No. 175, Taleghani Ave., Tehran 15814, Iran Tel: +98 21 88 38 13 55
Transcription
No. 175, Taleghani Ave., Tehran 15814, Iran Tel: +98 21 88 38 13 55
SPRING 2013 / ISSUE NO NO.66 License Holder: Iran Chamber of Commerce, Industries, L Mines and Agriculture Representative: Dr. Mohammad Nahavandian Legal R Editor in Chief: Iman Farjamnia E in Chief & Deputy Editor Ed Executive Director: Elham Alaghebandan Exec Public Relations & Pub Advertising Director: Reza Mahdlou Advert Art Director: Behrouz Khoshkar Contributors: Atefeh Rezvania, Siavash Rezaei, Afrashteh Khademnia, Nasim Niazi, Bahar Kasra, Alireza Behdad, Reza Arman, Saber Moghadami, Mohammad Azimnezhad, Behrang Jalili, Fahimeh Payam Asgari, Sama Farkhondeh Nejad Translators: Zahra Salimi, Abolfazl Jafarnezhad Photography: Bahareh Taghiabadi, Reza Mahdlou Production Coordinator: Mohammad Sharifi Productio No. 175, Taleghani Ave., Tehran 15814, Iran Tel: +98 21 88 38 13 55 - 6 Fax: +98 21 88 82 51 11 www.iccima.ir [email protected] IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE 1 CONTENTS 3 Tehran: From a Vast Garden to a Big Parking Lot 4 Peugeot in Iran: Before and After 7 Foreign Automakers and the Iranian Vehicle Industry 11 World Economic Climate improves Slightly 14 The Iranian Automotive Industry Comes of Age What is the Role of the Private Sector in ensuring Economic Growth? 22 Foreign Car Brands in the Iran Market 15 18 Off-Roading like a Gentleman: 10 Luxury SUVs on Their Way 24 28 The Auto Industry under Trasformation 33 Automobile Technology & Innovation 34 Auto Industry Outlook and Review The Correlation between Happiness and Automobiles 36 39 Different Types of Car Engines 44 The History of BMW in Iran The Market Share of Domestic and Foreign Auto Firms in Iran The Growing Presence of Asian Vehicle Manufacturers in Iran Cars of the Future 48 50 54 58 62 Modern Global Automobile Industry Tehran’s Most Luxurious Cars Production of Economy Cars a Way Toward Growth 65 70 Iran’s Auto Parts Industry; The Strategic Industry 73 The specifications of Iranian car engines 78 A Strategy for becoming more Competitive Participation of Iran Chamber of Commerce, Industries, Mines and Agriculture in Qinghai International Halal Fair Digital advertising tops agenda of responsible marketing experts meeting Tabriz: One of Iran’s most Attractive Cities News 2 84 89 SPRING 2013 / ISSUE NO.6 83 81 EDITORIAL The Iranian Automotive Industry Comes of Age n 1975, the assembly of a Chevrolet Iran (Opel Rekord) at the Iranian car company Pars Khodro took, on average, 45 man hours to assemble against 25 man hours for the same car in an Opel plant in what was then, West Germany. During that same period, wage increases in Iran during certain periods increased on average, three times more than the annual rate of productivity, with production costs at times rising so quickly that the prospect of creating an export oriented industry such as automobiles seemed dim. In the case of Pars Khodro and Opel, the comparative difference in labor costs was 5.2. Today, it is a different story. Today, Pars Khodro, which has a joint venture with Renault, has been successful in assembling and exporting Renault vehicles across the region, even marketing an indigenized and co-branded Renault vehicle (the SR) in regional markets. Renault has repeatedly expressed its interest in developing its joint venture in Iran as an export hub. Marked gains in productivity, skilled labor and effective supply chain management have made most Iranian manufacturers competitive both locally and regionally and the growing pains of the 1970’s are now past history. One company, SAIPA, with a productivity level that is, on average, thirty three percent higher than any other company in Iran, has production costs that are now so competitive that not only is the company successfully exporting its cars to numerous markets, experiencing a growth rate in exports of 256% in 2009-2010 alone, but has also been able to enjoy a higher than industry average profit margin of 8% on many of its top selling vehicles, translating to its continuous performance as one of the best performing companies on the Tehran Stock Exchange. Companies such as SAIPA and Iran Khodro, which have been ranked among the top twenty companies worldwide, are effectively exporting more nearly 15% of their annual production across the world to continents as far reaching as Latin America and Africa. In some regional countries, such as Iraq, both companies are market leaders, dominating their respective market segments, and continue to achieve double digit growth rates for exports. These successes are complemented I IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE by the establishment of licensing arrangements and production plants in over fourteen countries across the world. What makes such success all the more of interest is the fact that the majority of exported vehicles are local, indigenous designs sold under the brand names of their manufacturers, with names such as Saipa and Iran Khodro even becoming increasingly recognized as household consumer brands in some neighboring countries. The key contributing factors to this success are subject to a separate article. What bears mention is that such success has been achieved under circumstances that for many other companies would seem to be insurmountable odds, ranging from the effects of international sanctions to the implementation of inconsistent government policy making and local inflation anchors in monetary policy resulting in limited access to domestic credit and cash flow. 2012 marked the fiftieth anniversary of the establishment of the automobile industry in Iran. During this period, despite all the impediments that they faced, Iran’s leading manufacturers have made the transition from imported knock down assembly operations, with little added value, to the ability to design and manufacture vehicles and capitalize upon a broad and competitive local supply chain network. Given the growing strength and competiveness of the Iranian automotive industry, and the new economic climate arising from the election of the Rowhani administration, the time would seem ripe for international OEM’s to use this opportunity to enter into strategic alliances with their Iranian counterparts to not only capitalize on the competitive advantages offered by Iranian partners, including, inter alia, economy of scale, state of the art infrastructure, well developed regional export networks and a skilled and competitive work force but to develop such partnerships into regional production hubs which would be able to facilitate low-cost and high volume entry not only into the continuously growing Iranian market, but to the fast growing regional markets surrounding Iran as well. 3 REPORT Tehran: From a Vast Garden to a Big Parking Lot utomobile was first imported to Iran during the early 20th century. During his first trip to Europe, Mozafar al-Din Shah, a Qajar king, brought the first automobile to Iran in the year1902, only 15 years after the production of the diesel engine. As the king was returning to Iran, two automobiles, which he had ordered, were ready at his door. The automobiles, manufactured by Re- A 4 nault Company, were sent to Iran, but only one of them reached Tehran. The cars were imported to Iran in situation that the government treasury was poor and the nation lived in bad economic conditions. The king borrowed a high amount of money to buy the cars. According to Kahkeshan magazine, the director general of the company gave one of the men- tioned cars to the king as a gift but the latter cost 1600 Franks. The director had told the king that next cars to be sold to Iran would cost 1500 Franks each. The king said, “we do not want any other cars.” But the director answered, “we have put 100 sedans apart to be exported to Iran because we are sure as the king arrive at Iran all princes and politicians ask for a car like yours.” SPRING 2013 / ISSUE NO.6 REPORT The car gifted to the king was an oil-filled vehicle bought from International France Car Exhibition in 1902 which valued 40 thousand rials. The blue vehicle was driven to Iran by a French driver named mussio Varrone. After Mozaffar Al Din Shah, his successor Mohammad Ali Shah used the car until he was assassinated. One day, when Mohammad Ali Shah royal carriage and his car were passing in front of Saudi Arabia’s embassy near Baharestan a bomb was thrown at them. As a result of that assassination attempt some of the riders, coachmen and footmen were killed or injured. The king who was in the car survived. After Mohammad Ali Shah, the car was given to his son, Ahmad Shah, he bought second car and drove them quite frequently. During Reza Shah Pahlavi Iran witnessed an era of modernization. During that period automobile was a luxury goods which was owned only by statesmen, rich people, ambassadors and foreign envoys to Iran and well-known businessmen. His son, Mohammad Reza Pahlavi was a car freak and one of the biggest car collectors of the world. He had more than one thousand cars from different world famous brands, including Lamborghini Countach, different models of Rolls Royce, more than 20 models of Mercedes-Benz, Alpha Romeo, Cadillac, Ford, BMW and Chrysler… Iran Car Import Nostalgia We reviewed first car import history to Iran above. After that Iran gradually turned to one of biggest car importers in the world. The first person who familiarized foreign auto makers with Iran market was Seyyed Ahmad Mirsepassi. He was the private driver of Hassan Vosough Al-Dowleh the Qajar prime minister. Later, he became Ahmad Shah driver and accompanied him during his several trips to Europe. Mirsepassi was a smart man who cleverly got familiar with foreign auto firms directors during Ahmad Shah trips and was given some facilities from those companies. Then he helped them enter Iran market and this way he collected a huge wealth and credit. Later he was assigned as the advisor of the army in the field of arms and machineries. He had helpful information about driving ability and different kinds of cars. After a while he started a self-employed job, he also favored Qajar court as a credited and rich businessman. First Series of Imported Cars According to the book “Tehran Social History in 13th Century” written by Jaafar Shahri, Ford Crook cars were the first series of cars imported to Iran whose top speed stood at 40 km/h. the mentioned cars did not have any gearboxes to change the engine power so they could only move on flat levels and streets. They also were unable to move on downhill roads, for the driver could not control the car completely. In later years cars with gearboxes and trucks with differentials with different capacities were imported to Iran. These cars name GrahamPaige had oil brakes and its wheels were filled with wind stream. All of them were crook and their lights turned on with matches and carbon dioxide. The cars did not have start system and turned on with handles located in front of the cars. 300 toman Cars Then cars cost 300 to 350 tomans and people could buy one with a prepayment of 50 tomans. Lauri cars price tag was 600 tomans of which one fifth could be paid previously and the rest in installments. Graham-Paige sedans were the most expensive cars at that time which valued two thousand and five hundred tomans. The cars had IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE a lot of spare parts with it such as two spare tires, a wrench set, a mobile light, a pump and prizes like watches, lighter, leather coat, cigarettes… were offered to customers. Wearing leather coats, pilot sunglasses and hats the drivers looked like pilots and showed off. In the year 1929, more than 90 foreign automakers exported cars to Iran of which Americans ranked first. During the mentioned year about seven thousand cars and their spare parts were sold to Iranian rich people and businessmen. At that time car sales reached two million and five thousand dollars annually. Iran Market, an Odd Mix of Brands “Etelaat” Persian newspaper published an article in 1929 during which the author criticized Iran car market. According to the article about 1522 city and family cars and 1105 trucks, buses and minibuses were imported to the country. The paper criticized that Iran auto market was an odd mix of brands and cars and nowhere in the world had such situation. The author warned that it was the sign of spreading people’s tendency toward fancy, for it showed that every person had bought six different brands of cars during one year. On the other hand foreign embassies in Tehran changed their cars at the beginning of each Christian year and replaced them with brand new one to show them off and advertize for them. USA, UK, France, Italy and Germany were the major contestants to grasp the attention rich Iranian people. First Standard Trucks in Iran The first trucks entered Iran from western boundaries and were very old and broken down, but because they transited goods for Iranian traders and received good amount 5 REPORT of money they stayed in Iran. Those trucks, highly welcomed by Iranians, had iron lights and filled tires and no differentials. A man called Fouladi who was one of biggest then car dealers and repairmen imported first standard trucks, having gearbox, differential, dynam disks and battery, and used them in his garage. Later Fouladi who had also monopolized transport of post consignments, won the official dealership of Fiat Company in Iran and began to import Fiat sedans with capacity of seven or eight passengers. The sedan was like Jeep Stations used as ambulances in Western countries and was used to move passengers in Tehran. Then Fouladi sold them to Bank Melli Iran (BMI) and the bank established first company for public transportation and used them as taxis. BMI also hired some drivers to run so called ‘auto bank’ Fiat sedans and moved people from Toopkhaneh Square to their required directions. Trucks at that time were so expensive regarding their weight and facilities so that people sold their homes and properties to be able to afford such truck. The people were extremely eager to buy those trucks because 1. Working by them was incredibly profitable 2. Businessmen and traders welcomed those trucks because their goods could be transferred to other cities and provinces faster and easier 3. The job of truck drivers was one of high class occupations 4. The truck’s owner could blow his own horn among his relations and neighbors. In other words drivers became a major rival for state employees and traders among social classes. No longer then Iran became a hub of several models and brands of trucks and mini trucks (kamyonets) and a historical revolution occurred in the country’s transportation system. After Fouladi Enterprise, many people founded transport and travel institutes of which the most famous were Nosratollah Etehadieh Enterprise and Transport Institute lo- 6 cated in Sarcheshmeh Crossroad, Tehran-India-Bain Alnahrain Parking in Shoosh St. and BT travel institute whose ticket’s price was more expensive than others’. The company offered first entertainment system for passengers and its drivers and staffs wore formal clothes. First Enterprise in Iran Kazerouni Transportation Institute and Trade Firm was one of the first business companies founded in Southern Iran. Cities like Boushehr, Bandar Abbas, Khorramshahr and Bandar Anzali were among the premier cities whose transportation system and car business grew fast. First Second Hand Goods Exhibition During those times official dealerships sold only brand new cars and second hand cars were sold in parking lots and garages. The first center to buy and sell second hand cars started to work as a cargo ltd. Some of those traders repaired second hand cars and sold them to people with higher prices, so that then media warned people to avoid buying such cars. Reviewing the history of Iran car market and auto imports shows that Iran and especially its capital, Tehran, became a parking of different brands of old and new cars. SPRING 2013 / ISSUE NO.6 Peugeot in Iran: Before and After uring beginning months of last Iranian year (ended March 20 2013) a bad news shocked Iran auto market and car traders. As per the news, the new partner of Peugeot is considered as an American giant and therefore people talked about the strategic union of General Motors (GM) and Peugeot-Citroen Group and cession of 7% of French Company to GM and also about break off between Iran Khodro and its old- D est partner Peugeot. The French companied have been benefitted from multibillion Iran market and leaving this source of revenue worried the French managers of the company. On the other hand after years of partnership the Iranian side achieved the technical knowledge and found several ways to leave the international sanctions behind. The Iranian experts could reproduce the sedans under the IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE Peugeot brand license and foil West conspiracy to let up Iranian production. However if any of foreign brands leave Iran market they will hurt themselves for this market is a profitable one with high demands and good customers. So if they leave such market they will lose a lot and abandon a significant profit. If we look back, we can clearly find out that during March 2012, American GM pressed Peugeot to haul auto part exports to Iran. 7 REPORT At that time Iran production under Peugeot brand was very high and the French side harmed more that Iranians; because it lost a high profitable market for its products. So that AFP announced Peugeot blamed Iran sanctions for its sales plunge and crisis in its factory in North-Eastern France. Meanwhile operations at a Peugeot auto plant in northeastern France have been suspended because of the lack of spare parts from Iran. Management from PSA Peugeot Citroen put 220 employees at its Vesoul factory in partial redundancy due to a slowdown caused by blocked shipments from Iran. This latest decision will require redeploying another 300 workers and the axing of 300 part-time jobs. At the same time there were rumors about Renault withdrawal from Iran, but French giant carmaker Renault announced it is committed to continue its services in Iran despite international sanctions imposed on the Islamic Republic. At the same time media announced another Peugeot factory was closed for the reason of sale plunge and high losses made through leaving Iran market and financial problems of European countries. The factory located near Paris had three thousand employees and was predicted to be closed in early 2014. It is the first time during past 20 years a French auto maker announces closure for such reasons. This made French statesmen worried so that they declared their more support for the factory and expressed their dissatisfaction about the bankruptcy of it. When Peugeot affirmed its leaving from Iran, economic experts warned that the company would suffer the loss of the largest and most profitable auto market of the Middle East region and it would also tarnish its profile in Iran. 8 What Peugeot Lost After Withdrawing Iran Market? It is worth noting that Iran is the second large market for Peugeot products. More than 300,000 cars are produced and sold in Iran under the brand of Peugeot which accounts for 40% of Iranian car market. Given that most of the products supplied under this brand in Iranian market are made domestically or imported from other countries, Peugeot has lost an easy source of income. Also the halt in the export of spare parts to Iran will expose workers involved in producing them to lose their jobs. At present Peugeot 206, 405, 207i and Pars are being manufactured in Iran under the brand of Peugeot which are highly welcomed by customers and demand for them is high in Iranian market. On the other hand, Peugeot withdrawal from Iran market made domestic auto part makers produce Peugeot parts themselves by 100 percents. When Peugeot abandoned Iran, its partner Iran Khodro asserted that 80 percents of its production were made domestically during recent years and Peugeot sanction against Iran did not harm the company. When Peugeot abandoned Iran, its partner Iran Khodro asserted that 80 percents of its production were made domestically during recent years and Peugeot sanction against Iran did not harm the company. As per the reports during first quarter of 2008, of 132 thousand cars Peugeot sold abroad, 667 hundred (more than 50 percent) were sold in Iran. This is while during the mentioned period only 32 thousand of Peugeot products were sold in EU and 99 hundred in large market of China. A Historical Loss What happened to the French giant automaker after leaving Iran profitable market? The French auto giant Peugeot Citroen announced a net loss of five billion euros (USD 6.7 billion) in 2012, making it the worst result in its history. The carmaker released the historic loss, blaming 4.74 billion euro in asset write-downs and a collapse in European sales for the results. The automaker is reportedly losing seven million euros every day. This is while the company has reported a 588 million-euro profit in 2011. In an attempt to recover, the company previously announced that the it plans to eliminate 11,200 jobs. This has sparked several demonstrations by the workers. The company’s profit in 2011 totaled 588 million euros. Yet revenue fell 5.2 percent to 55.4 billion euros compared to the previous year. Philipe Varin the chief executive of Peugeot Citroen said that he laid a foundation in 2012 to help the company recover present critical situations. 10m Euros Loss Monthly During a press conference, Jean-Baptiste de Chatillon chief financial officer of Peugeot Citroen mentioned that the company would lose 10 million euros per month due to cutting exports to Iran. He further warned about a critical plunge in operational profit of the company. As experts predicted, Peugeot Citroen company’s revenues dropped by 7.3 percent during first quarter of 1012. The giant French automaker was forced to cut its auto prices as a result of EU car market breakdown which caused further decrease in its in- SPRING 2013 / ISSUE NO.6 REPORT comes. According to reports Peugeot sales plunged to 14.3 billion euros during first three months of 2012. General Motors announced an alliance with the French automaker Peugeot Citroen in February which it said will save the automakers a combined $2 billion within five years. But a price decrease of 0.9 percent in Peugeot brand new cars has cut the company’s sale rate during the current year. At the same time the company pledged to cut its cash-consumption rate by one billion euros (50 percent) in 2013 and reach the break-even level by 2014 after burning through 3 billion euros last year. Hidden Causes of Peugeot Withdrawal From Iran Market Mohsen Razmkhah, a member of Iran Auto Part Manufacturers Association said that after the Islamic Revolution (1979) Iranians have learnt to convert foreign threats and sanctions into economic development and growth opportunities. He further noted that recent international sanctions against Iran in stronger than before; however, most of them are superficial and are imposed only to press Iranian nuclear negotiators. Iran and Western powers have been negotiating Iran’s nuclear program for many years. The West believes that Iran nuclear program is not peaceful, but the country’s officials deny it. Western powers press Iran government to halt its nuclear plan. To do so they impose international economic and political sanctions against the country. Razmkhah stated that Peugeot would not stand abandoning Iran market, for it would lose a high source of profit and an attractive market. About two years ago Peugeot officials declared French government that as a result of Peugeot withdrawal from Iran auto industry, the company would be forced to lay off more than five thousand workers. So French government let them keep on their function in the strategic country of Iran. “The cut in Peugeot auto parts export to Iran is a political and media show to press Iranian nuclear negotiators,” he said, adding that even if such threats and limits are enforced, they will give IRA IIRAN RAN AN CH CHA C CHAMBER H HA AM MBE MBER B BE BER ER OF OF C COMM CO COM COMMERCE, OM OMM O M MM MERC ERCE RCE RC CE C E, IN IINDUSTRIES, NDUS DU DU DUST UST S ST TR RIE RIES IIES IE ES S, M MI MINES INES NES NE ES & A AG AGRICULTURE GRIC RICU RICU IC CU C UL LTU LTUR TUR TU UR U RE - Q QU QUARTERLY UA ART ARTE R RT RTE TERLY RLY LY MA M MAG MAGA MAGAZINE A AGA G GA AZI ZIINE ZIN ZINE IN NE N E Iranian experts and engineers a new opportunity to optimize the quality of Iranian products and enhance technical knowledge to manufacture domestically made cars and auto parts. He stressed that at present, Iranian auto part manufacturers are easily able to reproduce a major portion of imported auto parts. Razmkhah went on to say, “Iranian experts can simply achieve the technology to make highly developed parts like sensors and air backs.” However whether Peugeot leaves Iran or not, he said, “we should appreciate this opportunity, produce all imported auto parts domestically and jump through a significant change in quality and technology of Iran-made cars.” The member of Iran Auto Parts Manufacturers Association opined that Iraq imposed war against Iran paved the ground for both industrial and economic growth of the country. He went on to say that if the government supports domestic firms, departure of foreign auto firms like Peugeot Citroen will not only harm Iran auto industry, but is also the best chance to decrease Iran industrial gap with other countries. 