TEHRAN - The state car-making strategy should be compiled by participation of the private sector spare part makers.
The auto industry is one of the highly prioritized industries in the world's developed and developing countries.
A proper strategy compiled for this industry will motivate other industries including the textile, chemistry, electronics, steel, metal casting and machine building industries while at the same time will promote technology and initiative in these sectors.
During the years 1368 (1989-1990) to 1372 (1993-1994) the import value of car and auto parts hit over $7.98 billion; however, since 1372, the import rate had a declining trend due to lack of resources and this caused a new growth in the car-making industry.
Presently, the majority of the state car-making units are either governmental or semi-governmental; nevertheless, there are a few private spare part making units that import CLD and CBU.
Since the beginning of the 1370s, due to lack of long-term investments and government financial contributions on the on-time delivery of the products, the two great Iranian car-making factories, i.e. Iran Khodro and Saipa invited private spare part producers to produce some automotive spare parts for them.
This actually increased the cost price of the products.
The reports also suggest that the budget allocated to the establishment of industrial units during a 10-year period of time, i.e. from 1368 (1989 - 1990) to 1378 (1999-2000) was about $7.2 billion.
Some $0.9 billion of this budget was invested in the car-making and metal casting industries; while in the same period of time, China, South Korea and Brazil had respectively invested some $18 billion, $15 billion and $19.8 billion in their state car industry.
Lack of resources, development of capacity, paying special attention to the creation of research and development units and paying a special attention to the training of manpower due to the uneconomical cost of conducting long-term contract are among the most significant problems of the state car-making industry.
Nevertheless, despite all these problems, the annual car production rate reached one million in the year 1384 (2005-2006) in comparison with the former 20,000 cars in the year 1368 (1989-1990).
Some 80% of the auto spare parts can be produced inside the country and most of these Iranian made spare parts can efficiently compete with similar foreign ones.
According to the experts, lack of proper management in most of the car-producing companies, the old production technology in the factories, insufficient investment in the research and development activities, lack of efficient program and strategy in the car-producing factories, and lack of a long-term program are among the other major problems facing the state car-producing industry.
The governmental and semi-governmental nature of the state car-making factories has also created some problems.
However, compiling a proper strategy for the state car-producing industry, allocating sufficient financial budgets for realizing the strategy, reforming the restrictive regulations in investment, taxation, labor and social welfare sectors, supporting domestic craftsmen, paying a special attention to the research and development activities, privatizing the auto industry, avoiding both the CBU (completely built unit) selling and CKD (complete knocked-down) assembly methods, and using the car market as an opportunity to encourage joint investment are the most effective solutions for the aforesaid problems.
© Tehran Times 2006
