhow and technological capacities to the automotive sector for designing and manufacturing high-tech components and engines.

Nasirzadeh said the result of the collaboration will benefit both sides.

“The army would like to use the capabilities of SAIPA and its subsidiary parts makers to produce special engines for drones. In return, the army would help the automaker develop high-tech auto components that are currently imported,” he said.

The air force chief said in case the projects are implemented judiciously, the US sanctions that have troubled the automotive sector will be easily overcome.

Also in May 2020, the commander of IRGC’s Aerospace Force said the force can provide Iranian automakers with advanced technologies so that they can overcome their shortcomings and reduce their reliance on foreign firms.

Brigadier General Amir Ali Hajizadeh also told reporters that IRGC’s Aerospace Force is ready to offer consultations to Iranian carmakers to address their shortcomings in the field of technology and car parts production.

He noted that reliance on local capabilities and domestic knowledge-based companies is the key to success.

“IRGC does not plan to take the helm of the industrial sector and start manufacturing cars, but our goal is to extend help and [provide carmakers with] consultations,” he added.

The Defense Ministry has also stepped in to support domestic automakers to curb their reliance on foreign parts.

In early June 2019, the ministry started sharing its technological capabilities with IKCO and SAIPA.

With the ministry's support, the production of homegrown substitutes for key imported car parts was placed on the agenda.

In an integrated move, the ministry signed a deal with local car manufacturing company SAIPA in December 2019 to bolster collaboration in research and development, design, technical monitoring, safety standards and localization of parts.

Tech Firms

In a similar move in July 2020, a knowledge-based company produced several high-tech auto parts that meet global standards, which has been hailed by industry insiders as a step toward localization of auto parts.

According to the Vice Presidential Office for Science and Technology, Iran Spare Parts Company, a major manufacturer of auto components, announced it has produced crankshaft pulley, rubber bush, plastic bush, engine handle, hydro mount and balance shaft using state-of-the-art technologies.

The components used in the production of several car models are in high demand.

Reza Aryana, the CEO of ISPC, said the parts have a coating that makes them resistant to rust and corrosion.

Noting that various engineering methods are employed to designing these parts, Aryana said ISPC’s production is supervised by professionals and quality control units to enforce the latest global standards and meet the requirements of domestic automakers.

“The company’s products are compatible with foreign counterparts,” he said, adding that the mass production of tech-based auto parts can curb the sector’s dependency on foreign resources and help prevent capital flight.