9 REPORT Peugeot After Leaving Iran Peugeot was one of the rare western automakers to hold a significant share of the Iranian market. The company’s ties to the Middle Eastern nation go back to 1978, when it purchased the remains of Chrysler’s shattered European operations. Since that point, Iran has grown to become a key market in Peugeot’s global strategy. In 2011, over 450,000 complete knock-down (CKD) kits were delivered here, a number which equates to about 21% of Peugeots sold globally. In spite of these positive numbers, the automaker announced that it stopped exporting CKD kits to Iran in early March, and that it doesn’t plan on exporting any in April, either. The auto giant said that global sales plunged by 16.5 percent in 2012 owing to contracting demand in debt-crippled southern Europe and the suspension of its activities in Iran. Peugeot Citroen recorded worldwide unit sales of two hundred and eighty two thousand assembled vehicles, down 8.8 percent. Together, sales of assembled vehicles and CKD units totaled 2,965,000, down 16.5 percent. Southern Europe, where Peugeot Citroen has a particularly large presence, was hit hardest by economic crisis, with the market down 13.3 percent in France, 14.9 percent in Spain and 20.9 percent in Italy. Peugeot’s decision to suspend business in Iran was to comply with international sanctions against the Islamic republic over its nuclear program. France also came under intense pressure from Washington lobbies to shut down its thriving operations in Iran after US auto giant General Motors acquired a 7.0-percent shareholding in Peugeot Citroen. According to a Press TV report, Peugeot Citroen has posted a net loss of 819 million euros (about 10 $989 million) in the first half of this year. Peugeot, Europe’s secondbiggest automaker, announced that it would slash 8,000 domestic jobs. The company is also set to shut down a plant outside Paris; the first such industrial closure for France in more than 20 years. Union representative of the closed Peugeot plant Jean-Pierre Mercier criticized the company for lay-offs. The decision by Peugeot, France’s largest automaker, to axe 8,000 jobs has caused a political firestorm but they are in large part caused by France’s sanctions against Iran. The cuts, which have been deemed unacceptable by The Government, have also angered factory workers. “Peugeot’s decision to stop working with Iran is costing us today, but it’s not right that our workers paying the price for decisions made by the management,” he said. Peugeot says their woes will last until 2015, as the company is planning more wage and job cuts as they look for 1.5 billion euros in savings. Beforehand, the American GM announced an alliance with Korean Daewoo Company in 2003. The Korean company used to produce Cielo sedans jointly with Iranian Kerman Motor Company. The alliance forced Daewoo leave Iran market and as a result Cielo production which was highly welcomed by Iranian customers was stopped. Now we can conclude that France and its giant automaker harmed terribly from cutting off their relations and cooperation with Iran. The decision by Peugeot, France’s largest automaker, to axe 8,000 jobs has caused a political firestorm but they are in large part caused by France’s sanctions against Iran. The cuts, which have been deemed unacceptable by French President Francois Hollande, have also angered factory workers. Porsche Hurt Too Peugeot was not the only foreign auto firm whose withdrawal from Iran market harmed it awfully. Porsche was the latest brand decided to leave Iran. Iran contributes significantly to Porsche’s overall earnings. In fact, sales in its one dealership in Tehran topped $17 million in first quarter of 2012, so this is definitely a big decision on Porsche’s part. According to statistics conducted by Iran Customs Organization, about 563 Porsche sedans valued 49.8 million dollars were imported to Iran. Porsche officials have announced that the company would withdraw from Iran market due to International bans against Iran. This is while Porsche official dealership in Tehran has denied the news. The figures and statistics show that luxury and super cars’ stake in Iran auto industry and market is rather tiny, so that stopping the import of such cars would not affect Iran car market and future. SPRING 2013 / ISSUE NO.6 Foreign Automakers and the Iranian Vehicle Industry IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE 11 ARTICLE ran’s automotive industry is the second most active industry of the country, after its oil and gas industry, accounting for 10% of Iran’s GDP. During its approximately 50 year activity, many foreign famous automakers tried their chance to develop it, but most of them left the country and only put their names as memento. General Motors (GM), Land Rover, Daewoo, Proton, Volex Wagon, Benz, Fiat, Citroen and Mitsubishi were the nine big automakers that abandoned Iran beneficial auto market for some marginal problems. From them GM was the first and Mitsubishi the last. Now we should take a look at these companies and answer some questions: why and when these nine automakers deserted the country? What were those marginal problems that frustrated them? I General Motors We first start with the famous American GM. The company entered Iran in the region of auto manufacturing birth in the country; so that Pars Khodro as the oldest automaker in Iran started its activity with the help of GM. The two auto firms’ first cars, the Aria and the Shahin, were based on AMC’s compact 1966 Rambler American and were launched in 1967. Production ended in 1974. In addition, they jointly built Buick, Cadillac and Chevrolet (Nova). Some of these lovely cars can be still seen on Tehran busy streets. However despite its short cooperation with Iran auto industry, GM effect on the country’s auto assembly and manufacturing industry was significant. The American company did some investments on Iran auto industry too in order that it founded its first creditable laboratory in this country. It was while GM ended its cooperation and investment in Iran and left the country for ever. Land Rover British Land Rover was another early friend of Iran auto industry which cooperated with a private company named Morattab Khodro Co. At that time Land Rover produced the only SUV models in Iran which had their special customers. However, Land Rover abandoned Iran market forever and preferred to condone their profits rather than staying and facing marginal challenges. proval by the Government of Islamic Republic of Iran to assemble Daewoo passenger cars at Bam city in Kerman province. In 1991 as the assembly plant was being established, simultaneously Kerman Khodro commenced the imports of CBU vehicles of Espero and Racer models from Daewoo Motor Co. For the sales, delivery and after sales services an independent organization was formed in 1992 and incorporated as Modiran Pars Co. In 1996 Kerman Khodro and Daewoo Motor Company jointly established Kerman Motor Company which started its activities in the field of assembling Cielo sedan and later on in 1999 Matiz model at Bam assembly plant in Kerman province. Unfortunately after 12 years of cooperation, Daewoo Company sold most of its assets to American General Motors after running into financial trouble. Then the company was forced by its American owner depart from Iran and leave the country with its sanction challenges. Proton The tragedy did not end after Daewoo leave of Iran and after several years Zagros Khodro lost its Malaysian partner, Proton, because of state companies’ interference. Until two years ago, the two had close cooperation and could produce Proton Vira and Gen-2 sedans jointly in Iran. As the result of this cooperation Zagros Khodro was identified as a reliable automaker from the private sector. After inking a memorandum of understanding with SAIPA Car Manufacturing Co., proton found no promising future with Zagros Khodro and left its counterpar. Then Proton started cooperating with SAIPA which did not last a long time. Ultimately, the company called off its activity in Iran and the name of Zagros Khodro was removed from Iran auto industry. In the meantime, SAIPA did not follow its MoU with Proton and any cooperation was made between the two. Volkswagen If you take a look at cars stuck in traffic jam, you Daewoo Iran private auto industry too had had close cooperation with renowned global automakers. In addition to Morratab Khodro which was mentioned before, Kerman Khodro lost Daewoo as its popular partner. In the year 1990 Kerman Automotive Industries Co. (KAIC) and Daewoo Corporation from South Korea signed a contract for a joint venture under ap- 12 SPRING 2013 / ISSUE NO.6 ARTICLE can find out that some of them are marked with the largest EU car manufacturer (Germany’s Volkswagen). VW and Bam Khodro-another private car manufacturer-worked together and assemble Gol sedan which found many customers within Iran’s that time developing and profitable car market. Unfortunately international limits and sanctions prevented the German company from prolonging its activity in Iran. At last it went from Iran and Gol production was suspended too. Fiat Fiat was the only Italian car firm that began a short cooperation and investment in Iran During 2000s, the Italian firm signed an agreement with Iranian TOPCO and started to produce Siena sedan. Yet both TOPCO financial challenges and international sanctions made Fiat leave the country as the sixth popular international automaker. Now Saipa wants to buy TOPCO shares and make up for losses and bring the Italian firm again to the country. Citroen French Citroen Auto Firm was a very popular brand in Iran whose cooperation with the country lasted longer than others. The first car the Citroen produced in Iran was the Citroën 2CV which was called the Jian in the country. The cars were originally manufactured in Iran in a joint venture between Citroen and that time Iran National (Pars Khodro) up until the 1979 Revolution. After the Islamic Revolution the French company resisted political challenges and did not leave the country. It signed a ten year contract with SAIPA to assemble admired Xantia models in Iran and when the contract time ended last year, it left the country too. Mercedes-Benz Complex bureaucracy and international limits drew out renowned Mercedes-Benz ties with Iranian auto industry. The manufacturer of luxury automobiles and sport utilities had been active in Iran since before Revolution era. It continued its cooperation after the Revo- IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE lution and jointly produced luxury sedans with Iran Khodro. Mercedes-Benz officials announce some time ago that it is not profitable for them to keep on their maneuver in Iran, so they ended their performance here. Mitsubishi Japanese Mitsubishi did not have an influential presence at Iran automotive industry; however, it left the country as the last foreign automaker. The company worked as a team with Morratab Khodro and then Bahman Automotive Group and manufactured popular SUV sedans like Pajero. Its officials claimed that Iran market was not attractive for them. Why They Left? Now there is a question that why foreign automakers left Iran market? We interviewed some experienced auto experts and asked them about reasons behind diminishing foreign investment on Iran auto industry. The Secretary of Iran’s Vehicle Manufacturers’ Association Davood Mirkhani Rashti said that political setbacks and international sanctions were the most important factors that made foreign firms leave Iran auto market. He went on to say that beside political strains, they could not adjust themselves with Iran working environment. “For example the private sector in the country is not powerful enough to attract foreign investment and boost production,” Mirkhani added. The official noted, “maybe if we were firmer we could keep some of those foreign automakers in our country.” A member of Iran’s Automotive Part Makers Association said in this regard that Iran car market is attractive enough for foreign investors but international limitations put them apart from the country’s auto industry. Mohammad Reza Najafi Manesh added that after the Revolution conditions were not suitable for foreign investment on Iran auto industry until the Parliament ratified a bill to support foreign and domestic automakers. He stressed foreign automakers’ significant effect on Iran auto market, stating that political pressures were the main element that forced foreigners leave Iran. Najafi Manesh went on to say that the private sector in Iran is not as powerful as the public (state) sector this is why it breaks easily facing international and political challenges. He noted that if production capacity of domestic automakers was high and our economy was stronger foreign automakers could avoid international sanctions and continue their activities in Iran. 13 REPORT World Economic Climate improves Slightly T he Ifo World Economic Climate Indicator continued to rise, even if only slightly. Both assessments of the current economic situation and the six-month economic outlook improved marginally compared to the previous quarter. There are a growing number of signs that the world economy is stabilizing. Conducted in co-operation with the International Chamber of Commerce (ICC), the Ifo World Economic Survey (WES) assesses worldwide economic trends by polling transnational and national organizations worldwide on current economic developments in their respective countries. Its results offer a rapid, up-to-date assessment of the economic situation prevailing around the world. In April 2013, 1,178 economic experts in 125 countries were polled. While the economic climate indicator rose only slightly in Western Europe and North America, it increased sharply in Asia. Thanks to much brighter assessments of the economic situation and expectations, the indicator for Asia reached its highest mark since the end of 2010. In North America, assessments of the current economic situation are somewhat better, but remain below the satisfactory mark. The experts surveyed remain positive about the six-month economic outlook, but to a somewhat lesser degree than last quarter. In Western Europe the economic situation remains unfavourable. Economic expectations for the next six months, on the 14 other hand, are slightly more positive, leading to a moderate overall improvement in the economic climate. The results point to the fact that the world economy seems to be falling into step. There might be an increasing trend towards higher growth rates, although business cycle dynamics remain moderate. Monetary policy in advanced economies remains strongly expansionary. Central banks in the US and Japan have announced plans to leave interest rates at their currently low level and to continue to implement quantitative easing measures until the economy stages a clear recovery. In Europe, restricted fiscal policy in many countries is constraining any stronger upswing. In emerging countries, business cycle dynamics look set to gain momentum. World average inflation estimates for 2013 fell somewhat from 3.3% to 3.2%. WES experts on average expect short-term interest rates to remain largely unchanged over the next six months, while long-term interest rates are expected to increase slightly. On worldwide average, economic experts expect moderate increase in the value of the US dollar over the next six months. ICC Secretary General Jean-Guy Carrier was pleased with the survey results, but cautioned against overconfidence. He stated: “The continued trend of quarter over quarter economic growth is cause for optimism, but governments and businesses must continue to sustain this positive momentum.” SPRING 2013 / ISSUE NO.6 REPORT What is the Role of the Private Sector in ensuring Economic Growth? W hen most people say or think that there is a need to grow the economy, their first thought is that government will fix it. For sure, governments should create and encourage the creation of the environment that will ensure prosperity and sustainable economic growth. They do this, among other things, by establishing and protecting private property rights; ensuring national defense; fighting crime; providing a sound educational system; maintaining a public health system; ensuring a sound monetary system; collecting the necessary revenues; paying the public debts; and sourcing funds, when necessary, to pay debts and to finance development. In addition, government is a major employer as well as a major purchaser of goods and services. Taken all together, these contribute to growing the economy. But, it is not the full story. Economic growth is the rate of change in real GDP between one period and an earlier comparable peri- IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE od. This change could either be positive or negative. When the change is negative, one can also say that the economy is shrinking or contracting. The table following shows that in 2009, real GDP for the Jamaican economy contracted by 2.8 per cent, following a contraction of 1.0 per cent in 2008. In the three years before that, 2004 - 2007, the economy grew an average of about 1.4 per cent, meanwhile agriculture, forestry and fishing; electricity and water supply; finance and insurance services; and hotels and restaurants combined to contribute about 1.0 per cent to growth. This was overtaken by contractions in the rest of the goods producing industry in the services industry. Overall, the goods producing industry contributed about 20 per cent to GDP in 2009, while the service industry accounted for 80 per cent. There is no government/private sector breakdown in the composition of the GDP available. However, government employees, at about 120,000 15 REPORT comprise about 10 per cent of the total workforce of about 1.2 million. Government entities include the Parliament, Cabinet, ministries and executive and non-executive agencies. The private sector takes in the vast informal, commercial sector, small and medium economic enterprises, private companies, public companies, not-for- profit companies, partnerships and sole traders. Government spending contributed about 30 per cent to GDP in 2009 and the remaining 70 per cent could be attributed to the private sector, if we assume that everything that is not government falls within the private sector. Government and the private sector A basic difference between the government and the private sector is the profitability motive. Whether it’s hiring people, establishing branches or spending money generally, the bottom-line justification in the private sector is increased profitability. With government, the bottom-line consideration is whether increased spending will bring about increased or better services for the population 16 and for the defense of the country. The private sector strives to do more with less while the government often seeks to do more with more. Doing more with less is at the heart of an entrepreneurial spirit. When people apply for employment at our company, we are very keen to identify and to understand their attitude towards entrepreneurship. If they have a proper entrepreneurial disposition and we succeed in strengthening it through their- on-the-job experiences with us, we believe we will have multiplied that individual’s ability to contribute to growing the economy, whether that individual remains with our company or not. Job creation is one of the key drivers of economic growth as is private consumption. They go hand-inhand. Consumer spending accounts for more than two-thirds of our economic activity and the private sector develops and nurtures the majority of a country’s consumers through job creation and entrepreneurship. Yet, perception is greater than reality. Two years ago a public opinion survey was conducted in 22 Latin SPRING 2013 / ISSUE NO.6 REPORT American and Caribbean countries, including Jamaica. The survey asked one question: “Government, more than the private sector, should be primarily responsible for creating jobs. To what extent do you agree or disagree with this statement?” Almost seventy-eight percent (77.5) of Jamaicans agreed with the statement. Agreement ranged from 58.3 per cent in Haiti up to 90.4 per cent in Paraguay, with countries such as Mexico, Chile and the Dominican Republic at 78.0 per cent, 80.0 per cent and 87.7 per cent, respectively. Those sub-groups that showed strong support for the government as the primary source of job creation included: younger people within the 18 - 24 age group; persons living in poor households; and those seeing the economy as doing poorly. On the other hand, individuals in wealthier households significantly oppose a primary role for government in job creation. During a recession, it is quite likely that the government will outpace the private sector in job creation at particular times in particular countries. IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE However, when one looks at China with a GDP growth rate of nine per cent in 2009, India with a 6.2 per cent growth rate and Brazil at 5.2 per cent, one finds that all have vibrant private sectors. China, with a labor force of 812.7 million, has undergone a steady transformation from a centrally planned economy to a private sector led one over the past 30 years. India has become a world technology centre, driven by a private sector of more than 200 million persons and entities. And through its private sector, Brazil has built one of the world’s largest retail markets, dominated by huge supermarket chains. While many have known for some time that the private sector is a necessary ingredient to economic growth in Jamaica, I was pleased to hear PIOJ Director General, Dr Gladstone Hutchinson, say recently that the Jamaican economy must be transformed into a private sector-led one, if the government’s Vision 2030 plan is to succeed. 17 22 Foreign Car Brands in the Iran Market 18 SPRING 2013 / ISSUE NO.6 REPORT he Iranian government has put strong auto import limitation to support domestic production; though Iranians are keen on paying too much money to buy luxury foreign brand cars. They have extremely welcomed foreign cars, this is while domestic firms have put all their efforts to improve their quality and obtain their customers satisfaction. Auto import to Iran is still low because of high import tariffs and customs duty, yet various kinds of foreign car brands in Iran auto market made it difficult for people to choose their favorite car. We review all foreign car brands which have entered Iran market and those which were planned to come but did not. T Audi Iranians got familiar with German Audi brand. Audi 80 and Audi 100 were first models of the famous and popular German brand that entered Iran market. After the Islamic Revolution Audi could not continue it activity in the country until five years ago an enterprise called “Amic Technogy” introduced itself as the official dealership of Audi in Iran. There occurred vast advertisements but nothing positive happened in this regard. Yet again “Ramak Khodro” official importer of Korean Ssangyong announced that it would import Audi vehicle in 2011. This is while Audi sedans have not yet been offered massively. Audi which is a luxury subsidiary of German Volkswagen Group produces different classes and ranges of cars and we will introduce them below. The 2013 Audi A4 is impeccably engineered for driving. It has a dynamic exterior, leather appointed interior, and a light yet responsive 2.0-liter four-cylinder TFSI engine for agility and efficiency. Add to this available features like adaptive headlights, sport seats, and Audi connect with Wi-Fi hotspot connectivity, and you have a car that meets your needs and desires. The super sedan costs about 3540 euros and competes with Mercedes-Benz class C and BMW 3 series sedans. The A5 marked Audi’s return to the compact executive coupé market since the (B3/B4) Audi 80-based coupé model ended production in 1996. The B6/B7 A4 spawned a convertible variant but not a coupé. For the fourth generation A4 (B8), Audi decided to spin off the cabriolet, along with a new coupé and four-door hatchback, into a nameplate of its own as the A5. The A5 is the third coupe in Audi’s line-up, following the second-generation TT and the R8. The A5 adopted design elements of the Nuvolari quattro concept. Ordering of the A5 and S5 began on March 6, 2007 IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE and the first deliveries were made in June 2007. Launch models included 3.2 FSI V6 engine multitronic and 3.0 TDI quattro 6-speed, with 1.8 TFSI available in autumn 2007. The A5 Coupe comes with a six-speed manual or an optional, eight-speed automatic transmission. Fuel economy is good for the class, as the A5 Coupe gets up to 22/32 mpg city/ highway. The vehicle is priced 33350 euros. With timeless elegance, modern technology and confident performance, the Audi A6 redefines success. It stands out with available intelligent technologies like Audi MMI touch and Audi connect. It pleases the crowd with the gratifying performance of an Audi 3.0-liter TFSI engine. The car costs 38500 euros and competes with Mercedes-Benz class S and BMW 5 Series in Iran. For 2013, the 4.2-liter V8 engine featured in the Audi A8 has been replaced by a supercharged V6 that delivers better performance. Beyond that, a smaller yet more powerful turboV8 is also available. Later, a diesel V6 will also join the A8 lineup. Mercedes-Benz class S, BMW 7 series and Maserati Quattroporte are its major rivals. The seven-seat Audi Q7 is more about performance, space and status than it off-road ability. The Audi Q7 may now be getting on a bit (it first debuted in 2006), but is remains an imposing car. Inside, it offers a high driving position that gives a commanding view of the road ahead that reflects its exterior looks. Plus, there’s no denying that the seven-seat interior is massive, even though the legroom in the last row of seats is a little tight. It drives along quietly, even at motorway speeds. The suspension can feels a bit stiff at times, making the ride too firm for real comfort, but the selection of V6 diesel engines all offer impressive performance. The Q7 no longer comes with a petrol option, but the 3.0-litre TDI quattro offers the best combination of performance and economy. First and foremost, the 3.6-liter V6 and 4.2-liter V8 have been replaced by a supercharged 3.0-liter TFSI V6. Available in two versions, the base 3.0-liter unit produces 200 kW (272 PS / 268 hp) and 400 Nm (295 lb-ft) of torque. It enables the Q7 to accelerate from 0-100 km/h (62 mph) in 7.9 seconds, before hitting a top speed of 222 km/h (138 mph) or 225 km/h (140 mph) with the optional adaptive air suspension. The more powerful 3.0-liter V6 is lifted from the S4 sedan, it produces 245 kW (333 PS / 329 hp) and 440 Nm (325 lb-ft) of torque. 