Iran Automotive Industry Analysis Quarterly – Winter 2015 Part 2
Feb., 2015
Table of Contents
1 Notes 4
2 Introduction 4
3 Discussing Regulations and Events Affecting the Auto Industry 4
3.1 Administration’s Increased Revenues through Import Tariffs in 1394 Budget Law 5
3.2 The Project to Establish the Country’s Third Car Manufacturing Pole 6
3.3 Auto Manufacturers’ Merger Plan 6
3.4 What is the Car Import Management Plan? 6
3.5 Auto Industry not in Government’s Anti-Recession Policy Package 6
3.6 Special Bank Loans for Indebted Manufacturers 7
3.7 Money and Credit Council’s Inaction to Increase Car Loan 7
3.8 Government Recommends the Carmakers to Change Strategy to Provide Equity 7
3.9 Government Supports Imports of Hybrid Cars Aimed at Reducing Pollution 7
3.10 Preliminary Negotiations to Collaborate with Foreign Carmakers after the Nuclear Deal 8
4 A Preview of Production, Exports and Imports in the Auto Industry 8
4.1 A Brief Description of the Auto Market during the First Half 1393 (March 2014 – March 2015) 8
4.2 Domestic Production 10
4.2.1 Production in the Saipa Group 11
4.2.2 Production in the Iran Khodro Group 12
4.2.3 Analyzing the Production of Domestic Cars 12
4.2.4 Domestic Production of Other Vehicles 18
4.2.5 New Cars Coming to the Market 19
4.3 Imports 20
4.4 Import Tariffs 20
4.4.1 The Outlook of Imports 21
4.4.2 Import Developments during the 3rd Quarter of the Year 1393 22
4.4.3 Import Statistics 23
4.5 Exports 23
5 Checking the Clients’ Status 24
5.1 The Demand Analysis 24
5.2 The Latent Demand 25
5.3 The Balance of Supply and Demand 26
6 Potential Challenges and Solutions 26
6.1 The part makers’ unsolved difficulties 26
6.2 The Automotive Industry’s Inappropriate Structure 27
6.3 The Automotive Industry Liquidity Problems 27
6.4 The Iranian Auto Making Lost Circle 28
6.5 Generalizing in the Policymaking Bodies 28
6.6 The Instability of Provisions in Car Imports 28
6.7 The Challenge in the Cabinet Automotive Plan to Reduce Pollution 29
6.8 The Sales Crisis with Decreasing the Customers’ Purchasing Power 29
6.9 The Downturn in Automotive Research and Development Centers 29
6.10 The Challenge of Pricing New Cars 29
6.11 The Quality and the Price, the Exports’ Main Challenges 30
7 The Auto Industry Financial Analysis 30
7.1 The Trend of Raising Capital (million rials) 30
7.2 The Trend of Vehicle Manufacturing 31
7.3 The Trend of Car Sales 32
7.4 Performance in Sales 33
7.5 Evaluation of Profit Margins 34
7.6 The Trend of Net Profits (million rials) 39
7.7 Evaluation of Assets 39
7.8 Evaluation of Debts 40
7.9 Evaluation of Accumulated Profit/Loss 41
7.10 Shareholders’ Equity 42
7.11 P/B and P/E 43
This report has studied and analyzed the country’s automotive industry during the third quarter of the Persian year 1393 (a period ended December 21, 2014), focusing on cars.
To do so, the production, import, and export have been evaluated after considering all the legal, environmental, social, and political factors which affect the auto industry during the studied period. Then, the customer information was processed and ultimately the major challenges faced by the auto industry are discussed and the possible solutions are provided.
The study uses an industrial analysis model, taken from the macro environment analysis models (PESTEL) and the micro environment analysis model for industries (Porter’s five competitive forces).
The influential factors considered in this study include the events affected the auto industry’s customers, raw materials and the resources for production, export markets, the upstream documents and the government-auto manufacturers relations.
Prior to the discussion on changes in regulations as well as to effective events in the auto industry, it is crucial to study the relevant upstream documents in order to accredit the remarks and resolutions within the period. Therefore, the following documents were studied:
+ The 20-year Vision Plan of the Islamic Republic of Iran;
+ The 5th Five-Year Socio-Economic Development Plan (2011-2015);
+ The Budget Bill for the year 1394 (started March 21).
The clauses and articles in the above-mentioned sources which deal with the auto industry are as follows:
The 20-Year Vision Plan:
In 2007, the Ministry of Industry, Mines, and Trade announced that developing the national car brands as one of the main strategies. Base on the forecasts made by the 2025 Vision Plan, the auto industry had to develop 5 domestic brands with special care taken for domestic design, technical know-how, and production (with cooperation with foreign carmakers of course). Nevertheless, the goal has not been achieved yet and it is not clear whether the policy is still pursued by the ministry or not.
The 5th Five-Year Socio-Economic Development Plan (2011-2015):
Some of the contents of the plan on automotive industry are as follows:
Clause 160: The production and import of diesel cars are allowed if the requirements of the law to improve the domestic car production are met.
Clause 163: The domestic transportation companies are allowed to import trucks under three-years old which have the international standards. Based on the law to protect the rights of consumer –passed on June 13, 2007– the trucks must have after-sale services and will be imported upon the confirmation of the Road Maintenance and Transportation Organization. The administration is authorized to grant customs exemptions for the importers if one truck older than 25 years is dismantled and recycled for every imported truck. The bylaw to execute the clause will be jointly prepared by the Ministries of Roads and Urban Development as well as Finance and Economic affairs and will be presented to the cabinet within six months to be passed ...
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