Iran - Industry ministry takes steps to reform auto sector

Iranian industry, mining and trade minister said reforming the country’s auto industry requires collaboration of all sectors and the ministry has taken steps in this regard, Shata reported.

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“We have good plans for the auto industry, and we need the support of sectors to develop and reform this industry,” Reza Rahmani said in a meeting of the parliament`s committee on industry and mining on Sunday.

Underlining the fact that most of the foreign automobile manufacturers have left the country under U.S. sanctions pressures, the official noted that legal measures are underway regarding the uncompleted contracts in this industry.

Since the U.S. reimposed sanctions on Iran’s economy, most of the foreign companies have left the country on the fear of facing penalties for collaborating with Iranian partners.

So the government, which owns the country’s major carmakers, has been focusing on developing the domestic production to counter the impact of the U.S. sanctions on this industry. However, the automobile industry has been recently under serious criticism for the poor quality of the cars and the high prices.

In this regard, the ministry has been taking new steps to improve the quality of the Iran-made cars and to lower the prices.

Supporting the domestic manufacturers of car parts has been one of the major policies that the ministry has put on the agenda.

In early August, Rahmani has said that the policy of domestic manufacturing of auto parts should be seriously followed up.

Later that month, director general of the industry ministry’s automotive and transportation industries office announced that the ministry has allocated €844 million to support the country’s auto parts manufacturers.

Seyed Reza Mofidi noted that according to the ministry’s plans, domestic manufacturers are set to produce 1.3 million automobiles by the end of the current Iranian calendar year (ends on March 19, 2020) of which 310,000 was manufactured up to August 10.

According to the industry ministry, given the number of vehicles that are anticipated to be manufactured in the country during the current Iranian calendar year, the part manufacturers will need 150 trillion rials of working capital (about $3.571 billion) for the purchase of raw materials and other required items.

Following the orders of the ministry, domestic car makers have also started a research movement in recent months titled “Domestic Manufacturing of Imported Parts”.

The movement is aimed at creating the condition and opportunity for cooperation among domestic manufacturers, knowledge-based companies and startups.