0-100 km/h (62 mph) comes in 6.9 seconds and the top speed is 243 km/h (151 mph) or 245 km/h (152 mph) with the adaptive air suspension. Both engines are rated at 10.7 l/100km (21.98 US mpg) in the EU test cycle - an improvement of 12% and 16% (over the previous engines). 19 REPORT The Audi R8 is the German automaker’s current top of the line model based on the Le Mans Quattro concept car. Thanks to lightweight aluminum construction the mid engine super car weighed in at under 3,500 lbs when it was introduced in 2006. The original 4.2 Liter FSI V8 powered car made 420 HP and 320 lb-ft of torque sprinting the four wheel drive dream machine from 0 to 60 MPH in 4.4 sec, through the quarter mile in 12.8 sec at 113.2 MPH and up to 187 MPH while an updated version will offer a Lamborghini 5.2 Liter V10 making 520 HP and 390 lb-ft of thrust and gets to the 60 MPH mark in only 3.9 seconds and all the way up to 196.4 MPH. The luxury sedan costs 121 thousand euros. Alfa Romeo Alfa Romeo is one of the most famous Italian cars hitting Iranian streets since 2012. Alfa Motors has been announced as the official dealership of Alfa Romeo sedans in Iran. The price of this luxury car has been variable at Iran market place. Opel German “Opel” was one of the most controversial car brand entered Iran market but it failed to keep on driving on Iranian roads. While Iranian people eyed Opel hit their city’s streets, American GM made a successful takeover bid for Opel Company and it inhibited Opel imports to Iran due to international sanctions against the Islamic Republic. Smart Mercedes’s subsidiary Smart was one of disappointed companies that could not offer its small and fuel efficient cars to Iran market. First it was planned to import the sedan via Pars Khodro and “Setareh Iran”, but the hurdle were too much on its way. Mercedes Benz It is worthy to take a look at background of strong and famous German MercedesBenz Company in Iran. The company’s products have long been present and welcomed at Iran auto market and different classes of people like its sedans. Its accurate engineering and high quality is well-known among its customers and people. The company has set up large research centers which are well-equipped and bigger that its factories and production lines. According to statistics, Mercedes-Benz net revenue stood at 1065 bil- 20 lion euros during the year 2011. Before production of Paykan in Iran, the companies of ex-Iran Nasional (now Iran Khodro) and Khavar had been producing Bus 302 and Benz trucks respectively. Mercedes-Benz bought 30 percent of Tabriz Diesel Engine Manufacturing Co. shares. The company aimed to occupy Middle East, part of African and Asian market through manufacturing its products in Tabriz Diesel Engine Manufacturing Co. The first Benz sedan entered Iran in 1941 and was Benz 170 from W15 series. At that time a few of such vehicles were imported to Iran and particularly used in Qajar court. In addition, earliest mass import of Benz products started in 1353 by importing Benz buses. During first Pahlavi era, rich people, politicians and courtiers well like the newer W136 series known as V170 and its limousine and crook vehicle were famous as luxury-oriented West. For the period of final years of 1950s, the relation between Iran and Benz Company developed drastically; so that many Ponton models (W121, W120) known as 180 and 190 in Iran were imported to the country. The mentioned cars were well equipped with facilities like radio and leather seats and were highly admired by Iranian people. Since 1965, contemporary with international market Benz W110 known as Fintail was offered in Iran. Later Benz 190, 200 and 230 entered the country, which were appreciated by the people. Of that period, businessmen started to import super luxury W111 sedans from the new S class vehicles. The Mercedes-Benz products were on the top of Iran market until the Islamic Revolution of Iran. After that for Iraq War against Iran and bad economic conditions of people the public could not afford to buy foreign brand card especially those of MercedesBenz. Yet when American brands left Iran, the way was paved for European car firms to have a more colorful presence at Iran market. While MercedesBenz introduced class E sedans during 1990s, people preferred to buy Volkswagen and Opel products instead of expensive Benz vehicles whose upkeep was very high. Thereafter when Iranian people upgraded their economic conditions and enjoyed better facilities, Mercedes-Benz decided to resume its relation with Iran’s profitable market. In 2001 Setareh Iran Company was introduced as the official dealership of Mercedes-Benz products in Iran. It was planned in 2006 to produce class E Benz sedans, buses, minibuses, ambulances and firefightingvehicles in Iran Khodro subsidiary “Top Khodro”. But u fortunately after a while the company stopped Benz E class production and it seemed that Mercedes-Benz and Iran Khodro had no further program to continue their ties. Iran Khodro replaced Mercedes-Benz production line with Roa (RD) which was more affordable by the SPRING 2013 / ISSUE NO.6 REPORT public. It was while dealers have kept on importing Benz super luxury sedans with extremely high prices. Its customers are now limited to very rich people. After Mercedes-Benz sold stake of Setareh Iran Co. to Iran Khodro, Benz production gradually stopped in Iran. In the previous year, car prices increased dramatically and this included all Iran made cars and imported foreign brands. Last summer high dollar prices added to the crisis, on the other hand importers bought and imported foreign cars with subsidized exchange rate and sold them in Iran with free exchange rate. On the other hand people and experts criticized expanding aristocracy and wealth seeking in the country. Finally in January 2013 the Parliament approved the law which prohibits import of foreign cars with more than 2500 cc engine capacity. BMW BMW have long been presented and popular in Iran car market. For many years Nouriani enterprise was the official importer of BMW sedans, but it transferred its dealership to Persia Khodro. All BMW products cost more than 100 billion rials. Peugeot Iran auto industry was formed after the country started to produce famous Paykan, but its car sector developed dramatically cooperating French Peugeot Company. The Iranian company modeled Peugeot products to produce different models of Samand and Peugeot vehicles. If Iran Khodro did not cooperate with Peugeot it would confront grave problems. This is while the well-known Peugeot faced serious crisis after it announced alliance with Citroen, Saipa’s close partner. The company experienced one of its most profitable businesses with Iran Khodro and withdrawing it made many losses for the French giant auto maker. During the years before alliance with Citroen, Peugeot manufactured different models and classes of cars in Iran. The Peugeot 404 is a large family car produced by French automobile manufacturer Peugeot from 1960 to 1975, with the exception of the truck which was sold until 1988. It was also made under license in various African countries until 1991 (in Kenya). Styled by Pininfarina, the 404 was offered initially as a saloon, estate, and pickup. The 404 was fitted with a 1.6 L petrol engine, with either a Solex carburetor or Kugelfischer mechanical fuel injection or a 1.9 L diesel engine available as options. Introduced at the Paris Motor Show as an option was the inclusion of IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE a 3-speed ZF automatic transmission, similar to the unit already offered on certain BMW models, as an alternative to the standard column-mounted manual unit. Peugeot’s French production run of 1,847,568 404s ended in 1975. Still relatively common in developing nations (especially in pickup form), a grand total of 2,885,374 units had been produced worldwide at the end of production. Everybody can remember popular Peugeot 504 which replaced 404 models. The Peugeot 504 was a large family car manufactured by Peugeot between 1968 and 1983, with licensed production continuing until 2006. Huge suspension travel, and great strength, meant that the 504 was suited to rough road conditions, and the car proved extremely reliable in conditions found in Africa, Asia, Australia and the like. The Peugeot 205 was a super-mini produced between 1983 and 1998. It was declared ‘Car of the Decade’ by CAR Magazine in 1990. It also won ‘What Car?’s Car of the Year for 1984. Early 205s used the X engine from the older Peugeot 104, although these were later replaced with the newer XU and TU-series engines, which were of PSA design. Engines ranged from 954 cc to 1905 cc engine displacement, in carburetor or fuel injected petrol and diesel versions. The sedan was highly welcomed in Iranian market and rivaled different models of German Golf, Corsa and Passat sedans. There is no doubt that Peugeot 405 was the most successful family car during 1980s. The Peugeot 405 is a large family car released by the French automaker Peugeot in July 1987 and which continues to be manufactured under license outside France. It was voted European Car of the Year for 1988 by the largest number of votes in the history of the contest. Its appearance is similar to the Alfa Romeo 164, launched the same year and also styled by Pininfarina. Iran Khodro also produces several models derived from the 405. The Peugeot RD is a rear wheel drive car which has a 405 body and mechanical parts from the Paykan. The Samand, which was designed to be a “national car” for Iran, is also based on the 405 platform. The Peugeot Pars also known as Peugeot Persia is an Iran Khodro product. After 10 years of manufacturing Peugeot 405 in Iran Khodro Company, Peugeot Persia was designed as a facelift of the 405. Peugeot Persia was soon renamed to Peugeot Safir and eventually Peugeot Pars because of local copyright problems. Peugeot Pars had been made in 3 models Pars, Pars 16V, and Pars ELX. The 16V and ELX models use a more powerful PSA 16 valve engine and a few extra facilities. The PSA-borrowed engine is XU7JP (code LFZ, known as L3 in Iran) 1.8 L SOHC with 2 valves per cylinder capable of producing a maximum power of 101 PS (74 kW) at 21 REPORT 6000 rpm and a maximum torque of 153 Nm at 3000 rpm which is controlled by SAGEM SL96 ECU. The same engine was already in use in the PSA’s Peugeot 405 1.8 SR, Peugeot 306 1.8i 8v, Citroen Xantia 1.8i 8v, and Citroen Xsara 1.8i 8v. The Peugeot 206 is a super-mini manufactured from 1998 to 2010. Even though the 206 had finished production in most markets by 2010, it is still available as the 206+, with front and rear styling that resembles the Peugeot 207. During the early 1990s, Peugeot decided not to directly replace the Peugeot 205, citing the reason that super minis were no longer profitable or worthwhile. Instead, Peugeot followed a unique strategy and decided that its new, smaller, super mini, the Peugeot 106 (launched in 1991) would take sales from the lower end of the 205 range while the lowest models of the Peugeot 306 range, launched in 1993 to replace the Peugeot 309, would take sales from the top-end 205s. Between the 106 and 306, Peugeot hoped that the 205 would not need to be replaced, and could be phased out slowly, while customers who would normally plump for the 205 would continue to have a choice with either a smaller or larger car. Unfortunately for Peugeot, this strategy did not work. With the 205 phased out, other super minis like the Ford Fiesta and Volkswagen Polo continued to sell well and even increased in popularity, and without a direct competitor to these cars Peugeot was losing sales fast. A new super mini was required, and the 206 was launched in 1998 as a somewhat belated replacement for the 205. To be honest, Peugeot 206 has been the most popular car in Iran and all ranges of people including rich and middle-class, young and old, men and women like to have one. Yet it seems that the story of the well-liked car would not have a good ending. At first the production number declined to about half and its price increased by two folds. Until the year 2001, 206 productions increased dynamically, but now its destiny in dim and unknown. In the year 2000, giant French automaker unveiled its new product called CC (Coupe Convertible) which was a pattern to manufacture Peugeot 206 SD (initially known as Peugeot Aryan). One or two years ago, in line with nationalizing Iran auto manufacturing industry, Iran Khodro revealed a new sedan named Runa which is the impression of 206 SD. The Peugeot 207 is a super mini produced from 2006 to 2012. It was unveiled in January 2006 and launched in April. It was replaced by the 208 in 2012. The sedan is known as 206+ or the facelift of 206 in Iran. The 407 was the successor to the hugely successful Peugeot 406, and was launched in 2004. The streamlined design of the car was seen as quite radical, its most distinctive features being its large front 22 grille and the steeply raked screen pillars. It seemed that the sedan was a copy of Citroen Xantia and C5. The new model of Peugeot was not successful in Iran. Porsche Porsche is one of the most famous German super sport cars which were offered in Iran market by Moin Motors. The prices of Porsche products are far above the ground in Iran. For example the lowest price for Porsche Panamera models is 500 billion rials. Toyota Japanese Toyota car brand in exceedingly admired by its Iranian customers, so that though its prices are increasing considerably and its official dealership Irtoya does not offer strong after sale services, the car is being sold well in Iran market. On the other hand several car traders put some hurdles on the way of Irtoya. Renault French Renault is active in Iran by offering Tondar sedans via “Renault Pars” and Megan vehicles via “Pars Khodro”. It also cooperates with “Negin Khodro” to introduce its new products in Iran. SEAT SEAT is the sole active Spanish brand with a mass production potential and capability of developing its own models in-house. It was planned to import and manufacture SEAT sedans in Iran by Dastan Industrial Development Co., but the plan was cancelled for unspecified reasons. Ssangyong SsangYong Motor Company is the oldest and the fourth largest South Korea-based automobile manufacturer. The name SsangYong means double dragons. In 1991 it started a technology partnership with Daimler-Benz. The deal was for SsangYong to develop an SUV with Mercedes-Benz technology. This was supposedly to allow SsangYong to gain footholds in new markets without having to build their own infrastructure (utilizing existing Mercedes-Benz networks) while giving Mercedes a competitor in the then-booming SUV market.[7] This resulted in the SsangYong Musso, which was sold first by Mercedes-Benz and later by SPRING 2013 / ISSUE NO.6 REPORT SsangYong. SsangYong further benefited from this alliance, long after Daimler-Benz stopped selling the Musso, producing a badge engineered version of the Mercedes-Benz MB100, the Istana and using Daimler designs in many other models. Suzuki Iran Khodro was the first Iranian car manufacturer that won the dealership of importing and then manufacturing Suzuki sedans. Initially Suzuki Grand Vitara entered Iran streets and later the famous Kizashi hit Iran market. Kia Kia Motors was one of the most popular foreign brands in Iran. “Atlas Khodro” imports and offers different models of Kia products to Iran market. Lexus The eye-catching products of luxury subsidiary of Toyota, Lexus, run on Iran streets. This is while for many years no new Lexus models have been imported to the country. Land Rover Iranian businessmen began talks with British Land Rover to import its subsidiary product Range Rover. Yet talks were not successful. over 3.6 million vehicles worldwide. Its products are put forward in Iran market by “Asan Motors”. Mitsubishi Mitsubishi vehicle first entered Iran during 1970s by “Almasdaran Enterprise”. Now years later the news says “Aryan Motors” is planned to import new Mitsubishi sedans. Honda Honda Motor Company, Ltd. is a Japanese public multinational corporation primarily known as a manufacturer of automobiles and motorcycles. “Family Motors” is to import some models of Honda to Iran. It is predicted that Honda Civic will be highly welcomed by Iranian customers. Mansory Mansory is a luxury car modification firm based in Brand, Germany. Besides luxury cars, they also work on performance supercars, luxury SUV and custom bike. The company has intended to start a joint car and spare parts production with Iranian car and auto part manufacturers. Maserati Maserati is the most expensive car in Iran auto market. The Italian super sport car which is imported by “Artatak Motors” and the price of some of its models reach more than 600 billion rials. Mazda As “Bahman Car Manufacturing Group” offers Mazda 3 models, the brand has proper conditions in Iran market place. Acoording to news the company has planned to unveil Mazda 6 in Iran. Hyundai The Hyundai Motor Company is another South Korean automaker which was successful in Iran. Hyundai was founded in 1967 and it, along with Kia, together comprise the Hyundai Motor Group, which is the world’s fourth largest car maker based on annual vehicle sales in 2010. In 2008, Hyundai (without Kia) ranked as the eighth largest automaker. In 2010, Hyundai sold IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE 2 23 Off-Roading like a Gentleman: 10 Luxury SUVs on Their Way 24 SPRING 2013 / ISSUE NO.6 ARTICLE Crossovers are welcome right now, and wagons have the hearts of enthusiasts, but SUVs still reign supreme in the luxury market. And competition among these high-dollar SUVs is heating up, with revised old models stepping up to meet new entrants. Here are ten high-end SUVs to watch for as they arrive over the next couple of years. can get to enjoy the madness of this high-performance, ultra-lux people mover. The 2014 Sport’s base engine, a 340-hp supercharged V-6, is nothing to sneeze at. It’s the supercharged, 510-hpr, 0-to-60mph in 5 seconds 5.0-liter V-8 in the Autobiography and (appropriately named) Supercharged models that is raising eyebrows. A V-8-equipped 2014 Range Rover Sport just set a record time for a production SUV performing the Pike’s Peak hill climb at 12 minutes, 35 seconds—comparable with some sports cars. 2015 Audi Q7 It’s easy to forget that the current Q7 debuted in 2005; most likely that’s due to the fact that it debuted in 2005 and has been in production for seven years without a replacement (although a facelift in 2009, pictured here, kept it fresh). That changes with the coming second-generation Audi Q7. Depending on the rumor mill you happen to visit on any given day, the new Q7 will either be presented in 2015 for a later release or is scheduled to hit the market in the summer of 2014 as a 2015 model. In any case, the new Q7 looks to achieve a targeted weight loss of 800 pounds over the current model, and could be offered with a hybrid powertrain option. 2014 Land Rover Range Rover Sport Get your orders in now; the all-new 2014 Range Rover Sport is scheduled for its first deliveries this summer, and buyers are going to want every extra second they IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE 2014 BMW X5 The third-generation of BMW’s X5 SUV—sorry, Sport Activity Vehicle in BMW parlance—is scheduled to arrive before the end of 2013 after an official debut at September’s Frankfurt Auto Show. We know a lot about this new X5 right now, however, including the coming first-time-ever option of a rearwheel-drive X5, and a turbocharged diesel X5 expected in the first quarter of 2014. The X5 will be greeted by a more fractious, subsegmented, and highly competitive luxury SUV market than ever before; by offering a multitude of powertrains and interior options (the choice of a 40/20/40 or 70/30 rear bench, for example) BMW hopes to draw customers away from less flexible rivals. 2016 Mercedes-Benz MLC The BMW X6’s combination of SUV capabilities, ride height, and blobby—sorry, sporting—looks have spawned a myriad of similar designs, and it looks like Mercedes-Benz is ready to throw its version in the ring. The MLC is based on the current M-Class—pictured here—and possibly slated for production in 2015 for a 25 ARTICLE 2016-model-year release. But little is known about the MLC yet, down to whether the MLC moniker will even be its official name. Rumors have been swirling for over a year, and there is plenty of time for powertrains to be mulled over and for revisions to the M-Class to affect what the MLC will become. 2014 Cadillac Escalade The Escalade has lived a complicated life. Over the past fifteen years, the Escalade was simultaneously the biggest hit for Cadillac in a generation and a setup for every “bling” reference your parents have made in an uncomfortable attempt to relate to you. Just when it seemed that the Escalade had outlived its relevance, here comes a revitalized Cadillac riding a hot streak and ready to make the Escalade a legitimate luxury SUV contender. Spy shots haven’t revealed everything about the 2014 Escalade yet, but what we’ve seen so far indicates a turn toward a more mature, elegant SUV. Combined with Cadillac’s CUE infotainment system and recent success with high-end interiors, the 2014 Escalade could be flying in a little bit under the radar compared to its overly chromed reputation. 26 Bentley EXP 9F Bentley debuted the EXP 9F Concept at the 2012 Geneva Auto Show, and at the time its only real delay in hitting dealerships seemed to be the number of preorders that the company was waiting to get before beginning a production run. Reports surfaced late in 2012 of a pending redesign, however, and with the EXP 9F likely to be built on the underpinnings of the new Audi Q7 coming to the market as a 2015 model, there certainly is time to do so. There is no confirmed powerplant for the Bentley SUV, but look for a big-displacement engine to differentiate the Bentley from the Q7. 2016 Audi Q8 A top-of-the-line luxury SUV meant to sit above Audi’s Q7 has been discussed for years, with little solid information to show for it. That changed ever so slightly recently when Audi confirmed a coming Q8 SUV, built on the platform of the coming 2015 Q7. With its sights set on the Range Rover Sport, Audi’s new Q8 will be a sportier Q7, with the coupe-inspired styling that will be seen in the new Q6 crossover. There are still rumors of an Audi Q9, which would in effect be a larger Q7 built onto the Q7’s chassis. At this stage, it appears that the Q8 is intended as Audi’s SUV range-topper, as the A8 is for its cars, so no Q9 is in the offing. SPRING 2013 / ISSUE NO.6 ARTICLE mance-focused tuning in line with that of the Porsche Cayenne or the BMW X6. 