Companies Eye New Markets
TEHRAN: Car exports fetched more than $500 million in the Iranian year 1385 (ended March 20) as sales doubled to 38,000 units. This represents an increase of almost 350 percent over the previous year's sales that stood at $110 million.
Top carmaker Iran Khodro outperformed other domestic manufacturers, launching assembly lines in Syria, Azerbaijan, Venezuela and Belarus. The company reportedly exported more than 22,000 cars registering a fourfold increase over the previous year.
However, the company's export figures are not considered significant compared to its supply of 500,000 vehicles in the saturated domestic market. With a ratio of one out of 23 cars manufactured being sold abroad, observers say the huge car manufacturer/assembler should rise to the occasion and improve its competitiveness if it wants to make inroads into the regional markets and beyond.
Iran Khodro has announced that it intends to raise foreign sales to over 100,000 cars in the current Iranian year. To help reach such ambitious goals assembly plants are planned in countries as far as China and Senegal.
The other major auto company Saipa is in the process of finalizing plans to set up assembly lines in five more countries. It exported 15,000 cars in the last Iranian year. That figure is nearly 50 percent over the preceding year. The company has set a target of exporting 70,000 cars per annum by 2011.
Saipa has already launched a production site in Venezuela and intends to start another facility in Syria in the coming months with a total annual manufacturing capacity of 15,000 cars.
Iran's auto industry is beset by several export hurdles including outdated designs and high custom tariffs because of the country's lack of membership in regional economic accords.
For now Syria and Russia continue to be Iran's main auto markets, absorbing more than 50 percent of the total exports.
Automakers are reported to be working on an export figure of 250,000 cars per annum to 40 countries within the next five years.
When it comes to the domestic market, the general belief is that prices are to high compared to other regional states, especially the Persian Gulf littoral states. For example, a small family car known as 'Pride' produced by Saipa in collaboration with KIA motors of South Korea sells for about $7,500. The car does not meet acceptable international standards in engine performance, fuel consumption and after-sales-service. The same is true for many other car companies whose numbers have been increasing rapidly over the past two decades.
Customers routinely complain about quality and durability. One interesting point in the thriving auto industry is that Iran is the only country where buyers of some models have to wait for almost a year to take delivery.
© Iran Daily 2007
