Iran Automotive Industry

Iran Auto Industry
2 June 2016- Bruegel
By:
Mohsen Pakparvar
Senior Expert
Head of Energy & International Economics studies group
Institute for Political and International Studies (IPIS)
Ministry of foreign affairs
Islamic Republic of IRAN
E-mail: [email protected],
1
Content
IRAN AT GLANCE
IRAN’s Economics Index
IRAN Auto Industry
IKCO Vs.
Vs. ISAIPA
SAIPA Group
IKCO
Group
Opportunities and suggestions
Iran’s Spare Parts Industry
IRAN
The Cyrus Cylinder is a document issued by Cyrus the Great and known as The First Charter of Human Rights.
Persepolis
500 BC
5
A Country for All Seasons
Mount Damavand
Tehran
I.R.IRAN at glance
Official name Islamic Republic of Iran Head of State President H.E. Dr. Hassan Rouhani National Day 11th of February (Islamic Revolution of Iran-1979) Capital Tehran Area Land
boundaries 1,648,196 sq km 4,137 km Sea
boundaries 2,700 km (Including the Caspian Sea) River
boundaries 1,918 km Border
countries Afghanistan, Azerbaijan , Armenia, Iraq, Pakistan, Turkey,
Turkmenistan +9 sea neighbors Climate Mostly arid or semi-arid, temperate along Caspian coast and
mountainous temperate along west and north-west. Natural resources Land use: Arable land Meadows and
pastures Forest and
woodland Other Irrigated land Population Population growth
rate Petroleum, natural gas, coal, chromium,
copper, iron ore, lead, manganese, zinc, sulfur 300,000 sq. Km
18.2% 900,000 sq. Km
54.6% 120,000 sq. Km
7.3% 258,000 sq. Km
70,000 sq. Km
15.7% 4.2%
78.03 million (2015) 1.30% (2015) Iran at glance 3
Muslim
Religions 99.56% Zoroastrian, Christian & Jewish
0.44% Languages Persian, Azeri, Kurdish, Lori, Baloochi,
Arabic Population
Literacy (2015) 79,668,323(2015)
Total 94% University's students 5 M (annually 1 M graduate,<300,000 Engineers, <60% ladies) Total Imports 53451 million US $ (2012) Total Exports 98033 million US $ (2012) Foreign Direct
Investment 4870 million US $ (2012) Iran at glance 4
Electricity Transportation: Railways networks Road networks Ports Airports Production: 232,955 GWH (2010) 12000 km (2013) 220000 km (2013) 11 commercial ports 54 Economic sectors contribution to GDP growth
Iran’s trade balance
Unemployment Rate
Government Budget
Current Account Balance
Iranian Oil Resources
IRAN: ECONOMY, OIL AND GAS
o  Mixed and transition economy
o  Large public sector
o  60% of the economy is centrally planned
o  Dominated by oil and gas production
o  One of the best performing exchanges in
the world
With 10% of the world's proven oil reserves and 15% of its
gas reserves, Iran is considered an "energy superpower.
IRAN: AGRICULTURAL PRODUCTS
Iran is known for its agricultural products which are mainly related to soils:
o 
o 
o 
o 
o 
o 
o 
o 
o 
o 
o 
o 
Wheat
Rice
Other grains
Sugar beets
Sugarcane
Fruits
Nuts & dried
Fruits
Cotton
Dairy products
Wool
Caviar
Saffron
IRAN: EDUCATIONAL SYSTEM
o  Iran has free public schools and
private schools at all levels
o  Educating more than 18 million
students at segregated schools
o  Education in Iran is highly
centralized
o  Iran is one of the few developing
countries with great success in
girls' education
Education is considered a
top priority in the
development plans of the
country.
IRAN: TOURISM
There are several types of tourism in Iran. Some of them include
historical, cultural, educational, Eco-tourism etc.