2014 BMW X7 With a new X5 set to roll out, BMW appears ready to debut a brand-new, larger luxury Sports Activity Vehicle. Recent spy photos have caught a big BMW SUV on the road, with a test driver allegedly calling the vehicle a 2014 X7. So far that’s all we know for sure about the X7, so the rest is speculation: trim levels, engine options, M-Sport package—we can likely expect these, but we don’t know for sure. Potentially more interesting is that the success of an X7 might see a Rolls Royce SUV built on the same platform, which would melt the eyes of luxury-sedan purists the world over 2017 Lamborghini Urus The first Lamborghini SUV in decades has been called a game-changer by Lamborghini CEO Stephan Winklemann. The insane performance standards of contemporary Lamborghinis have set an extremely high bar for the Urus, and Lamborghini is putting forth every effort to reach its goals—including having the ability to produce enough of them. The Urus project is set to double Lamborghini’s annual volume, and Winklemann promises that the result will be an SUV that fits in with the wider Lambo lineup. Likely to ride on the chassis of one of its Volkswagen Auto Group brethren (Audi Q7, Volkswagen Touareg, Porsche Cayenne), expect lots of carbon fiber and other weight-saving materials and a screaming-loud) powerful engine. The Urus is confirmed for 2017; set your clocks. 2015 Maserati Levante It’s going to take some time to get used to the Maserati Levante. Not only is the Levante the first SUV from Maserati, but since 2011 we’ve been seeing it as a concept design called the Kubang and frankly, we’ve all gotten used to calling it that. Built on the new Jeep Grand Cherokee platform, the Levante will draw its power from a twin-turbocharged 3.0-liter V-6 with 410 hp or a twin-turbocharged 3.8-liter V8 with 530 hp, with Europe getting a additional turbodiesel option. Maserati’s Q4 all-wheel drive will come with the Levante, which should see a more perfor- IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE 27 Auto Industry Outlook and Review 28 SPRING 2013 / ISSUE NO.6 REPORT he auto industry is highly concentrated. The top 10 global automakers account for roughly 80% of the worldwide production and nearly 90% of total vehicles sold in the U.S. In January 2013, General Motors Company ( GM ) led with an 18.7% market share in the U.S., followed by Ford Motor Co. ( F ) with a 15.9% market share, Toyota Motors Corp. ( TM ) with a 15.1% market share, Chrysler-Fiat with a 11.3% market share, and Honda Motor Co. ( HMC ) and Nissan Motor Co. ( NSANY ) at the last spots with 9.0% and 7.8% market shares, respectively. Toyota recaptured the sales crown from General Motors by selling 9.75 million vehicles globally in 2012, which exceeded GM’s sales of 9.29 million vehicles. Germany ‘s Volkswagen AG ( VLKAY ) came third with sales of 9.07 million vehicles for the year. Toyota’s victory can be attributed to its impressive product lineups and marketing initiatives. Toyota lost its No.1 position to GM in 2011 after gaining the title from GM in 2008. The loss of crown was driven by declining reputation due to a series of safety recalls as well as negative impact from natural disasters in Japan and Thailand in 2011. However, the automaker had vowed to regain the top position by increasing its dependence on the non-U.S. markets, especially the high growth emerging markets. T OPPORTUNITIES To remain competitive, the automakers will need to design vehicles that will cater to consumers in both mature and emerging markets while manufacturing them at low-cost using the most advanced technology. For example, Ford has undertaken “One Manufacturing” strategy, which aims at producing multiple models from plants across the world in order to save production costs and fast adaptation to changes in consumer tastes. The automaker anticipates producing 4.5 models at each of its plants by 2015, up from 3.6 models currently. Further, the automakers are concentrating on offering more optional features (which will save money on gas) even on the small and less gas-guzzler vehicles in order to attract buyers. The sale of optional features is helping them offset lower profit margins for small cars relative to large trucks. The automakers continue to shift their production facilities from high-cost regions such as North America and the European Union to lower-cost regions such as China, India and South America. According to a study by CSM Worldwide, China and South America together are projected to represent more than 50% of growth in global light vehicle production in the auto industry from 2008 to 2015. The role of governments is highly significant. Governments in all major countries have become active IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE auto industry players. Their energy and environmental policies will be strongly responsible in molding the auto industry in the coming years. In late 2011, 13 major automakers, including Ford, GM, Chrysler, BMW, Honda, Hyundai ( HYMLF ), Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota and Volvo, have signed letters of commitment with the U.S. Government to upgrade the fuel economy standard of cars and light-duty trucks to 54.5 miles per gallon (mpg) by 2025. The new standard is more than double the Corporate Average Fuel Economy (CAFE) standard of 24.1 mpg. It is expected to save 12 billion barrels of oil and curtail oil consumption by 2.2 million barrels per day, which accounts for half of the oil imported by the U.S. from OPEC countries on a daily basis. The new standard also aimed at reducing carbon pollution to 163 grams per mile of CO2. With this, more than 6 billion metric tons of greenhouse gas will be curbed over the time span of the program, which accounts for more than the amount of carbon dioxide emitted by the U.S. in 2010. Pent-Up Demand and U.S. Market Recovery Strong pent-up demand due to aging vehicles on the U.S. roads along with falling unemployment rate have been the key factors in driving the auto sales in the U.S. Average age of vehicles on U.S. roads increased to 11.3 years in January 2013 from 10.8 years in 2012. Banks were also friendlier as they offered greater access to loans with lower interest rates. Auto sales in the U.S. grew 13.4% to the five-year high of 14.5 million vehicles in 2012 including a 9% rise to 1.4 million in December last year. Further, in January 2013, auto sales rose 14.2% to 1.04 million vehicles that translate into a seasonally adjusted annual rate (SAAR) of 15.3 million units for the year, up about 1 million units from 2012. GM expects a 7% rise in industry sales in 2013. Meanwhile, Ford predicted an 8% gain in the year, which reflects more than threefold rise compared with the overall economic growth of 2%-2.5% forecasted by the automaker. Asia Promises High Growth The Asian countries, especially China and India, are expected to account for 40% of growth in the auto industry over the next five to seven years being the rapidly growing economies. According to Global Insight -- a U.S. based provider of economic and financial information -- 14.7% of growth is expected to come from India and 8.3% from China by 2013. Ford anticipates global sales to expand by 50% to 8 million vehicles by 2015 given the potential growth in Asia, mainly China and India; and rising demand for 29 REPORT small cars. The automaker anticipates small cars to account for 55% of the total sales by 2020 compared with 48% presently. One third of the small car sales are expected to come from Asia. The Chinese automakers have been struggling hard to enhance their global profile by upgrading their technology to meet international standards. Meanwhile, Indian automakers are also sallying into international markets by introducing their innovative products that could meet consumers demand abroad. In late 2012, Ford announced plans to boost exports of its engine production from India by shipping them for the first time to Europe. Currently, the automaker exports 40% of its Indian-made engines and 25% of its Indian-made cars to 35 countries. The company’s plan to rev up Indian exports is in line with its capacity expansion programs in the country. The company expects to manufacture 450,000 cars and 600,000 engines in India by 2015. Ford already pumped in $2 billion to build manufacturing facilities in India. However, it is still lagging behind Hyundai Motor and Maruti Suzuki India Ltd, which occupy the lion’s share in the Indian car market. Auto sales in China had grown at a double-digit pace since 1999, except in 2008 when the global economic crisis crept in. In 2009, China overtook the U.S. as the biggest auto market in the world by sales volumes when the Beijing government introduced a stimulus package, including tax incentives for small cars. China accounted for a third of light vehicle sales growth in the last five years. However, the incentives were scrapped in 2011 and the Beijing government imposed quotas on new car registrations in order to control the traffic congestions. In 2012, sales in China grew 4.3% to 19.3 million units, including a 7.1% gain in December to 1.8 million units. Despite being higher than the 2011-level of 2.5%, sales growth is lower than the 8% growth projected by China Association of Automobile Manufacturers (CAAM) as well as the double-digit growth in 2009 and 2010. The lower-than-expected growth was attributable to a sluggish economy, rising fuel costs, weak Japanese automakers sales owing to a conflict between Beijing and Tokyo over a group of uninhabited islands in the East China and drastic steps take by few major cities to curb traffic congestion and emission level. Auto sales in the country are expected to improve if the government renews some of its policy incentives that helped the country overtake the U.S. as the biggest auto market. It is rumored that the government would soon resume paying subsidies to rural consumers who are willing to trade in old vehicles for new and fuel-efficient vehicles. According to CAAM, auto sales in China are expected to rise 7% to more than 20 million vehicles in 2013, led by strong demand for passenger vehicles and economic recovery. The association believes SUVs will remain 30 the fastest-growing segment in the year while commercial vehicles will record a moderate gain in sales. WEAKNESSES Although automakers continue to focus on shifting their production facilities to new regions driven by cost and demand factors, developing the supplier networks remains one of the greatest challenges faced by them. Existing suppliers to automakers often lack the financial strength to expand capacity in new markets. On the other hand, auto parts suppliers are sensitive to technology transfers to local third parties, which can give rise to low-cost competitors. Since 1999, more than 20 of the largest global auto parts suppliers have filed for bankruptcy. The financial condition of the majority of auto market suppliers continues to deteriorate, resulting from a historically weak demand and high dependence on automakers. Thus, despite the government’s sizable investment in the industry, it is likely that there will be auto parts suppliers who are unable to restart operations due to a lack of sufficient working capital even as automakers SPRING 2013 / ISSUE NO.6 REPORT start production. According to the Original Equipment Suppliers Association, 12% of the auto industry suppliers do not have sufficient working capital to support a 10%-25% expansion in production. High dependence on automakers makes the auto market suppliers vulnerable to several maladies, primarily pricing pressure and production cuts. Pricing pressure from automakers constricts parts suppliers’ margins. On the other hand, production cuts by automakers driven by frequent market adjustments negatively affect their operations. Some of the auto industry suppliers who have a high reliance on a few automakers such as General Motors, Ford, Chrysler and Volkswagen include American Axle and Manufacturing (AXL), Meritor Inc. (MTOR), Goodyear Tire and Rubber Co. (GT), Magna International (MGA), Superior Industries (SUP), Tenneco Inc. (TEN) and TRW Automotive (TRW). Future of Green Cars Looks Bleak Rising fuel prices and global warming have turned attention to the auto industry that either rely less on tradi- IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE tional fossil fuels or use cheaper renewable sources of energy. Thus, “green” alternatives such as fuel-efficient electric vehicles (EVs) and hybrid vehicles will attract consumers in the affluent countries while flex-fuels such as ethanol and natural gas will be highly demanded in the emerging auto markets due to their suitability with the local climate and resource base. Despite the U.S. Government’s continued effort to promote plug-in-hybrids or EVs, the future of green cars looks bleak, at least in the near future. Globally, the hybrid market is ruled by Toyota (which includes the highly acclaimed Prius) and Honda (includes Civic and Insight hybrids). Meanwhile, other automakers such as Ford, General Motors and Nissan are also aggressively pursuing a plan to push hybrid sales. Some of the well-recognized “green” cars include the Ford Focus, GM Volt, Nissan Leaf and Daimler AG’s (DDAIF) smart USA micro EV. U.S. is the largest hybrid car market in the world with sales accounting for 60%70% of global hybrid sales. Many leading automakers took steps in the last one and half years to push green car technology. In late 2011, Ford and Toyota have signed a memorandum of understanding on the equal product development collaboration for developing a gas-electric hybrid engine for pickup trucks and sports utility vehicles (SUVs), which is expected to be marketed by the end of this decade. In August 2012, Ford revealed its plan to invest $135 million to develop key components, including advanced battery systems, for its next-generation hybrid-electric vehicles. The automaker is looking forward to double its battery-testing capabilities to 160 individual batterytest channels by 2013. Ford aims to reduce cost of its current hybrid system by 30% compared with its previous-generation system. It also plans to triple production capacity of electrified vehicles by 2013. GM also plans to manufacture a luxury electric car dubbed ELR based on the technology used in its Volt plug-in hybrid for its Cadillac brand as a part of its longterm goal to become a leader in the fuel-efficient vehicles market. The automaker intends to manufacture 500,000 vehicles per annum by 2017 that will include some of electric technology. The vehicles would mainly include plug-in hybrids such as Chevrolet Volt, apart from pure electric vehicles such as Chevrolet Spark EV that will go on sale in 2013. The company also plans to push its eAssist system technology in its new vehicles. The eAssist system boosts fuel efficiency by 25% in gasoline-powered vehicles. However, the industry has witnessed some notable adverse developments in the drive for green technology. In January 2013, the U.S. Department of Energy (DOE) backed off President Barack Obama’s stated goal of putting 1 million electric cars on the road by 2015 due to weaker than expected demand for plug- 31 REPORT ins/EVs. According to Hybridcars.com, plug-in/EV sales constituted a meager 3.3% of the overall sales in the U.S. in 2012. The weak demand for plug-ins/EVs has led some lithium-ion battery makers file for bankruptcy protection in 2012. They include MA-based A123 Systems Inc. and NY-based EnerDel, despite both being DOE grant recipients (A123 - $249.1 million; EnerDel - $118.5 million). It also led another DOE grant recipient (in fact, the third largest with $161.0 million), Dow Kokam, to be written down by chemical behemoth Dow Chemical (DOW), who jointly operated the entity with TK Advanced Battery LLC since 2009. Safety Recalls Since November 2009, Toyota recalled about 20 million vehicles globally, surpassing all other automakers. Few months back, the automaker had announced a major worldwide recall of 7.43 million vehicles that included more than a dozen models manufactured between 2005 and 2010. The recall was related to faulty power window switches in the vehicles that can cause fire because they did not have grease applied properly during production. In 2012, the Transportation Department of U.S. slapped a fine of $17.35 million on Toyota due to late response regarding a defect in its vehicles to safety regulators as well as late recall of those vehicles. According to the department, it was the maximum allowable fine under the law for not initiating a recall in a timely manner. The latest fine adds to $48.4 million imposed by the U.S. government on the company in 2010 due to late recall of millions of defective vehicles. Toyota would also need to pay $1.1 billion to settle a class-action lawsuit related to complaints of unintended acceleration in its vehicles. According to a plaintiff lawyer, the settlement is one of the largest in a lawsuit in the history of automotive industry. The lawsuit blamed Toyota’s defective electronic throttle-control system rather than floor mats and sticky accelerator pedals for unintended acceleration, resulting in a crash. The settlement would pacify 16 million owners of Toyota, Lexus and Scion of model years 1998 to 2010. In the spate of recalls following Toyota’s, other automakers’ recalls also came into the limelight. They include Chrysler, Ford, GM, Honda and Nissan. Among them, GM recalled most frequently. According to the European Automobile Manufacturers’ Association (ACEA), car sales in Europe reached its lowest level of 12.05 million units in 2012 since 1995, indicating a year-over-year decline of 8.2% due to the sagging demand for cars, as highly indebted banks were reluctant to finance new car purchases for customers. The decline was the steepest in the Euro zone, where car sales dipped 11.3% to roughly 9 million units, according to Reuters. Car sales in December last year fell for the straight 15th month and at the fastest pace since October 2010. As many as 799,407 vehicles were sold during the month, falling short of the 2011-level by 16.3%. Most of the major EU markets registered a doubledigit fall in sales in December. Sales tumbled 14.6% in France, 16.4% in Germany, 22.5% in Italy and 23.0% in Spain. The U.K. was the only market that came up with sales growth of 3.7% in the month. The U.S. automakers General Motors and Ford saw the steepest decline in sales among all the major automakers operating in the continent. Each of their sales shrank 27% in December. Meanwhile, Japanese automaker Honda sales slipped 6.7% in the month. Among the European automakers, Volkswagen -- the biggest in Europe -- recorded a 15% decline in sales in December, driven by a 20% fall in sales of its namesake brand. Meanwhile, PSA Peugeot ( PEUGY ) and Renault each posted a 19% fall and Fiat SpA ( FIATY ) recorded a decrease of 18%. Most major automakers in Europe are resorting to job cuts and plant closures, as it became no longer feasible for them to undertake full-fledged operations in the continent. Unemployment in the EU reached 26 million in November last year, while the unemployment rate increased to 10.7% in the same month from 10% in November 2011. Among the U.S. automakers, Ford plans to shut vehicle and component plants in the U.K. and Belgium in the next two years while General Motors would suspend car production at its Bochum plant in Germany -- which employs 3,100 workers -- in 2016. Among the European automakers, Renault plans to retrench 7,500 jobs in France by 2016 while Fiat and Peugeot have decided to eliminate 1,500 jobs each. Among the Japanese automakers, Honda announced plans to terminate 800 jobs at its South Marston plant near Swindon in southwest England in the second quarter of 2013. Economic Crisis in Europe The present Euro zone financial crisis has adversely affected the operations of many global automakers, especially GM and Ford, who have a significant exposure to the market. Car sales in Europe continued to be low owing to weak consumer confidence on the back of a weak economy triggered by the crisis. 32 SPRING 2013 / ISSUE NO.6 The Auto Industry under Trasformation REPORT IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE Technology Drives Change The pace of vehicle technology change is accelerating. Vehicles are changing in response to consumer taste and expectations, higher safety standards, and the drive toward a low-carbon future. When considering changes in automotive technology that support the “greening” of automotive transportation, most people think first about advanced powertrains, materials and electronics. These three technology sectors play a significant role in the transformation of the new auto industry: • Powertrain: The most noteworthy change is the reemergence of the electric vehicle. The development of alternative forms of energy storage (primarily batteries) is rapidly progressing. As powertrain technologies advance, the locations of powertrain production and employment may shift. It is possible that new propulsion systems will be produced outside the region or require fewer workers to produce the same number of propulsion systems. In either event (or both), a large-scale displacement of traditional engine production by alternative technologies puts the tri-state region’s powertrain employment at risk. • Materials: The need to make vehicles lighter for improved fuel economy is a major driver in the development of automotive materials and forming. The U.S. workforce’s strength is in steel, but less so in alternative materials. While there are only a few domestic metallurgy programs focused on lightweight materials, Europe and Asia have much more experience in this field. • Electronics, software and controls: Technology in vehicles will continue to increase at a rapid rate. Today, electronics accounts for 25 percent of a vehicle’s value—tomorrow, 40 percent. Yes, the tri-state region is poised to benefit from the research and development, design, engineering, and systems integration side of the electronics used in vehicles, but the area may lose jobs to other automotive regions that are stronger in electronics manufacturing, particularly producers in Europe and Asia. Workforce Implications Today’s auto industry workers need systems thinking. That means that individuals must possess the soft skills that enable cross-cultural communication, collaboration and teamwork. Production and skilled-trades workers must adapt to an increasingly fast cadence of new product, process and technology introductions. Fortunately, the tri-state region has the educational infrastructure to meet these challenges and prepare the workforce for the occupations and careers of the future. Out of nearly 900 accredited postsecondary institutions in the region, more than one-third offer programs relevant to the engineering, design, production and maintenance of automobiles. 33 Automobile Technology & Innovation 34 SPRING 2013 / ISSUE NO.6 REPORT he product life-cycle for automobiles continues to shorten due to competitive market pressures. Competitive market forces have caused automakers to dramatically redesign car models every four to five years.4 New technological developments have led to unique and innovative designs for future automobiles. Automobile manufacturers use the development of new technologies to enhance performance capability, as well as to create innovative designs. Alternative fuel technologies, such as electric hybrids and fuel cell cars, have received considerable attention, and demonstrate attempts to design vehicles that are more energy efficient and greatly reduce engine propulsion reliance upon fossil fuels. T Electric Powered Vehicles The movement towards electric powered vehicles began as a result of the 1973 Oil Embargo, in which efforts were made to utilize electric battery technology to power engine propulsion. However, problems and limitations regarding driving range, speed and a very small market, all led to automakers GM, Ford, Honda and Toyota discontinuing their electric vehicle programs during the late 1990’s. Hybrid Powered Vehicles Hybrid vehicles combine two or more sources of power, which are able to operate using a rechargeable battery and gasoline. Production of gas-electric hybrids signifies the first significant move away from total reliance on the internal-combustion engine in nearly a century.5 Hybrid vehicles are highly fuel efficient and presents the first major step toward fuel cell vehicles, according to industry specialists. Japanese automaker Toyota, is one of the auto industries leaders in hybrid vehicle research and production with its Prius model. General Motors, also involved in producing hybrid vehicles, will be introducing and mass producing its hybrid model by 2007.6 Most major automakers plan to introduce hybrid vehicles to the market within the next five years. Fuel Cell Vehicles Another automobile technology that is presently viewed as the latest catalyst in future automobile technology, is fuel cell powered vehicles, in particular hydrogen fuel cell powered engines. Fuel cell systems operate by compressing hydrogen made from natural gas and gasoline, which is then converted to hydrogen by on-board systems. 