Iran Automobile Industry – Past to Present
Iran Automotive Industry Outlook 2025
The benefits of developing a Domestic Automotive Industry are significant. The worldwide automotive industry is estimated to have a total cash flow of more than 2,790 billion USD with a total production capacity of approximately 90 million (PV* and CV**) and it employs more than 48 million people (directly and indirectly). Accumulated this would make up for the 7th biggest economy of the world.
The first Ford Model T’s arrived in Iran in the 1930s and by 1955 annual imports had soared to approximately 10,000 units. Nowadays the domestic Iranian automotive industry is estimated to have a yearly nominal production capacity of 2 million cars (PV and PC combined) of which around 1.09 million units of PV and CV production capacity is being utilized. It employs more than 1.5 million people (directly and indirectly) making up for 12% of the countries workforce. Furthermore it has a daily nominal production capacity of 10 million components whilst drawing input from sixty related industrial fields.
With total sales of 12 billion USD it makes up for approximately 19% of the total industry, as well as for approximately 2.5% – 3% of Iran’s GDP. Furthermore it is responsible for 14% added value creation contribution to the whole industry. The average profit of the industry is 4.5%. The Iranian automobile industry makes up for 1.2% of world production, and currently holds rank 18 to 20.
Several national brands exist, such as Iran Khodro, SAIPA, Pars Khodro, Kerman Khodro, and Bahman that produce a variety of different models (such as Samand, Tiba, Dena, etc). IKCO and SAIPA are the biggest automotive manufacturers and together own more than 79% of the total market share.
Iran also looks at its automotive industry as an important sector for exporting its products to neighboring countries. In 2012 Iran exported 520 million USD worth of automobiles and car components. The situation for car and component manufacturers worsened in the following years, leading to a diminishing export value by 2013 to 263 million USD. In 2014 Iran’s share of exporting automobiles and car components was announced to be at 243 million USD. There are several reasons for the drop, however, experts concur that the key reasons are low quality and at the same time a high price.
Currently the Iranian automobile import market is ranked on 75th place worldwide, making up for less than a percent of the global automobile and component importing market share. In 2010, its market share was 0.2 percent with a total value of 2.5 billion USD. During 2011 the market share did not change, however, the total value of it increased to 2.9 billion USD.
Economic sanctions were a big setback for Iran’s automotive industry, especially at a time when the industry was ready for major expansion. Since the year 2012 the production output decreased by approximately 50% (from 1.4 million to 0.7 million), whilst at the same time the price of cars increased radically by about 300%. Furthermore the quality of Iranian-made cars dropped at a similar rate as well.
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