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IRAN: INDUSTRY OVERVIEW
o  Electrical
o  Pharmaceutical and health
o  Chemical and cellulose
o  Construction industry
o  Automotive industry
Iran is the Middle East’s biggest car producer. Its car industry, comprised
of companies such as the Bahman Group, Iran Khodro and Saipa, ranks
13th in the world for total production and 5th in the world in terms of
fastest growth.
IRAN AUTO INDUSTRY
24
Iran Vs. World
q More than 38 countries are active in Auto Industry
q 90% of Auto production belong to 22 countries
q World Auto Industry’s turn over annually 2700 B$
q Auto industry share in Iran’s GDP= 3.5%
q 18.8% of Iran’s Industry belong to Auto Industry
q & 12% of total employment of the Country
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production
26
Production (by type in 2015-2016)
Type of vehicle
2014
2015
% change
Car
958339
892600
-6.9
Pick up
151044
73187
-51.5%
Mini &
middle bus
276
511
85.1%
Bus
651
696
6.9
Heavy vehicle
20977
9842
-53.1
total
1131287
976836
-13.7
27
Export
28
E
ٍ xport by Iranian car manufacturer
company
Actual Exp.
Programmed exp.
% success
Saipa
14450
45000
32.1
IKCO
10198
30000
34
Saipa Diesel
10
250
4
IKCo Diesel
107
350
30.6
Others
0
900
0
Total
24765
76500
32.4
* Total Export in 2014( Units) 28432
* 12.9% reduction of export in 2015
29
IRAN Auto Industry’s
prospective in 2025
30
Quantitative goals of 2025
Ø Total annual production of 3 M. Vehicle (2 M for domestic& 1 M
for Export)
Ø Minimum of 50% of production under domestic Brand
Ø 25 B$ Revenue of spare part manufacturers from local market
Ø  6 B$ export of spare part
Ø  Production of 120,000 heavy vehicle (75% domestic, 25%
export)
Ø Increasing of Auto industry share of GDP to 4%
Ø  reaching of 20% share in industry sector of Economy.
31
Quantitative goals of 2025 p/2
Prospective of production on 2025
(1000 Units)
Year 2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Car
1600
1750
1900
2100
2250
2400
2550
2700
2800
3000
Export
1400
200
260
320
380
500
580
690
830
1000
Heavy
vehicle
35
43
52
60
69
80
90
100
110
120
Export
1
1.5
2.5
4
6
8
10
15
22
30
32
Qualitative goals of 2025
v Improve and enhancing of Quality and a9er sells services v Reduc;on of pollu;on(all kind) v Reduc;on of fuel consump;on 33
Auto industry’s posision
34
World Ranking of Vehicle Production
In 2014 Iran
ranked 18th in the
volume of Vehicle
Production
Auto industry capacity
36
Type
Capacity (annually)
Car
1800 Pick up
175 Mini bus and Bus
36 Tracks and trailer
170 Total
2126 37
List of car manufacturer
38
List of Iranian Automotives manufacturer
No.
name of company
1
Saipa Group
Saipa Dessel
Sabalan Khodro Mayone
Sepeh dessel Kaveh
Saman Khodro Kumesh
Sinad Khodro Tus
Siba motor
Sair o safar Rakhsh
Shahab khodro
Sanaye Arg Dessel
Sanaye Puya Khodro Garmsar
Sanaye Khodro Sazan Modiran
Sanaye Khodro Rili Akia Douche
Sanaye Khodro Kavir
Oghab Afshan
Karsan Yekta
Karizan Khodro 0 Qazwin
Kerman Khodro
Bahman Groupe
Mamut Dessel
Mobarez
Moratab
Huran Khodro Dessel
Yavaran Kodro Sharq
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
No.