7 Automakers and suppliers worldwide are investing substantially in the development of fuel cell systems. IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE General Motors (GM), Ford and DaimlerChrysler have invested billions of dollars in a collaborative project to develop hydrogen fuel cell technology. GM is perhaps the most active in investing, as well as researching and developing fuel cell technology. However, many industry specialists indicate that fuel cell technology will not be available on the commercial market until the next 10 to 15 years. There are, however, problems associated with hydrogen fuel systems which consist of: • Fuel cell vehicles will be more expensive • Fuel cell cars will require a new infrastructure for vehicle manufacturing and maintenance • Developing a system for producing and distributing hydrogen fuel Many uncertainties remain regarding the development and use of hydrogen fuel cell technology, as well as addressing the major question on how to create a viable infrastructure that supports the use of fuel cell vehicles. Advanced Product Design and Vehicle Operating Systems Modern automobiles are increasingly relying upon more advanced electronics, computer, and wireless communication systems to assist drivers and enhance safety. These technologies replace mechanical systems that power, steer and brake the vehicle. Most vehicles have several computers, with high-end models having a half dozen or more that control functions, which range from shifting gears to operating GPS navigational systems. GM has introduced the Autonomy concept model, which uses hydrogen fuel cell technology that powers electric motors in each wheel. The vehicle uses a chassis and replaceable body, allowing greater flexibility and freedom in designing the interior. Internally, the vehicle operates without pedals or dashboard, using sophisticated computer and electronic systems to operate the vehicle. Voice activation is another technology being developed for use in future vehicles. Voice activation systems are expected to operate internal climate controls, open doors, and respond to navigational request by the driver. The next step in automobile electronic and communications technology is vehicle sensor technology. Sensor technologies use radar or laser technology to control systems that detect vehicles in front which then automatically slow down the vehicle. Companies are using sensor technology to serve as collision-avoidance systems that operate and control vehicle safety systems and on-board equipment. 35 36 SPRING 2013 / ISSUE NO.6 ARTICLE orbes magazine has featured a list of the happiest people in the world for 2013. According to the magazine, Norway, Sweden, Australia, New Zealand, Canada, Finland, Netherland, Switzerland and Ireland are the happiest countries of the world. We want to review auto industry conditions in the happiest countries. What kind of cars do they run? Do their cars influence their life dramatically? What is the relation between happiness and auto industry? F 30 thousand sedans annually. Zenvo Automotive is the most famous Danish car maker which uses big EU automakers’ technology and auto parts to manufacture a super sport car. The carbon fiber body is made in Germany and many components such as gauges, petrol tank, ABS brakes, traction control, and airbags come from US or German cars. The three other auto firms professionally carry out sports cars tuning for domestic races. This country is also a Schengen state so there is no prohibition for auto imports. Happiest Country The results of our findings showed anything could make the people of the happiest countries pleased except cars and the auto industry. Norway’s most important achievement in the field of auto industry is only an electric car company which is mostly directed by foreigners. The company was long affiliated by Ford Company but they sold it to a Russian auto group and most of its products are used in other countries. Norwegians used to founded and directed seven auto manufacturing company which had been active from 1950s until 2011. The companies announced bankrupted and were closed. The country is a Schengen country and a member of World Trade Organization it does not pay any tariff duties and taxes for importing car from other EU members. There are tight traffic laws in the country and driver are required to run their car by only 40 or 60 kilometers of speed. A Happy Place for Cars The automotive industry in Sweden is mainly associated with passenger car manufacturers Volvo Cars and Saab Automobile but Sweden is also home of two of the largest truck manufacturers in the world: Volvo AB and Scania AB. The automotive industry is heavily dependent on export as some 85 percent of the passenger cars and 95 percent of the heavy vehicles are sold outside of Sweden. The automotive industry and its subcontractors is a major part of Swedish industry. Most of Swedish auto companies were closed during World War II and did not revive. Volvo, Saab and Koenigsegg are among famous Swedish automotive groups whose products are mostly being exported. Current active Swedish auto companies mainly use hand-made or American auto parts. Land of Kangaroos Free Territory of Cars Scandinavian Denmark has begun to step in auto manufacturing way since the World War II finished. All of its 16 automakers are active domestically and locally. They mainly manufacture hand-made, sports and carting cars and their total production stands at less than Although Australia is a thriving auto market, the country does not own many automakers. Australia is one of only a few countries with the capabilities to design cars from scratch and manufacture in significant volumes. Australian-designed cars are made by local producers Holden (a subsidiary of General IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE Motors) and Ford Australia. Toyota Australia also manufactures local variants of its international models, particularly the Camry. In Australia the cars are righthand-drive and should not exceed the 60 km/h speed, if so the driving license of the driver would be seized for three months. Car import customs duty is not high in Australia but the country enforces high taxes for carbon production which raises the price of a car by 2.5 folds. A Good Consultant for Big Automakers The automotive industry in New Zealand no longer has a vehicle assembly industry for passenger cars. Changes to protection of the local industry eventually led to the closure of the assembly plants since they could not compete with foreign counterparts. Currently, there are a number of small domestic companies producing original kit and replica cars using local-made car bodies and imported componentry for both the local and international markets. Several of these, while small in size, are noted internationally for the quality of their workmanship. Most domestic vehicles are imported, with Toyota, Ford, and Holden dominating the market. The automotive industry started with import of two Benz cars from Paris by William McLean. Apart from a few attempts to create locally made cars in the 1900s most were imported. New Zealand Government legislation and import duties in the early 1920s created conditions which meant that major international companies such as Ford and General Motors started assembling cars locally. The country’s small domestic companies have been successful to give useful consults to big international automakers in the field of engine design and aerodynamic engineering. 37 ARTICLE Almac and Beattie are the two companies active at that country and are famous for their workmanship. There are also several tuning companies that cooperate with car racing teams contractually and prepare cars for races. Britten Motorcycle Company is a domestic motorcycle manufacturer in New Zealand whose products is being sold within Oceania continent. Big Neighbor of US Notwithstanding Canada enjoys every facilities and resources required to become a house of automakers, it preferred to expand its agriculture and other heavy industries. Before 1960s the country embarked on auto manufacturing task but all its efforts were not successful. High consumer prices and production inefficiencies characterized the Canadian auto industry to the signing of the 1965 Automotive Products Trade Agreement with the United States. The 1965 Automotive Products Trade Agreement or “Auto Pact” represents the single most important factor in making the Canadian automotive industry what it is today. As to the pact managing and directing all parts of Canada automotive industry was transferred to the US. After signing the agreement all auto firms like Ford, General Motors and Chrysler started acting in the country with the suffix of Canada (for example Ford Canada) and began production and export. Beside Orion Auto Inc, Nova Bus and Arment are three originally American firms active in Canada. The companies of Toyota and Hyundai have established independent branches in the country. be well developed. But it is not so. Since first days automotive industry landed in the country only nine firms were active in Finland of which just three have not yet announced bankruptcy. Talbot was an automobile marque that existed from 1903 to 1992, with a hiatus from 1960 to 1978, under a number of different owners, latterly under Peugeot. Elcat Electric Vehicles is another Finnish company established in 1985 with the aim of developing a commercial electric vehicle for urban delivery traffic. However, Elcat Oy, the owner of Elcat Electric Vehicles, has been researching electric vehicles since the beginning of 1970’s. Two other Finland’s auto firms produce hand-made auto parts and tuning cars. The Country of Tulips The beautiful country of Tulips and windmills is a geographically low-lying country, with about 20% of its area and 21% of its population located below sea level and 50% of its land lying less than one meter above sea level. So there are not many roads in the country. However the Netherland has put its effort to become an automotive industry owner. About 39 auto firms have been functioning in the country of which many were bankrupted. Spyker Car is Netherland’s most famous carmaker which produces super sports cars. In addition to Spyker Car six other auto firms like Wijenburg, Barton, Leviatron, Carver…are keeping on their function in the country. DAF Co. was a famous Dutch truck maker which was sold to American PACCAR Inc. in the year 2012. A Place for Formula One The Country of Watches Finland is the home of world’s best Formula One drivers, therefore its automotive industry should Switzerland is mostly famous for its watches and also called the country of industrialists, but it was 38 not so successful in the field of auto industry. During Switzerland history, 51 auto firms have been functional none of which were successful in domestic and international market. Orion was the first Swiss automaker established in 1900 and closed in 1920s. There are three more active auto firms in Switzerland. Sbarro was founded in 1967 and uses Mercedes-Benz engine and Lotus parts to produce super sport cars. From other functional Swiss automakers we can point to Rhine Speed and Leblang whose production is similar to Sbarro. Colonialism Defiant Ireland has long been defiant to old colonialist (UK) and now stands at first ten happiest countries in the world. The country set off on auto manufacturing industry in 1907. Aylesbury was the first Irish auto maker established in 1907. But unfortunately Irish people did not welcome automotive industry and all of its four car manufacturers became bankrupted. Ireland production rate was at best during 1950s which reached hardly to 15 thousand cars per annum. The country imports its basic need of cars from its neighboring countries like Germany, France and England. SPRING 2013 / ISSUE NO.6 INTERVIEW The History of BMW in Iran BMW is a popular brand for every generation around the world and in particular, Iran. After car imports were liberalized in 2005, BMW reentered officially Iran car market after being absent for a number of years. Iranians welcomed several models of BMW and the company benefitted from this market significantly. Ali Nouriani is the importer of BMW vehicles. His family and he were ac- tive in the field of print industry. Now he is one of the most prominent Iranian businessmen in Germany. During an interview with Iran Commerce he pointed to ten years of efforts to license BMW imports to Iran and start assembly of BMW sedans and producing its parts. However he was not successful and tried to persuade Iran Police Forces buy BMW sedans for their missions and officials, but police preferred IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE Mercedes Benz. At last he set up a BMW exhibition in Iran; it was while foreign auto import was not free in the country. You can read the full excerpt below. Would you please explain about your father career? When did your family begin its business activities? My father, Morteza Nouriani ini- 39 INTERVIEW tiated modern printing industry in Iran. Nouriani Institue was founded in 1931 whose main business activity was importing print and …machines. Some of these machines are still active after 50 years and some others that we sold 50 or 40 thousand rials, no cost millions of rials. Unfortunately imported machines during recent years are not qualified and do not have proper after sale services. As I know your father started cooperation with German Heidelberg in the early years of 1950s, so he had more tendencies toward Germany. How do you describe it? Heidelberg was one of the companies my late father cooperated with. Many international printing and lithographic companies had contract with him but he continued working with Heidelberg and broke with British Roland Co. My late father mostly liked to work with German and Swiss firms. Among his partners, there were few 40 British and Italian companies whose services and goods were not well qualified to be offered in Iran. So we preferred to disentangle ourselves and continue with Swiss and British firms. More than 15 thousand BMW sedans were imported to Iran from 2005 of which 60 percent was imported by Nouriani and Persia Khodro. Why Iranian traders were more interested in working with German companies during those years? Because Germans offer more qualified goods and services and have better cooperation with Iranians, so Iranian traders who enjoy very little backup can attain huge achievements with collaboration of Germans. Germans constructed many powerful and valuable buildings which are still fashionable and strong. Iran Foreign Ministry and Defense Ministry buildings and construction in Sakhaei Street are good examples of German works in Iran. The said buildings were guaranteed by their constructors until 10 or 15 years ago. They had been sending their experts to Iran for many years to check the said buildings and remove any existing problem. This shows their high obligation and respect for their customers. Did you import BMW sedans before the Revolution? Our closeness with BMW Company refers to many years ago. I remember although my father did not have any relations with the company, he drove a BMW sedan when I was a child. My brother and I liked working in the field of motorcycles so we signed some contracts with several motorcycle manufacturers and began a side business in this field. One of them was BMW with which we signed a contract in 1975 and started importing its motorcycles. Now in Iran if a trader wants to import a motorcycle brand he is obliged to import cars too. This is not acceptable because they are both from one brand but their managing and selecting system is differ- SPRING 2013 / ISSUE NO.6 INTERVIEW ent. At that time we had the license of BMW motorcycles and Mr. Vahhabzadeh BMW car dealership. I also founded the first motor racing track. Before the Revolution people brought their maico and cross motorcycles to the streets which bothered the public. We established a motor racing track and hired a Belgian coach and were successful to collect the earsplitting motorcycles from streets. When did you take measures to become the first BMW dealership in Iran? Before any businessman who imported BMW sedans or motorcycles said he was a full dealership of this famous and popular brand. But when I called one of my friends in Germany in 1989 he said there were no BMW full dealerships in Iran and I declared my tendency toward negotiations to take the permission of selling all products of BMW brand in Iran. Then we started bilateral talks in 1990 for this purpose which continued for 10 years. Although BMW representatives knew us and our company very well it was not easy to take the official dealership from them. At that time UAE was the closest Iran trade partner where two official dealership of BMW brand were active, but we had no in Iran. No wise businessman wastes his time for 10 years to take a brand’s dealership, but I persisted and was successful to sign a contract with the company in the year 2000. During those 10 years I set up several BMW car exhibitions and showcased state-of-the-art technologies of luxury and concept BMW products in international car exhibition. The people admired our task a lot because though there were no official dealership and import, we displayed BMW products. In fact we took cutting-edge BMW products out of the pages of magazines and books. Sometimes there were some set backs during the fair too, for instance they took in the sedan and damaged some parts, tore the seat belts …but we did not care and continued our job. BMW Company itself well-liked IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE the fair too. It was interesting for them that while we did not take the official dealership at that time we disbursed a high expenditure to show their products. It was also interesting for BMW managers that Iranian people had considerable information about BMW products; it was while BMW brand was not up to date in Iran at that time. Do you still hold the cars you showed during that exhibition? No we did not. At that time we could hold those sedans after paying their customs duties. But I disagreed because many people could not buy such cars. We spent a lot of money to return the mentioned cars and sold them with lower prices. I believed that the cars should be imported to Iran when many people could afford for them. Did you try to set up BMW assembly lines in Iran? Between 2000 and 2004 there were no BMW imports and we tried to set up BMW assembly line in the 41 INTERVIEW country. To do so I invited German BMW part manufacturers to Iran to get familiar with Iranian auto part makers and train them their modern technology. In between, we found some Iranian qualified firms which could become BMW spare part manufacturers. If a company in a country is able to make a standard part for BMW, the part will be used not only in that country itself, but also all over the world. I hoped that our auto part makers could manufacture BMW parts for being used in every country and that auto part maker would not be under the pressure of domestic companies. It is to be said that if domestic companies force the part manufacturer to make cheap spare parts with low quality, the manufacturer cannot complain. But when it offers an international product it can reject producing poor standard goods and guarantee quality and security of the car. Unfortunately I could not take any positive steps in this regard. Would you please elaborate on Iran police force’s big purchase? It seems that it was a good opportunity for BMW to be the official police car instead of Mercedes-Benz? Iran Police was intended to buy 4 thousand sedans of foreign brands. In between BMW and MercedesBenz competed closely. We talked to the German side a lot, but they insisted on setting up our after sale services in six global centers before founding domestic assembly lines. It was impossible for us. I told BMW officials that if they sold 4 thousand sedans to Iran Police Forces we could set up police car after sale services in provinces, beside we could remove the barriers to establish same services for personal cars. If so, we were able to found the assembly line in Iran. Why the Police did not decide on BMW instead of Mercedes-Benz? Well, there existed many prob- 42 lems. They annoyed me too because I spent a lot of time and they did not respect it. They could only inform me that they had chosen Mercedes-Benz, but I heard it from the German side. When did you return to the market and restarted BMW talks? During the year 2004 the government announced that foreign car brands could be imported under special regulations. We had created an expert team to follow technical talks. We had also determined places for after sale services for embassy cars and cars with temporary movement permit. So when car imports to Iran were liberalized we could win the first approval for importing foreign car brands. After us Mercedes-Benz, Toyota …could take the permit. Did you start cooperation with Persia Khodro at the same time? No, Persia Khodro was not established at that time. Rey Investment Co. from Rey city, Tehran Province, offered us to cooperate and collect money for charity purposes and school and hospital construction. I accepted because I liked to be helpful for development of the city which has been holy for Iranians for hundreds of years. BMW is the car Iranians adore and view as a sign of wealth. You said you are interested in charity and public welfare activities. If so why did you try to import such luxury cars which the public cannot afford to buy them? BMW is an expensive brand so that in Germany itself not everyone can buy its products. I chose this brand to do a positive work for my people. I wanted to prove that in Iran we are able to import and use such brands too and create competitiveness between domestic companies and foreign brands. After we began to import BMW products, domestic companies tried to optimize their products and after sale services and so the market turned to a competitive one. When there were no car imports, domestic companies were not interested in improving their products. In fact the best sedan Iran Khodro produced at that time was Paykan which was just offered by the white color. After car imports were loosed and foreign brands entered Iran domestic companies lagged behind. So they launched leasing companies, developed their styles… When we were struggling to win BMW import permit, I helped Mercedes-Benz take the license sooner. Its officials were shocked and thought I wanted to their job. I told them that I did it to make the market competitive. When two famous brands exist in a country, competitiveness will expand and customers have more options to choose. Do you buy BMW products from its main factory or from regional markets? From the first days of our work we bought BMW products from Munich factory. I believe that BMW products manufactured for Persian Gulf Arab states have different standards. For the weather condition there is totally different from ours. For instance the do not need powerful heating system, but in Iran winters we experience very cold days. So we order the cars ourselves. BMW does not produce stark autos. There is always a sign in conductor part of the BMW sedan which shows the company and country that ordered the car. So the company manufactures each car for a special country with its distinguished standards. Some BMW sedans have been imported to Iran by other importers than Nouriani Institute or Persia Khodro. What is your idea about it? We call it grey import which occurs in every country. Though there are SPRING 2013 / ISSUE NO.6 INTERVIEW two official dealership of a brand, a businessman imports a car for example from France with import tariff of more than four percents. I believe that they are also good cars but with no management and arrangement. Such sedans have no proper guarantee and distinguished standards. If the engine hurts and its owner refer to us for repair, it should have guarantee; otherwise, he should pay a lot of money for it. We as official dealership of BMW are obliged to offer broad after sale services. Before about 50 percent of BMW imports were grey imports, Mercedes-Benz too suffered from more than 90 percent of grey imports but now there are more controls. International sanctions affected different industrial sectors and their managers generated some initiative to take on the sanctions. What did you do? Did sanctions influence your business too? Of course the sanctions affected our business. They affected the job of all foreign cars dealer ships even Korean and Mercedes-Benz. However we have faced it with a high flexibility. We are obliged to undertake out commitments to our customers. We cannot tell them that for EU sanctions we would cut our services to them. How is the condition for your old rival MercedesBenz? After Germans left and a new team took the control of its dealership, I do not have strong relations with them compares to the past. But as I know they are confronting more challenges than us; because the United States has put more pressure on Mercedes-Benz than BMW. The US imports much more Mercedes-Benz products compared to Iran and if it cuts its imports the company will be bankrupted. It is to say that if Iran imports one thousand sedans, the US imports 600 thousand whose difference is significant. Germans think economical and try to avoid irreparable losses. The BMW X6 is a mid-size luxury crossover of which exist a few in Iran. It seems that only disabled veterans have import permits for this car. How can they import this X class BMW sedan? This model of BMW car is being produced in East US in a BMW plant located there. Because it is manufactured in the US it is counted as an American product. We are suffering tight US sanction so we cannot import the car. BMW X5 and X3 are counted as American products. Only BMW X1 and Z4 are going to be manufactured in EU and we are planning to buy them. Disabled veterans imported a few BMW X6 sedans under special exemptions which are available only for them. They also import these cars from regional markets like Persian Gulf Arab states. ports was speculative and decreased employment rate. What was your motivation to win BMW import approval? There were many people before and after the Revolution who did profitable businesses and departed their capitals to make more money. Many other capital holders prefer to start a profitable business within the country rather than spending their liquidity to create employment or develop domestic production. Why didn’t you begin such businesses? It is the right of all Iranians to enjoy the best products and brands. When a child is walking in the street along with his father, he sees a passing BMW sedan and asks his father what is this? His father explains to him that this is a BMW brand luxury car which is expensive and comfortable. Simultaneously the child starts planning to buy one of those cars. I mean that when you look upward you try to lift up yourself and improve your conditions. Many people have been employed in our institute and enterprise in Iran and other countries, after sale service centers and in the market. So our business not only benefits Iranians but also improves their culture and expectations. Experts criticize that the purpose behind car im- IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE 43 Different Types of Car Engines here are a number of different types of car engines in today’s road and race cars, and the number is growing especially with emerging technologies like Hybrids. Most cars these days use what is called a four-stroke combustion cycle to convert gasoline into kinetic motion. This four-stroke approach is known as the the Otto cycle, in honor of Nikolaus Otto who invented it in 1867. • Intake stroke- air and fuel are taken into the cylinder as the piston moves downwards. T 44 • Compression stroke- where the air and fuel are compressed by the upstroke of the cylinder. • Combustion stroke- compressed mixture is ignited and the expansion forces the cylinder downwards. • Exhaust stroke- waste gases are forced out of the cylinder. The intake and outlet ports open and close to allow air to be drawn into the cylinder and exhaust gases to be expelled. So we understand that the engine is effectively a device which sucks in air, compresses it, ignites it and then blows the air out again to create power to the road wheels. In terms of the performance gains possible, there are a vast multitude of different techniques and technologies. First of all lets get a understanding of the different types of engine layouts commonly found in cars today. As Engines can come in an array of different designs, including Straight/Inline, V Type, Boxer, Rotary Wankel and even Diesel: Straight/ Inline Engines In-line engines have the cylinders arranged, one after the other, in a SPRING 2013 / ISSUE NO.6 straight line. Almost all four cylinder engines are A straight/Inline engine is considerably easier to build than an otherwise equivalent Boxer or V type engines because the cylinder bank and crankshaft can be milled from a single metal casting and it requires fewer cylinder heads and camshafts. This ultimately means lower production and maintenance costs. Also due to their smaller and more lightweight construction, this is the preferred Engine design for FF cars (Front Wheel Drive). The design can be extremely fuel efficient com- pared to V type, Boxer and Rotary engine designs. There are some five and six cylinder Straight/ Inline design engines, which are mainly found in European cars from the likes of Audi and BMW for example. Reasonable performance can be achieved with performance levels in the 0’9 Ford Focus RS around 300 BHP. This is mostly due to Turbo Charging and boost pressure used, but it is common for a 2.0 Litre 16 Value inline 4 to produce 200 BHP plus. The engines are not generally IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE thought to be as smooth as the V type and Boxer engine designs and the structure has it’s limitations in terms of durability and strength. Inline engines can sometimes be a little rough in lower revs, but work well for smaller cars and do respond well to Tuning. V Type Engines The V-type of engine has two rows of cylinders set normally at a ninety degree angle to each other. Advantages include it’s short length, great rigidity of the block, its heavy crankshaft, and attrac- 45 ARTICLE tive low profile. This is a tried and tested engine design with huge performance potential. In sports applications, having the engine as low to the floor as possible increases the car’s handling characteristics, as it will naturally have a lower centre of gravity. Also having a strong engine with built in rigidity can mean the difference in endurance races, making the V type engine design an ideal choice for Motorsport applications. With this type of engine it is possible to have a very high compression ratios, without block distortion under load. This makes it a strong and robust design for high performance applications and is used in F1 for instance. Also with it’s resistance to torsional vibration, the engine characteristics produce a smooth and refined engine. Another attribute for this compact engine design is a shorter car length without losing passenger room. In 1914, Cadillac was the first company in the United States to use a V-8 engine in its cars. From there America has fallen in love with the V type engine and the 50’s and 60’s produced some of the best Muscle cars. Boxer/ Flat Engines In 1896, Karl Benz invented the first internal combustion engine with it’s horizontally opposed pistons. This Boxer/Flat engine is an design with multiple pistons that all move in the horizontal plane. The most popular and significant layout has cylinders arranged in two banks on either side of a single crankshaft, generally known as “boxers”. This is because the two pistons join together in the middle of TDC ( Top Dead Centre). This is similar to two boxers touching gloves at the beginning of a bout and is the origins of the name appointed to the engine design. Flat engines have a lower center of gravity than any other common configuration, so vehicles using them should benefit from better sta- 46 bility and control during cornering. But they are also wider than more traditional configurations and the extra width causes problems fitting the engine into the engine bay of a front-engined car. Subaru have been producing AWD front engined cars for some time now, so where there’s a will they is a way. Boxer engines are one of only three cylinder layouts that have a natural dynamic balance; the others being the Straight/Inline 6 cylinder and the V12 design. This makes for a smooth and harmonious engine at idle. Boxer/Flat engines tend to be nosier then other designs due to the lack of airboxes and other components in the engine bay. They have a engine characteristic of smoothness throughout the rev range and when combined with a mounting position immediately ahead of the rear axle, offer a low center of gravity and largely neutral handling characteristics. Wankel/ Rotary Engines The Rotary Wankel engine was an early type of internal-combustion engine in which the crankshaft remained stationary and the entire cylinder block rotated around it. The Rotary/ Wankel engine has no pistons, it uses rotors instead. This engine is small, compact and has a curved, oblong inner shape. Its central rotor turns in one direction only, but it produces all four OTTO strokes (intake, compression, power and exhaust) effectively. The only production car to still have a Rotary/ Wankel engine design in production today is the Masda RX-8 and previous RX-7 models. The Rotary/ Wankel engine is limited by its inherent restriction on breathing capacity due to the need for the fuel/air mixture to be aspirated through the hollow crankshaft and crankcase, which directly affected its volumetric efficiency, also low torque levels are a known problem and the engine has design limitations. Turbocharging this engine is one of the easiest ways around these deficiencies and was seen in the RX-7. The rotational forces of the mass of the Rotary/ Wankel engine’s weight produce a powerful gyroscopic flywheel effect. This smooths out the power delivery and reduces SPRING 2013 / ISSUE NO.6 ARTICLE vibration. Vibration had been such a serious problem on conventional piston engines that heavy flywheels had to be added to the overall engine design to help counteract the effects. The cylinders themselves functioned as a flywheel, Rotary engines gained a substantial powerto-weight ratio advantage over more conventional engines. Another advantage was improved cooling, as the rotating cylinder block created its own fast-moving airflow, even at standstill. Dispensing with separate cylinders, pistons, valves and crankshaft, the rotary engine applies power directly to the transmission. It’s construction allows it to provide the power of a conventional engine that is twice its size and weight and that has twice as many parts. The Rotary/ Wankel burns as much as 20% more fuel than the conventional engine and is potentially a higher polluter, but its small size allows the addition of emission-control parts more conveniently than does the piston engine. The basic unit of the rotary engine is a large combustion chamber in the form of a pinched oval. Within this chamber all four functions of a piston take place simultaneously in the three pockets that are formed between the rotor and the chamber wall. Just as the addition of cylinders increases the horsepower of a piston-powered engine, so the addition of combustion chambers increases the power of a rotary engine. Larger cars may eventually use rotaries with three or four rotors. Mazda have had numerous success with this design, especially with the RX-7 and RX-8 models. By adding a turbocharger as discussed previously, the torque deficiencies are some what over come and also engine power greatly increased. This combined with the lower weight made a effective and competitive performance package. vented by Rudolf Diesel, of German ethnicity born in Paris. Although quite similar in design to petrol internal combustion engines, Diesel engines use compression to ignite the compressed fuel to air mixture prior to injecting it into the combustion chamber, with out the need for spark plugs. Advantages over Petrol Engines: • 45% efficiency in converting fuel into mechanical energy compared to Petrol at 30%. • Engine life expectancy is twice as long compared to petrol engines, due to the stronger internal design to cope with higher pressures under combustion. • No need for HT leads, spark plugs and coils, meaning greater reliability especially in damp environments. • Diesel engines are immune to vapour lock and the fuel is not explosive like petrol. • No proportionate decrease in fuel efficiency compared to petrol engines, at higher engine loads. • Produce less heat in cooling and exhaust. • Produce less carbon monoxide and can be used in underground applications. • Can accept turbo/supercharging with out risk of detonation, unlike petrol engines at higher pressure levels. • Higher torque lower in the rev range. • Diesel fuel is denser then petrol and contains roughly 15% more energy. Disadvantages Engines: over Petrol • Lower power to weight ratio then petrol engines, due to the increased internal component strength. • Lower power and rev band range compared to petrol engines, although turbo/ super charging has helped to combat this in the last decade. • Normally noisier and rougher in operation compared to petrol counter parts, although diesels are almost on par with technological advancements. • More expensive to purchase and run compared to petrol alternatives, due to increase in stronger components and more regular service schedules. Diesel Engines The Diesel engine was first in- IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE URE - QUARTERLY MAGAZINE 47 REPORT The Market Share of Domestic and Foreign Auto Firms in Iran ran roads are occupied with different classes and brands of domestic and foreign cars. In between Saipa and Iran Khodro, two major Iranian auto manufacturers, have the most portions in domestic auto market. Iran Standard and Quality Inspection Company (ISQI) reviewed the share of 15 auto provider companies from Iran car market during second half of last Iranian year (ended March 20). According to the latest quality report of ISOI Saipa ranked first and Germans last among the mentioned 15 firms. As per the ranking, Chinese companies hold a share of one percent and Koreans 1.4 percent from Iran auto market. I Market in Hands of Domestic Firms Domestic firms have cornered Iran auto market; though it is a positive point that domestic auto companies have been raising employment rate and decrease dependency to foreigners, there is also a negative 48 sense. That is Iranians cannot afford to buy foreign cars and are not well familiar with major foreign brands. According to latest statistics Saipa have dominated the market with a 46.9 percent share with reducing the negative scores of X131 car (Pride) and improving its quality. The sedan is the most popular product of Saipa for its better quality and cheaper price, so that it constitutes nearly 95 percent of Saipa production. Before the car was among low quality sedans and offered in different classes and prices. Rio and Xantia are two other sedans produced by Saipa. The two cars too could help improve the ranking of Saipa; though Xantia is not being produced anymore and Rio manufactures in low numbers. Tiba is a new product of Saipa and is going to be the top product of the company. Iran Khodro Industrial Group (IKCO), the largest Middle East car manufacturer, makes up 46 percent of SPRING 2013 / ISSUE NO.6 REPORT whole market share and ranked second after Saipa. Although the company offers various products like Peugeot 405, Samand, Peugeot 206 and Peugeot Pars which are highly popular among Iranians, Saipa’s pride sedan is still the most admired by people. IKSO is going to introduce new products like Rana and Dena which could be helpful to upgrade the place of the company. After IKCO, Saipa subsidiary Pars Khodro could grasp the seat place among active car manufacturers in Iran. Offering cars such as Maxima, Megan, Tondar-90 and Qashqai, Pars Khodro comprise 3.8 percent of Iran auto market share. The company’s products are counted along with luxury and expensive cars in Iran market and not many people can afford to buy its products. “Sanabad Khodro Toos” is another Iranian auto maker which manufactures Chery’s A15 sedan in Khorasan Privince. This is while it sounds as if currently the company does not produce any of Chery sedans. Later Modiran Pars Co. was assigned to launch the Chinese Lifan vehicle in Iran which could only comprise 0.1 percent of Iran market share. Bam Khodro is another auto company which produces Chinese Lobo. The company makes up for 0.1 percent of market proportion. Experts believe that the 0.1 percent share of Bam Khodro from Iran auto market is due to production of Volkswagon Gol vehicle. Low fuel consumption and cheap price are two major properties of Chinese cars which made them popular among people; this is while their quality is mostly at low level. High Proportion of Koreans The proportion of Korean cars to other foreign sedans is higher. Koreans make up for 1.4 percent of Iran market share which shows Iranians have welcomed Korean companies like Hyundai and Kia. In the situation that Koreans had announced they would withdraw from Iran market, their official dealerships (Asan Motor, Rain Khodro, Atlas Khodro) could constitute the largest proportion of Iran marketplace compared to other foreign companies. Hyundai Santa Fe, Sonata, Avante, Kia Sorento, Cerato and Sportage are the most in style Korean cars in Iran. In other words, Hyundai and Kia products which are imported to the country constitute one percent of market share and those manufactured by domestic producers like Rain Khodro (Verna, Avante) make up for 0.4 percent of Iran market share. Japanese Lagged Behind Japanese auto makers used to have active presence in Iran auto market, but now they stand after Koreans and Chinese firms as the third foreign automakers in Iran. Two reasons caused dim company of Japanese auto firms in Iran market: international sanctions against the Islamic Republic which forced Japanese firms limit their business in Iran and fast movement of Korean firms to overtake other foreign firms in Iran’s profitable market. As per ISQI statistics, Bahman Industrial Group as the producer of “Mazda 3” sedans comprise only 0.5 percent of Iran market share and Irtoya 0.1 percent by producing Orion vehicles. Distasteful Presence of Chinese Companies If Koreans decide to leave profitable Iran auto market, Chinese companies will actually replace them. “Sanabad Khodro Toos”, “Modiran Khodro”, “Bam Khodro” and “Modiran Pars”, are official importers and manufacturers of Chinese cars. Chinese companies are extremely interested in being present in Iran auto market and are featuring in three several companies whose productions are low. In between Chery Company has a vast plan to expand its presence in Iran. The company which is among top five Chinese auto makers offers MVM sedans via Modiran Khodro Company and constitutes 0.6 percent of market share. Chery was planned to spread out its attendance in Iran, but for marginal problems the plan was cancelled and the company has limited its presence to the private sector. IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE Rare Germans Cryptic and slow move of German car brands shows that Iranians will soon forget luxury cars like MercedesBenz and BMW. Germans have long been actively present at Iran car market, but their share decreased to less than 0.2 percent. Persia Khodro is the official dealership of BMW products and Setareh Iran Co. the official importer of Mercedes-Benz sedans and each of their shares from Iran auto market stands at less than 0.1 percent. Earlier the two well-known German companies warned that they would limit their business with Iran and may withdraw from the country’s auto market. This is while their products are not only of high quality but also are too expensive; so that not all people can afford to buy them. Futile MG The Chinese-British Media Qeshm auto maker has introduced MG Rover sedan to Iran car market whose market share is less than 0.1 percent in Iran. 49 REPORT The Growing Presence of Asian Vehicle Manufacturers in Iran 50 SPRING 2013 / ISSUE NO.6 REPORT astern countries’ share of Iran auto market is high; so that many Iranian customers are only keen on buying Japanese brand cars. As Japanese auto firms have become admired in Iran we preferred to review the background of their activity and presence in their hometown and Iran in order to get a better sight about these companies and their products. E Mazda The company website states that name “derives from Ahura Mazda, the Iranian Zoroastrian God. The company website also notes that the name “also derives from the name of our founder, Jujiro Matsuda.” The company is known as “Matsuda” in Japan. According to Mazda website, “the company’s name, “Mazda,” derives from Ahura Mazda, a god of the earliest civilizations in western Asia. We have interpreted Ahura Mazda, the god of wisdom, intelligence and harmony, as a symbol of the origin of both Eastern and Western civilizations, and also as a symbol of automotive culture. It incorporates a desire to achieve world peace and the development of the automobile manufacturing industry.” Mazda began as the Toyo Cork Kogyo Co., Ltd, founded in Japan in 1920. Toyo Cork Kogyo renamed itself to Toyo Kogyo Co., Ltd. in 1927. Toyo Kogyo moved from manufacturing machine tools to vehicles with the introduction of the Mazda-Go in 1931. Toyo Kogyo produced weapons for the Japanese military throughout the Second World War, most notably the series 30 through 35 Type 99 rifle. The company formally adopted the Mazda name in 1984, though every automobile sold from the beginning bore that name. The Mazda R360 was introduced in 1960, followed by the Mazda engines in 1962. Mazda entered Iran in 1970s sending family cars and pickups to the country. At that time the Mazda 929 was extremely welcomed in Iran. The car was originally a mid-size car from 1973 to 1987 and as a full-size car thereafter. Marketed over three decades, the 929 was originally the export name for the Mazda Luce. Also Mazda pickups have been used on Iran roads since that time. As of 1959 “Bahman Automotive Group” started the assembly of Mazda three-wheel pickup with the cargo capacity of 200 Kg upon obtaining the production license from the ministry of mines and industries. Later in 1971 the company increased its range of products to include various Mazda pickups such as1000 cc Mazda pick-up with the cargo capacity of 500Kg. In the same year the company also changed name to Mazda automobile production Co. Later in 1984, 1600 cc Mazda pickup was launched and the company again changed name to “Iran Vanent IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE (pickup) Co”. In the year 1986-1987 it launched 1800cc Mazda pick-up and upon the privatization of the company in late 1993 its field of activities was considerably developed to include various activities and products like different types of Mazda pickup and Mazda 323 passenger car. In 2007 in line with the strategy to expand its products and also to keep along with the modern technology of the world, Bahman Group launched Mazda 3 passenger car and in the same year with the goal of diversity its products the function assigning company for designing different functions for ISUZU trucks was founded. The brand symbol expresses Mazda’s dedication to continuous growth and improvement. It is a symbolic development of the Mazda “M”, and shows the company stretching its wings as it soars into the future. Toyota Toyota has been always identified as initiator of Japan automotive industry. The giant auto firm has developed so that it took over American giants like General Motors. Toyota was started in 1933 as a division of Toyoda Automatic Loom Works devoted to the production of automobiles under the direction of the founder’s son, Kiichiro Toyoda. Its first vehicles were the A1 passenger car and the G1 in 1935. The Toyota Motor Co. was established as an independent company in 1937. The three ovals in the new logo combine to form the letter “T”, which stands for Toyota. The overlapping of the two perpendicular ovals inside the larger oval represent the mutually beneficial relationship and trust between the customer and the company, while the larger oval surrounding both of these inner ovals represents the “global expansion of Toyota’s technology and unlimited potential for the future.” In 1957, when Toyota first came to America, GM and Ford were kings of US automotive industry. After a poor start with a car called the “Toyopet,” Toyota came back strong in 1965 with the popular 90-horsepower Corona sedan. The sedan was a start for Toyota in order to introduce its high technology products to the world and become a trustable brand. Two years after Corona was unveiled, the total annual sale of Toyota reached 30 thousand sedans and the amount has had an increasing rate. During 1970s, Toyota was still moving fast forward and penetrated American markets; in order that its production rate reached 311 thousand annually. As Toyota celebrated its 25th anniversary in America during 1982, it opened a new national sales headquarters complex that it occupies today in Torrance, California. Toyota’s success continued, and in 1986, it became the first import automaker to 51 REPORT sell more than one million vehicles in America in a single year, racking up sales of 1,025,305 cars and trucks. That year also marked the company’s debut as a manufacturer in the United States, with the rollout of the first Toyota car built on American soil. Today, Toyota is one of the top-selling brands in America and is committed to continuous improvement in everything it does, along with breakthrough products for the future. Lexus In 1983, Toyota chairman summoned a secret meeting of company executives, to whom he posed the question, “Can we create a luxury vehicle to challenge the world’s best?” This question prompted Toyota to embark on a top-secret project, codenamed F1 (“Flagship One”). In 1989, Toyota branched out by establishing a luxury line of vehicles with the debut of the Lexus LS 400 and the ES 250. Highly acclaimed cars, plus exceptional customer service quickly became the hallmark of Lexus. Despite being an upstart, Lexus established instant customer loyalty and its debut was generally regarded as a major shock to the pedigree luxury marques. BMW’s and Mercedes-Benz’s US sales figures dropped 29% and 19%, respectively, with BMW executives accusing Lexus of dumping in that market, while 35% of Lexus buyers traded in a Lincoln or Cadillac to make their purchase. In December 1989, Lexus initiated a voluntary recall of all 8,000 LS 400s sold to