25
26
27
28
29
30
31
32
33
34
35
35
37
38
39
40
41
42
43
44
45
46
47
48
name of company
Azar Etesal
Arya everest Mashin
Arya dessel motor
Aras Khodro Dessel
Iran Khodro Industry group( Ikco)
Iran Khodro dessel
Brojen Khodro
Bahman dessel
Toseeh fanavariyae pishrafteh Azar
Abagan
Toseeh bynolmel lutus
Tolidy Tajhizat Sangin Hepco
Tirajh dessel
Khodro sazan Bam
Khodro sazan rein
Khodro sazi pishro dessel Asia
Khodro sazan Desslel Azarbayjan
Khodro sazi Zagros
Khodro sazi setareh Nik Arya
Khodrokaran Iran
Raniran
Rayan Fangostar dessel
Rakhsh Khodro dessel
Zamyad
Zarrin Khodro
39
Iran Sale volume and Market share
Iran sale Volume
SAIPA Group’s market share
Others
9%
Import
4%
SAIPA’s market share
in SAIPA Group
35.405
1.800.000
43.389
1.600.000
50.633
1.400.000
1.200.000
41.610
42.691
41.767
80.000
1.000.000
78.498
800.000
600.000
IKCO
44%
SAIPA Group
43%
SAIPA
30%
400.000
Pars Khodro
7%
200.000
0
2007
2008
2009
2010
SAIPA Diesel
1%Production
2011
2012
SAIPA
Kashan
Import 2%
2013
2014
IRAN MARKET (PASSENGER CAR)
SAIPA Group’s market share
Import
4.8%
IKCo
43.4%
SAIPA’s market share in SAIPA Group
Others
6.5%
SAIPA Group
45.2%
SAIPA
35.1%
ParsKhodro 7.7%
SAIPA Kashan 2.4%
PARS KHODRO
A good companion for whole life
IRAN: OPPORTUNITIES TO INVEST
Iran is certainly a unique market in
the Middle East.
It is populous, rich in natural
resources and apt to technological
progress and international
developments.
The country's natural resources create
a significant wealth.
In fact, based on a resource-based
evaluation, the Iranian economy is the
20th strongest in the world
o  Strategic Location
o  Market Potentials and Proximity
o  Labor Privileges
o  Developed Infrastructure
o  Low Utility and Production Cost
o  Abundant Natural Resources
o  Climatic Characteristics
o  Fiscal Incentives
Auto industry : OPPORTUNITIES TO INVEST
Internally
• Iran ‘s domestics market rapidly
expanded.
• Most of infrastructure needed are
available
• Most of raw materials and cheap
energy accessible.
• Iranian Greet industrial groups could
support and provide requirements.
• Huge Talented engineers and skilled
man power available.
•  advanced law and regulation of
investment protection with a lot of
incentives.
• 50% empty capacity of industry
available (means no need for
capacity building of new produces)
• Free trade zones and SPZ,s with a
lot of incentives.
Regionally and internationally
o  The most stable and safe country of
ME
o  16 neighboring countries , more than
400 M population
o  Advantages of regional
corporations( ECO, Shanghai, IOR-ARC)
o  Hub of transit route (NS/ EW)
o  Easy access to the sea (Persian golf &
Caspian see,..)
o  Links of railway network to
neighboring countries
o  All of auto industry’s sanctions
removed after JCPOA
o  Several financing, FDI and insurance
covers suggested (more than 100 B$)
o  Major foreign partner : France(30%),
South Korea (25%), Japan, China,
Sweeden
o  Neg, partner: Italy, Germany, UK,
Iran’s spare parts Industry
By:
Mohsen Pakparvar
Senior Expert
Head of Energy & International Economics studies group
Institute for Political and International Studies (IPIS)
Ministry of foreign affairs
Islamic Republic of IRAN
E-mail: [email protected]
1 June 2016
Dispersion of Parts Manufacturers in the Country
7 clusters
Cluster 3
Tabriz
(Northwestern Provinces)
112
Cluster 6
Babol
Cluster 5
Saveh
(Western Provinces)
48
q 1200 participants
59
(Northern border provinces of
Alborz)
Cluster 1
Tehran
Cluster 2
Mash’had
(Southern border provinces of
Alborz)
(Great Khorasan)
718 units
125
Cluster 4 Isfahan
(Central Provinces)
91
Cluster 7 Shiraz
(Southern & Southeastern
Provinces)
46
in the supply
chain.