date, based upon two customer complaints over defective wiring and an overheated brake light. In a sweeping 20-day operation which replaced the parts on all affected vehicles, Lexus sent technicians to pick up, repair, and return cars to customers free of charge, and also flew in personnel and rented garage space for owners in remote locations. This response was lauded in media publications and helped establish the marque’s early reputation for customer service. By 1989’s end, 16,392 LS 400 and ES 250 sedans had been sold in the four months following the US launch. Although sales had begun at a slower pace than expected, the final tally matched the division’s target of 16,000 units for that year. Following initial models, plans called for the addition of a sports coupe along with a redesigned ES sedan. Subaru FHI started out as “The Aircraft Research Laboratory” in 1917 headed by Chikuhei Nakajima. In 1932, the company was reorganized as Nakajima Aircraft Company Ltd. and soon became the primary manufacturer of aircraft for Japan during World War II. At the end of the Second World War Nakajima Aircraft was again reorganized, this time 52 as Fuji Sangyo Co, Ltd. In 1946, the company created the Fuji Rabbit motor scooter with spare aircraft parts from the war. In 1950, Fuji Sangyo was divided into 12 smaller corporations according to the Japanese Government’s 1950 Corporate Credit Rearrangement Act, anti-zaibatsu legislation, but between 1953 and 1955, four of these corporations and a newly formed corporation Fuji Kogyo, a scooter manufacturer; coachbuilders Fuji Jidosha; engine manufacturers Omiya Fuji Kogyo; chassis builders Utsunomiya Sharyo and the Tokyo Fuji Dangyo trading company[citation needed] decided to merge to form the Fuji Heavy Industries known today. The first Subaru car was named the Subaru 1500 introduced in 1955. Nissan had acquired a 20% stake in 1968 during a period of governmentordered merging of the Japanese auto industry in order to improve competitiveness. The company is famous for offering modern and luxury cars with cutting-edge technology. Since the 2005 model year, Subaru has adopted the Controller–area network (CAN) bus technology for the USA and Canada markets. It also uses aluminum in its engines and other car parts and is committed to all environment standards. Subaru is the Japanese name for the Pleiades star cluster (M45, or “The Seven Sisters”), which in turn inspires the Subaru logo and alludes to the companies that merged to create FHI. Mitsubishi The Mitsubishi Company was first established as a shipping firm by Yataro Iwasaki in 1870. The company was diversified into shipbuilding, banking, insurance, warehousing, and trade. Later diversification carried the organization into such sectors as paper, steel, glass, electrical equipment, aircraft, oil, and real estate. As Mitsubishi built a broadly based conglomerate, it played a central role in the modernization of Japanese industry. After the Second World War the company was dissolved and divided to independent firms, the structure has been kept by Mitsubishi officials until today. Entering China market the company was the first Japanese firm began to act beyond Japan boundaries. During beginning years of 1880s, Japanese policy makers made a decision which slowed down Mitsubishi growth. They decided to allocate a sate budget to set up a new auto firm which was a strong rival for Mitsubishi. As a result of that fake competition, the both companies went bankrupt. Yet Mitsubishi went on with innovation and starting various activities. It bought a copper mine in Okayama and a coal mine and the shipbuilding area in Nagasaki from the government. Yanosuke Iwasaki took over leadership of Mit- SPRING 2013 / ISSUE NO.6 REPORT subishi on the death of his elder brother, Yataro. The second Mitsubishi president was the architect of diversification who set the group on the path it follows today. Yanosuke Iwasaki became president of Mitsubishi in 1885. The company was in the midst of bitter competition with a rival shipping company. Yanosuke accepted government mediation, transferring Mitsubishi’s shipping business to the new Nippon Yusen. Loss of Mitsubishi’s shipping operations motivated further diversification. Yanosuke shifted from a sea- to land-based operation. He formed Mitsubishi Sha, or Mitsubishi Company, in 1886. It centered its business around the mining and shipbuilding operations that Yataro started. Yanosuke’s Mitsubishi put a lot of effort into the mining business. It purchased coal and metal mines and invested in modernizing equipment and mining techniques. The Nagasaki shipyard, which Yataro had leased from the government, also became Mitsubishi property in 1887. Hisaya Iwasaki ran Mitsubishi for 22 years. The third Iwasaki president put the company on the path of modernization in both technology and corporate culture. He was the son of the company’s founder, Yataro Iwasaki. Koyata Iwasaki was the fourth and last president of a unified Mitsubishi. He took Mitsubishi public and turned the company into a giant corporate group centered on heavy and chemical industries. Koyata also articulated the business principles that continue to guide Mitsubishi companies today. Koyata coped with Mitsubishi’s growing size and diversity by spinning off business divisions as separate companies. The mining, shipbuilding, banking, trading, and real estate divisions became joint-stock companies under the umbrella of the holding company. Management autonomy gave those divisions greater latitude for growth and development than would have been possible in the old organization. The rapid industrial development that took place in Japan while Europe was engulfed in World War I centered on and heavy and chemical industries. Mitsubishi fostered ventures in electrical machinery, aircraft, oil refining, chemicals, and steel making, among others. Mitsubishi also was active in international business. Koyata believed strongly in learning from other nations. Under his leadership, Mitsubishi assimilated technology, financial expertise, and management know-how from the world’s best companies. He made alliances with companies worldwide, including joint ventures for securing world-class technology. Mitsubishi engineers improved on the imported technologies and also began to achieve original breakthroughs. Excellence in technology became a distinguishing strength for Mitsubishi. IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE The end of the Second World War brought to a close the Iwasaki chapter in Mitsubishi history. The Allied occupation forces demanded the breakup of Mitsubishi and other large family-controlled corporate groups. Mitsubishi headquarters closed in 1946, 70-some years after the organization began. Koyata’s health deteriorated under the occupation, and he died at 66 in December 1945. After signing San Francisco Peace Treaty in 1952, Japan was back to international community. A trend toward consolidation sparked a wave of mergers among the new ventures, and in 1952, three core companies emerged: Fuji Shoji, Tokyo Boeki and Tozai Koeki. Meanwhile, Kowa Jitsugyo adopted the name Mitsubishi Shoji Kaisha (MSK). After this, negotiations regarding a four-company merger rapidly gained momentum. The merger faced various obstacles, but with encouragement from elders of the old Mitsubishi organization, the four companies eventually reached an agreement and the new Mitsubishi Shoji was launched in 1954. Nissan Masujiro Hashimoto founded The Kwaishinsha Motor Car Works in 1911. In 1914, the company produced its first car, called DAT. It was renamed to Kwaishinsha Motorcar Co., Ltd. in 1918, and again to DAT Motorcar Co. in 1925.DAT Motors built trucks in addition to the DAT and Datsun passenger cars. In 1934, Aikawa “separated the expanded automobile parts division of Tobata Casting and incorporated it as a new subsidiary, which he named Nissan Motor (Nissan)”. At that time the company managers planned to produce 10 or 15 thousand sedans annually. A year later first mid-sized Datsun vehicles were manufactured in Yukohama plant. Nissan became the symbol of modernization and industrialization before the World War II. During e war, the company produced military trucks, plane engines and military boats. In 1945 Nissan resume production of civil equipments and cars. Afterward it sold its first Datsun trucks in the US. In the course of 1960s and first years of 1970, Nissan continued to export its products to the US by selling 225 thousand cars yearly. The fuel crisis in the US declined the country’s car demand. The US auto market preferred cheaper and more economy cars such as Nissan, Honda and Toyota products. During 1980s Nissan companies became one of the leading car exporters to the North American countries. It also founded two giant car manufacturing plants in the US and UK and offered vehicles name Nissan in 1983. Sunny is a successful example of those cars. In 1993 Nissan’s Micra sedans which had comfortable designs won the Car of the Year title. 53 Cars of the Future 54 SPRING 2013 / ISSUE NO.6 T he process to manufacture the fastest and greenest cars with lowest fuel consumption promises a new light on horizon beneath which vehicles are developed so that they probably can fly and will not need any kind of fuel. Last year a picture was issued from production line of a Formula 1 super car, in which was shown manufacturing process of a new vehicle as the second car of Formula 1 old team. McLaren Automotive Ltd. whose production lines have been solely specified for manufacturing Formula One racing cars since 1998 permitted a photographer to enter the factory and issue the pictures of its cutting edge technology for manufacturing new MP4-12C cars. The car costs 266$ in the market. IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE 55 First Flying Car American Terrafugia Aviation Company embarked on the latest endeavor of taking the flying car out of the pages of science fiction and making it a transportation reality during New York Auto Show. The new prototype car is licensed not only to drive but also to fly. “This street legal plane is the world’s first vehicle to have met both the standards of the Federal Aviation Administration and the National Highway Traffic Safety Administration”, said Cliff Allen, Vice President of Sales at Terrafugia. The four wheeled machine with retractable wings is known as the ‘Transition’. Terrafugia says it expects to release the flying machine with a price tag of approximately 279 thousand dollars. Aerodynamic Car Last year, Jaguar designed its new concept car whose aerodynamic shape is designed to deflect air away from the engine and around the car itself, said to be 60 percent more power efficient. It would work by using broad side deflectors that intake and push air over the front wheels, across the side panel of the car and then out the large rear openings to greatly reduce drag. The XKX’s body would be covered in a layer that houses microscopic ripples of piezoelectric cells that, when stimulated by airflow, could produce electricity to recharge the car’s battery. Using this progressive technol- 56 ogy, Jaguar might be able to use any kind of energy to drive its cars. XKX would be soon unveiled as a car with state-of-the-art technology. Fastest Super Green Car Super cars are usually famous for their high fuel consumption; but a German automaker has designed a new car which notwithstanding its 323 kilometer speed, is a fuel economy vehicle. Auto experts call the mentioned car an environment friendly super car. Porsche luxury car manufacturer has designed a new vehicle called Porsche 918 Spyder whose fuel consumption is 3 L/100 km. Its low fuel consumption is even more economical than Toyota’s Prius model. Diamond Car German tuner Gemballa has announced an innovation that should lead to many cars that surpass the gaudiness of even its own goldsplashed Mirage GT Gold Edition. It’s a car finish made from crushed diamonds. “When Gemballa speaks of diamonds, we really mean it”, says CEO Andreas Schwarz. “Our complex process uses genuine diamonds as its key ingredient – not metal pigments, glass fragments, or crystals.” 800 klm Without Charging Despite their green credentials, electric cars still come up short against their petrol-powered cousins when it comes to range -- how far they go before the battery needs recharging. A Danish consortium of three companies took out the most usual shortcoming of green cars and introduced a new “range-extended” electric vehicle equipped with the latest fuel cell technology which is promising to close the gap going 800 kilometers without recharging. Movie Projector Car Smart Forstars Company gave the world a taste of the future with its concept car; an electric car with a movie projector mounted on the front! The car was introduced at the 2012 Paris Motor Show, the Forstars concept is a Sports Utility Coupe (SUC) with unique features like a movie projector that is mounted on the front which gives you the ability to create a personal movie theatre; taillights that can be opened with one that houses the charging socket for the battery. Insect Car Toyota’s latest concept car is dubbed the Smart Insect and is somewhat reminiscent of a Smart car, if only a tad smaller. The car is proper for those who like driving distinctive vehicles and its designers named it as it should be. The little electric vehicle charges from a standard 100 V outlet and is equipped with gull wing doors that open widely. Most Powerful SUV An engine output of 550 horsepower makes the new Porsche SPRING 2013 / ISSUE NO.6 Cayenne Turbo S the flagship model of the Porsche SUV range. Thanks to its sophisticated active suspension, this top athlete with an SUV styling surpasses the driving dynamics of many sports cars. The Porsche Cayenne Turbo S is designed for optimum driving dynamics throughout. That’s why it comes with all relevant control systems as standard. The combination of air suspension and PASM active damping control is borrowed from the Cayenne Turbo. This is complemented by the Porsche Dynamic Chassis Control, which eliminates swaying in corners almost entirely, resulting in improved agility and comfort. The Porsche Torque Vectoring Plus, which is also standard equipment in this model, uses variable torque distribution to the rear wheels, and an electronically controlled rear differential lock, which translates into more agility in all driving situations. The 2013 Cayenne Turbo S boasts 550 horsepower, allowing it to motor from 0 - 60 mph (96.5 km/h) in just 4.3 seconds, and reach a top speed of 281 km/h. Although the car is only an initial and undeveloped model, it seems that its designers plan to drive the vehicle to the market until 2015. Car Under Driver’s Order Most efficient car Japanese Nissan Car Company unveiled the NSC-2015, a vehicle that can drive and park itself. The idea is that once you arrive at the entrance to a parking lot, you simply hop out and hit the ‘park’ button on its accompanying smart phone app. The Volkswagen XL1, which has been deemed the world’s most efficient car, capable of a staggering 313 miles per gallon. The car needs just 3.78 liters of gasoline for driving a distance of 500 kilometers. VW XL1 will be soon revealed by the biggest Ger- Hybrid Luxury Car The first examples of Cadillac’s range-extended electric ELR have rolled down the assembly line at GM’s Detroit-Hamtramck facility. That’s where Chevrolet already assembles the Volt range-extended car, on which the more luxurious ELR coupe is based. When the ELR goes on sale, it will be the market’s first electric luxury coupe with an extended range, GM North America President Mark Reuss said. The car was first unveiled at Detroit auto show in 2009. Fast and Green McLaren Caar Manufacturing Group which produces high speed cars for famous Formula One races, revealed Britain’s fastest sedan in March. The car is capable to motor 0-100 km/h in only three seconds and reach the highest speed of 350 km/h. the hybrid super car is also friendly to the environment. IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE man automaker. The radical VW XL1 will be powered by a tiny 800cc diesel engine and a separate electric motor and battery pack. This will give the plug-in hybrid a 0-62mph time of 12.2 seconds and a top speed limited to a modest 99mph. Hybrid LaFerrari Ferrari adapted a cutting-edge technology to produce a hybrid supercar that uses a bit less fuel, emits fewer grams of CO2 and accelerates to 60 mph in less than 3 seconds. The Ferrari LaFerrari captures excess power under braking or when the engine produces a surplus of power to a battery pack and then to two electric motors. One provides boost to the V12 gasoline engine and the other drives accessories. The LaFerrari is perhaps the most electrifying debut at this year’s Geneva show, and not only because of its sleek carbon-fiber body or its top speed of more than 350 kilometers per hour. Ferrari La-Ferrari produces total 963 horsepower from which 163 horsepower is produced via electric and the rest of the 863horsepower is produced by the combustion. It sprints from 0 to 100 mph in 2.9 seconds which is equal to Lamborghini Aventador. It can also overtake F12 Berlinetta and finish a specified path three seconds sooner. 57 REPORT Modern Global Automobile Industry oday, the modern global automotive industry encompasses the principal manufacturers, General Motors, Ford, Toyota, Honda, Volkswagen, and DaimlerChrylser, all of which operate in a global competitive marketplace. It is suggested that the globalization of the automotive industry, has greatly accelerated during the last half of the 1990’s due to the construction of important overseas facilities and establishment of mergers between giant multinational automakers. Industry specialists indicate that the origins in the expansion of foreign commerce in the automobile industry, date back to the technology transfer of Ford Motor Company’s mass-production model from the U.S. to Western Europe and Japan following both World Wars I and II. The advancements in industrialization led to significant increases in the growth and production of the Japanese and German markets, in particular. The second important trend in industrial globalization was the export of fuel efficient cars from Japan to the U.S. as a result of the oil embargo from 1973 to 1974. Increasing global trade has enabled the growth in T 58 world commercial distribution systems, which has also expanded global competition amongst the automobile manufacturers. Japanese automakers in particular, have instituted innovative production methods by modifying the U.S. manufacturing model, as well as adapting and utilizing technology to enhance production and increase product competition. There are a number of trends that can be identified by examining the global automotive market, which can be divided into the following factors: Global Market Dynamics - The world’s largest automobile manufacturers continue to invest into production facilities in emerging markets in order to reduce production costs. These emerging markets include Latin America, China, Malaysia and other markets in Southeast Asia. Establishment of Global Alliances - U.S. automakers, “The Big Three” (GM, Ford and Chrysler) have merged with, and in some cases established commercial strategic partnerships with other European and Japanese automobile manufacturers. Some mergers, such as the Chrysler Daimler-Benz merger, was initiated by the European automaker in a strategy to strengthen its position SPRING 2013 / ISSUE NO.6 REPORT in the U.S. market. Overall, there has been a trend by the world automakers to expand in overseas markets. Industry Consolidation - Increasing global competition amongst the global manufacturers and positioning within foreign markets has divided the world’s automakers into three tiers, the first tier being GM, Ford, Toyota, Honda and Volkswagen, and the two remaining tier manufacturers attempting to consolidate or merge with other lower tier automakers to compete with the first tier companies. 1st Tier Company Mergers - Volkswagen-Lamborgini; BMW-Rolls Royce 2nd Tier Company Mergers - Chrysler-Mercedes Benz; Renault-Nissan-Fiat 3rd Tier Company Mergers - Mazda-Mitsubishi; KiaVolvo This section presents literature that examines three major automotive markets in North America, Europe and East Asia. This material is intended to provide a thorough examination of industry trends, structure, and the effects of global market dynamics of the automotive industry within each region, as well as their interrelationships, followed by literature researching the East Asian IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE automotive market. North American Automotive Market The automobile manufacturing industry is one of the largest industries within the U.S., and is a vital engine for the U.S. economy contributing greatly to employment and productivity. Reports indicate that motor vehicle production represents over 5 % of the U.S. private sector GDP.The U.S. is the world’s largest producer and consumer of motor vehicles with production reaching 12.2 million units in 2002. The U.S. automotive industry continues to experience on-going organizational and technological change, and have taken steps to increase its global presence by expanding global alliances and seeking greater collaboration with other U.S. automakers. The Big Three U.S. automakers makeup approximately 76 % of U.S. passenger vehicle production, while Japanese automakers, Toyota, Honda, Nissan, Mitsubishi, Subaru, Isuzu represents 18 %, and European automakers, BMW and Mercedes (division of Daimler-Chrysler) make up nearly 2 %. 