q Spare Parts
Manufacturers
followed
Automakers in
industrial zones
45
Statistics on Parts Manufacturers in 1394 (2015)
q Parts
Manufacturers Companies: 1200 units
q Direct
employee of Parts Manufacturers Industry 500,000
q Indirect
Employee: 600,000
q Investment:
q The
3 B$
Amount of Working Capital: 4.5 B$
46
Statistics on Parts Manufacturers in 1394 (2015)
Spare Parts Sales: 7 B$
u 
Spare part's Share of total Industry: 9%
u 
Salaries paid: 1.5 B$
u 
Interest Paid: 0.7 B$
u 
u 
Imports of major items of Iran’s Parts Manufacturing Industry: $ 3
billion
47
International Cooperation of spare Parts
Manufacturers & Iran auto Industry
Type of Cooperation
Year
2005 2009 2013 2015
License
69
124
168
176
Joint Venture
41
30
73
82
Technical Assistance
6
42
53
59
Technology Transfer
0
0
34
38
Exclusivity Agency
0
116
0
196
10
338
25
380
Total
48
The Production of Vehicles and spare parts in Iran
(1990 - 2015)
1000 Units
1800
More than 1.6 million vehicles
In 1390
1600
1400
1200
1000
800
Almost 900,000
vehicles
In 2015
spare Parts
600
400
200
0
49
Trend of domestics major spare parts Suppliers sales
1997- 2015
9
6 B$
Megamotor
Saazeh Gostar
7
3.5 B$
SAPCO
5
3
1.5
0 B$
100 M$
‫ﺱسﺍاﻝل‬
1376
‫ﺱسﺍاﻝل‬
1380
‫ﺱسﺍاﻝل‬
1384
‫ﺱسﺍاﻝل‬
1388
‫ﺱسﺍاﻝل ﺱسﺍاﻝل‬
1393 1394
50
Spare Parts International Market
B$(2015)
400
675
1650
575
The total
spare
Parts market.
The spare parts
produced by
automobile
manufacturers
( 25%)
Spare Parts
manufacturers
Produced Along
with
automobile
manufacturers
The Export
market
(35%)
(40%)
51
Agreements with foreign spare Parts manufacturer
Cooperation agreements with:
q 
Indian spare Parts Manufacturers Association.
q 
French spare Parts Manufacturers Association.
q 
Austrian spare Parts Manufacturers Association.
q 
Turkish spare Parts Manufacturers Association.
q 
Spare Parts Manufacturers Association of Bavaria State (Germany).
Also cooperation with the Associations of spare parts manufacturing
of Italy, Japan, Taiwan, China and Slovakia is under negotiation.
52
Exports of spare Parts (M$)
Export in 2014 Export in 2015 Plan of 2016 99 33 120 Major spare parts exported:
ü  Vehicle Frame& body and spare parts.
ü  Spare parts and rims and spokes.
ü  Radiator.
ü  Clutch Discs.
ü  Brake drums and discs and clutch plates.
53
Expectations of government from spare parts
manufacturers
u 
Using of foreign investment and cooperation with famous international
brands.
u Improving the quality of parts and focus on customer satisfaction
u 
the establishment of Design and Engineering Units (R & D) in spare
parts industry , effective corporation in the design and production and
more cooperation with domestic and international companies.
u 
Development of spare parts manufacturing domestically in order to
enhance competitiveness.
u 
Expanding share in auto industry’s global market(vehicles& spare
parts)
25
Suggestions
1.  Exchanging of information via
governmental and private sector of
Iranian com. Vs. EU com.
2.  Giving suggestions to promote
bilateral relations
3.  Sending EU. Com. Delegation to
provide F.S report (micro level)
4.  B2B meeting of Auto industries com.
Vs. Iranian car and spare part makers
under EU umbrella.
55
The End
•  Thanks for your kind attention,
Special thanks :
•  Dr. Simone Tagliapietra
•  Dr. Matilda Sevon
•  Dr. Giuseppe porcaro
•  And Bruegle
For all arrangement and hope to have
tangible business interaction with
participants.
All right reserved for IPIS, for more information ask: [email protected]
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