59 REPORT Unlike the Japanese and European automotive markets, the U.S. does not rely significantly on foreign exports. The U.S. auto trade relies mostly on its own domestic market, and to some degree on the Canadian market. Canada is the largest market for U.S. vehicle exports with subsidiaries of U.S. automakers accounting for most of the imports. Integration of the U.S. and Canadian automotive industry dates back to the U.S.Canadian Automotive Products Trade Agreement established in 1965. The U.S. Big Three automakers continue to invest billions of dollars into the Canadian market, which has resulted in Canada becoming a global leader in automotive engineering. All of Canada’s passenger vehicle production is located in Ontario due to its close proximity to Detroit. European Automotive Market The European Union is made up of 15 member states, and any European country applying for membership. The EU is the world’s largest automotive manufacturing region and the world’s largest market. The European automotive industry represents approximately 9 % of the EU manufacturing sector. The European automotive industry is considered a leader in the global market with integrated operations consisting of: research, design, development, production and sales. The European automotive market is comprised of a concentrated and sophisticated global network, which includes joint-ventures, cooperatives, productions and assembly sites. EU automotive industry producers have a combined output that exceeds that of the U.S. and Japan, however no one individual EU country produces more than its U.S. or Japanese competitor. The importance of the automotive industry on the economies of individual EU countries varies country to country. According to recent reports, Germany, Sweden, France and Spain automobile production represents approximately 10 % of total manufacturing, while the average for the EU is about 8 %. The EU’s largest automotive producer is Germany estimated at 30 % of EU’s total production, followed by France at 19 % and Spain at 17 %, and the United Kingdom at 10 %. These countries are the largest automotive markets in the region. There are over 20 vehicle manufacturers in the EU, with the largest automakers producing multiple brands, such as General Motors, Ford, DaimlerChrysler, Volkswagen, Fiat and Peugot Citroen. There are also independent automakers, such as Porsche, BMW and Bertione. The last 10 years has shown an overall increase in vehicle production for the EU auto industry, along with Extra-EU exports accounting for approximately 20 % of total production. Like the other markets in the global automobile industry trade, the EU auto industry has experienced significant restructuring and consolidation, which includes mergers, such as ChryslerDaimler-Benz; GM acquisition of Saab; Ford’s acquisition of Jaguar and Volvo’s pas- 60 senger car division; BMW’s take over and then sale of Rover; and Volkswagen’s acquisition of Bentley, Lamborgini, SEAT and Skoda. There continues to be co-production efforts and supply arrangements among the EU automakers, as well as with foreign partners outside of the European Union. East Asian Automotive Market The Asian motor vehicle market is comprised of three ‘core’ markets, Japan, South Korea and China. The Korean and Chinese automotive markets continue to grow rapidly, with many analysts predicting that the Korean and Chinese markets will surpass that of Japan within a decade. The Asian financial crisis during the late 1990’s slowed down the demand and production of the auto industry, and did not reach pre-currency crisis levels until 2000. However, with the continued strong production growth of the automotive industry in Asia, analysts suggest that the Asia/Pacific region will be a driver of industry growth worldwide. As the automotive manufacturing industry continues to grow in Asia, foreign investment has begun to increase substantially in Asia over the last several years. U.S. and European automakers have targeted the region to not only establish a greater presence in the Asian marketplace, but also to expand its production capacity in Asia. In addition, there have been undertakings by both the U.S. and European automakers to collaborate with Asian automakers. Japan’s Automobile Industry The automotive industry represents a significant portion of Japan’s economy, representing 13 % of its total manufacturing output and 10 % of employment. Japan is home to 11 automobile manufacturers consisting of: Toyota Motor Corp., Honda, Nissan, Mazda Motor Corp., Isuzu Motors, Ltd., Suzuki Motor Corp., and Fuji Heavy Industries, Ltd., and Daihatsu Motor Co. Each of these automakers have manufacturing operations in the U.S. except Suzuki and Daihatsu. However, Suzuki is part of a joint-venture with GM, which is located in Canada. Japan is also the third leading producer of motor vehicles after the U.S. and the EU. The U.S. is the largest market for Japanese vehicle exports; however, automobile production has fluctuated downward over the last several years in Japan. Like the auto industries in the other regions, the industry has also experienced major restructuring, which is the result of a downturn in domestic demand. Japanese automakers have responded to stagnate domestic economic conditions by reducing production capacity through plant closures, and have offered equity ownership to foreign automakers to receive financial and managerial assistance. GM has equity in Suzuki and Subaru and controlling interests in Isuzu; Ford has majority equity in Mazda; DaimlerChrysler has majority equity control in Mitsubishi; and Renault has controlling interests in Nissan. The Japanese automotive industry relies heavily on SPRING 2013 / ISSUE NO.6 REPORT exports with imports making up a much smaller percentage of auto trade. German automaker imports account for the greatest percentage of imports at nearly 70 %. However, trade barriers on foreign automotive imports in Japan have often created problematic trade relations with U.S. automakers and U.S. trade policy officials. South Korea’s Automobile Industry Presently in South Korea, there are seven automobile manufacturers, which include: Hyundai, Daewoo, Kia, Samsung, Asia Motors, Jinda, and Ssanyong. South Korea is the world’s third largest automobile exporter, exporting 41 % of its total motor vehicle production, with roughly 35 % of the exports going to the U.S. South Korea is the 6th largest automobile market, however imports makeup less than 1 % of motor vehicle trade in the domestic market. Prior to 1987, foreign auto imports were prohibited and Japanese automotive imports were not permitted until 1999. South Korea’s automotive industry has also experienced restructuring. In 1999, Hyundai acquired Kia and Asia Motors, and sold 10 % of its equity to DaimlerChrysler in 2000; Daewoo purchased 52 % equity in Ssanyong in 1998; and GM purchased 42 % equity of Daewoo; and in 2000, French automaker Renault purchased Samsung Motors. Currently, South Korea has no independent auto manufacturers. DaimlerChrysler and Hyundai Motor Co., have formed an alliance in which DaimlerChyrsler will acquire a 10 % equity in Hyundai. Korean automakers have made efforts to join in collaborative ventures with foreign automakers and sold significant portions of its equity in order to continue to operate in the domestic market, as well as receive financial assistance. Industry specialists suggests that in order to become more competitive and efficient in both the domestic and foreign markets, Korean automakers must consolidate platforms domestically and with foreign partners; create strategies that more efficiently utilize regional sourcing; and enhance production and production platforms, as well as supply networks. IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE China’s Automobile Industry China’s automobile industry continues to grow rapidly. It is projected that by 2010, China will become one of the world’s largest automobile markets with domestic production reaching 5 million units. The automobile industry in China is composed of 120 vehicle manufacturers, employing nearly 2 million workers. The FAW Group is China’s first large-scale motor vehicle producer, which has an agreement with Volkswagen to produce Jetta’s and Audi sedans. The second largest automaker is the Dong Feng Motor Corporation with three major production facilities in the Hubei province. The Shanghai Motor Group, the third largest automotive producer in China, began producing cars during the 1960’s. It established a joint-venture with Volkswagen in the 1980’s that has contributed to the increase in automobile production in China’s domestic market. Government officials in China have initiated policies that are intended to encourage the continuing development of China’s domestic automobile manufacturing industry. Nevertheless, there are significant trade barriers for foreign competitors in the way of tariff policies that are applied to foreign auto imports. This restrictive trade environment has contributed to the serious problem of illegal imports of foreign cars into China. Despite China’s growing auto industry, industry productivity lags behind the other Asian competitors, and it lacks the ability to conduct research and development, relying on its foreign partners to develop new vehicles. Chinese automakers are presently creating new policies and methods through foreign joint-ventures to continue the development of China’s automotive industry, but at this stage, China’s automotive industry still remains underdeveloped both technically and managerially. These conditions present a significant challenge for China’s automotive industry, and it is expected to take a considerable amount of time before China becomes a global competitor in the automotive market. 61 Tehran’s Most Luxurious Cars ome domestic and local companies need one or two billion rials to revive and continue functioning, but some very rich people par such amount of money to buy the most luxurious cars. Today these splendid and extra expensive sedans can be seen noticeably in Tehran streets. We do not talk about only cars like BMW or Mercedes-Benz, but we would like to point to the most exclusive cars such as Maserati, Porsche,… whose imaginations of existing in Iran market was only a dream. Entering luxury cars to Iran auto market was a good event came about when auto import was liberalized in Iran; the vent which changed our car market drastically and turned it various. Reviewing Iran auto import history S 62 shows that before free car import policies being enforced auto markets was totally in hands of few domestic firms and only several old classes of BMW and Benz ran in Tehran streets. When auto import liberalized Iran poor auto market welcomed foreign famous car brands so that every day we can see a brand new car in streets. Some of these luxury cars’ temporary pass permits were not extended and others were localized. Before nobody even thought about such luxury and expensive car, but today many middle-class families talk about the price of such sedans, which can be seen significantly in Tehran and big cities streets. If these cars hurt, the money to be paid for compensation is equal to the price of a brand new domestic vehicle. This is while fluctuation of dollar price and high rate of inflation makes no differ- ence for upper classes of the society. They always are affluent and able to afford to buy extra expensive cars. The general speed limit on Iran roads and highways is 120 km/h, though it did not prevent rich people order and buy super sport cars. Many superb cars like Bugatti, Ferrari…have been imported to Iran since car import liberalization in 2001, but here we only go through those brands which have official dealership here. Porsche, most luxurious in Iran Porsche Automobile Holding SE, usually shortened to Porsche is a German holding company with investments in the automotive industry. The company was founded in Stuttgart, Germany, in 1931 by Ferdinand Porsche, an Austrian engineer SPRING 2013 / ISSUE NO.6 born in Maffersdorf, during the time of the Austro-Hungarian Empire. The company has been producing sport and super sport cars. The products of this famous brand entered Iran market in 2010. Moein Motors is the official dealership of Porsche in Iran which is located in 11th km of Karaj Special Road. When Porsche was first imported to Iran, the people were shocked for it is one of the most world luxurious cars. As per the conducted statistics by Islamic Republic of Iran Custom Organization about 160 Porsche sedans valued at 20 million dollars were imported to Iran during first five months of the last Iranian years. In other words, 563 German Porsche sedans began to run in Tehran streets in the last Iranian year (ended March20). According to Roudabeh Seddighi the head of public relations office of Moin Motors 800 of Porsche sedans were imported to the country during last two years. She expressed her hope that it will sell 800 sedans in its third year of entrance. However realization of this prediction seems a little difficult since exchange rate fluctuation does not stop. As per the statistics most of these Porsche sedans are imported from the UAE and few of them from its birth place Germany. As mentioned before, Porsche is one of the most expensive luxury cars in the world which is being sold much more expensive than in other countries. This is for continuous fluctuation of exchange rate. Now there are eight models of Porsche sedans in Iran— Porsche Boxster, Cayman S, 911 Carrera, Panamera, Panamera 4S, IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE Cayenne, Cayenne S and Cayenne Turbo. The lowest price of these cars is 335 billion rials (Cayman S) and the highest 800 billion rials (Cayenne Turbo). Maserati, a Shocking Car In late 2011 summer, some good news trembled Iran auto market; super Maserati sedan was on its way to Iran market. At that time Maserati affiliated by Fiat Automotive Group announced that it wanted to set up an official dealership in Iran. Bahram Gheysarzedeh the former director of Moin Motors was the first who could win Maserati official dealership directly from the Italian company. So Atatak Company has been functioning as the official importer of these super luxury cars in Iran. Maseratis are unique for their allure, elegance and state-of-the-art 63 REPORT technology. As per Custom Organization statistics, only ten Maseratis were imported to Iran during 2011 of which five was imported from its main origin Italy and five other from the UAE. The sedans valued at one million dollars each. The statistics also show that more than 34 Maserati sedans were imported to the country during first five months of the Iranian year of 1391 (ended March 20, 2013) valued 3.9 million dollars (50 billion dollars). Quattroporte S, GranTurismo and Quattroporte are three models of Maserati presented in Iran. Maseratis are being sold 775 to 850 billion rials. Mercedes-Benz With No Exact Figures Benz is the oldest imported car to Iran which started in 2003 and “Setareh Iran” won the official dealership of the brand. Before that Class A, B, C, GLK, S, SLK and CL of Benz were imported to Iran numerously. But unfortunately this luxury old brand does not export any of its products to Iran. There are no exact statistics on the total number of imported Benz sedans to Iran; however, Iran Custom Organization announced that 1163 Benz sedans valued at 66 million dollars were imported to the country during last year. Mercedes-Benz 500SL is the most expensive model of Benz in Iran whose price is estimated at 850 billion rials. The cheapest model is Mercedes-Benz 180b with the price of 140 billion rials. Unwelcomed BMW BMW was ranked the second imported luxury car to Iran after Mercedes Benz. Ali Nouriani was the first importer of BMW brand to Iran. He said to Sharq Persian language Newspaper in 2010 that he imported about eight thousand BMW sedans to the country. Gradually, Nouriani Enterprise was replaced with Persia Khodro as the official dealership of BMW sedans. Unluckily Iran importing BMW sedans has been stopped in the current year and shocked all BMW fans. Its exports to Iran dropped to less than 50 sedans during first five months of the current year which that BMW is gradually leaving Iran market. BMW sedans are cheaper than other mentioned luxury brands in Iran. The cheapest (i320) price stands at 230 billion rials and the most expensive (x6) at 550 billion rials. 64 SPRING 2013 / ISSUE NO.6 IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE Production of Economy Cars a Way Toward Growth I ran economy is struggling to pass through strict international sanctions. The country’s auto industry was developing fast, but said restrictions hindered its expansion. The question is how much Iranian car industry was hurt and how could it retrieve from the crisis? The country’s car sector has got caught up in inflations caused by high exchange rates and international sanctions; therefore, auto and spare parts prices increased peculiarly. Experts suggest that producing cheap cars and auto parts relying on domestic trained forces and investment could be an unfailing solution for Iran car industry. This is while many hurdles lie on the road of such a cure for the problem; however, blessing recent developments Iran auto industry will be able to retrieve its position in the country’s economy using the mentioned solution. In this regard as per the conducted studies by a research institute, domestically produced cheap cars are the very thing for preventing auto industry’s collapse. On the other hand, market is facing up to a serious slump in developed countries, so car markets in developing states are power engine for them to boost their auto sector. So they have to manufacture cars based on the Third World needs. In other words, customers’ expenses and cars’ upkeep and prices should be low. In contrast, the producer too has to decrease its expenditures and upgrade the quality of its products to maximize profitability of their task. There are several strategies in order to launch cheap car manufacturing due to world countries’ different identities and unlike regions. In between, several elements like economic boom, developed infrastructures, several tastes of customers, traditions and nationalism are effective factors that make characteristics of consumers’ demands different in fast developing countries like Brazil, Russia, India and China (Bric region). On the other hand market growth is distinct in different countries. For example the trend of market growth in South Korea in past 20 years looks like China’s market situation today. This made young citizens and burghers believe their country is not included in fast developing economies. As per the latest findings of “Just Auto” institute manufacturing cars with lowest expenditures has several characteristics in world auto industry. First, there are not any defined sectors or classes for producing low price cars. In other words “cheap car” is a concept which is comprised of quantity, quality, type and prices in the market. Second, each sedan can be highly profitable when it has more options and cutting-edge necessary equipments. Third, it is difficult to manufacture a single model of car for developing countries all over the world. However there are few special similarities between several regions of the world like Latin America, India, China and Russia. In the meantime some very cheap cars akin to Tata Nano are only demanded in India and poor south Asian countries due to climate and economic conditions. So because of low demand producing such cars by more auto firms would be less profitable. Innovating new cheap cars in newfangled markets is also attractive for developed economies. For instance although its low production expenses and marketing, “Logan” was warmly welcomed in South European countries. Tata Nano too could be sold to a great degree economic crisis torn countries in EU. This is for the reason that these people do not mind luxury trappings of the car and only its sole objectives which are transportation, driving and environmental functions are important to them. Compiling a program to produce cheap and economic cars would be a valuable experience for Iran car managers. The least profit it would have is that the car would meet the demands of domestic customers. It would also accelerate auto industry development and prompt market growth. 65 REPORT Foreign Firms Waiting to Return to Iran D uring last decade many foreign firms withdrew from Iran market due to international sanctions against the Islamic Republic of Iran. Yet after the last presidential election in Iran (June 15th, 2013) and selecting a middle-roader president by ballot, many of major industrial states intend to return to Iran and revive their economic and industrial relation with the country. They also hope that the new government project new policies to call off the sanctions and remove the hurdles on the way of economic relations. Just a day after Iran’s 11th presidential election when Hassan Rowhani was announced as the elected president, many industrial countries’ 66 statesmen sent congratulation message to the elected president and announced their tendency to revive their relations and economic talks with Iran. In the meantime these developments were good news for foreign firms and ventures that had long benefitted from Iran market and were awaiting an opportunity to return to Iran’s attractive and highly potential market. One of these companies is French Renault whose activities in Iran were affected by crippling economic sanction against the Islamic Republic. The well-known auto firm has declared that it is keen on perking up its relations with Iran’s auto industry and act again as a member of this boom market of the country. New Iranian president who is worried about isolation of his country vowed to reset the relations with France. The European country was Iran’s fourth trade partner in the year 2000, yet it ranks 15 now. French firms and ventures that left Iran for political matters and due to international sanctions against the Islamic Republic, hope to return and revive cooperation with their old partner. After imposing sanctions and restriction against Iran and when the US and Zionist Regime put up probable military attack on the country, French companies showed propensity to withdraw Iran market even in the fields that were not included in sanctioned sectors like food, phar- SPRING 2013 / ISSUE NO.6 REPORT maceuticals and auto industries. Catherine Cruisinier French Foreign Ministry Spokesman said, “French companies do not concentrate on this market (Iran’s) and it is not our aim.” Such statements show the hard-line stand taken by former French President Nicolas Sarkozy which is still followed by the new government. France exports to Iran have declined by 70 percent to 800 million euros (from two billion euros) since 2005. An expert in National Center for Scientific Research, known by its French initials CNRS, said in this regard, “from a symbolic point of view the losses made by decline of trade ties with Iran was very high. Before Sarkozy’s presidency, France was Iran’s first industrial partner and France paid more for following sanctions against Iran comparing to other countries.” He further said that other western countries especially the US did not lose a lot after imposing sanctions against Iran. The expert added the US also imposed sanctions against Iran by putting D’amato plan (1996) aimed to press the country’s fuel and oil industries, but the Americans continued their exchanges with Iran. He noted that Americans went on to export their products such as Coca Kola, Apple computers, iPhone… secretly. Ali Ahani, Iran ambassador to France, says that the US exports to Iran has increased by 50 percent IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE during last two years; this while the US has forced Europeans decline their oil imports from Iran by half. Danone Group, working under Sahar title in Iran, and also Damanvand Mineral Water Co. resisted sanctions and continues their business in Iran. Sanofi, the French multinational pharmaceutical company, too ignored the sanctions against Iran and carried on to export pharmaceuticals and vaccines to the country. Carrefour, the French multinational retailer, is another French company that its name was seen in the list of ICCIM partners; though the company has denied any cooperation with Iran. The company’s officials stated that the business was followed by Majid Al Futtaim Holding, one of its 67 REPORT franchisees. They also noted that they do not do any business in Iran for the country is not within the confines of their geographical zone. Majid Al Futtaim Holding is based in Dubai and built three hypermarkets in Iran whose logo reminds the logo of Carrefour. Auto Industry French car maker Renault, one of the last large European companies still active in Iran, has never denied its presence in Iran market but is acting cryptic. Renault has been active for years in Iran, where it sells kits of semi-assembled vehicles that are built up by its Iranian joint venture partner Iran Khodro. But international sanctions over Iran’s nuclear program have made doing business in the country 68 much more challenging. A spokesman of Renault Company who wanted to be unknown said, “although sales transactions are currently slowed down in Iran, we are doing business well in the country.” He said that though Iran’s share of Renault’s global sales has now fallen to just 2% from 4%, the impact of ceasing to do business there could be magnified because it could force the company to write down the value of kits that are either unpaid, or on which payments cannot be repatriated outside Iran, according to the people familiar with the matter. EU and the US banking regulators and Treasury officials have an obligation to make Swift stop its dealings with Iranian banks. This made operators and foreign companies using other complex ways to do their business and use swift facilities. These complexities forced Peugeot cut down its activities and business in Iran in February 2012. Iran’s market was so profitable for the French giant automaker that it sold more than 45 thousand cars in the country during 2011. Peugeot is only delivering spare parts to Iran-Khodro for assembling vehicles. In fact, Peugeot sees a decreasing market share in Iran. During the first quarter of 2007, 31,000 vehicles under its brand were produced there, a 35 percent fall compared to the same quarter in 2006. However, while Peugeot wants to ensure payments for deliveries, it is not investing new funds. Ahani says in this regard that Peugeot alliance with the American carmaker GM was the major fac- SPRING 2013 / ISSUE NO.6 REPORT tor that forced the French company withdraw from Iran’s big market. He says the American firm put a lot of pressure on Peugeot to cut its relation with its 35-year partner. The French automaker hopes to benefit from GM credit and dynamism to revive itself. Europe’s second largest automaker, PSA Peugeot Citroën, has posted the largest annual revenue loss in its history, partly caused by the West’s sanctions against Iran. The country was the French car maker’s second-biggest market in 2011 in terms of trade volume. Jean-Baptiste Maunier Peugeot spokesman says, the problems of Peugeot are not limited to the sanctions imposed on Iran. Since 2008 the auto market in western countries has been fighting with a serious plunge. The spokesman further said that the company is not well active in new markets like China and India so it could not confront its problems and challenges properly. Ali Ahani the Iranian ambassador to France said that Peugeot’s withdrawal from Iran auto industry hurt its name and credit. He said the French company was highly credited and welcomed in Iran, but now Iranian companies act more cautious dealing with Peugeot. Will Sanctions Ease? Selecting a moderate politician increased hopes that West will relax sanctions against Iran; yet it seems that the sanctions would not ease immediately. However some foreign firms and venture like Total have kept their offices in Iran in order not to face challenges when ties are re- IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE newed. It is worth to mention that the EU put restrictions on Iran oil industry in 2012 and forced Total wind its business down in Iran. Iran has the fourth oil reserves in the world. Before imposing sanctions against Iran, Iran sold 80 thousand barrels of oil per day to the French Total. On the other hand Total agreed to pay more than $398 million to settle Securities Exchange Commission (SEC) and Department of Justice (DOJ) charges for violation of the Foreign Corrupt Practices Act. Total would pay the SEC $153 million and the DOJ $245.2 million related to charges that the French oil major paid $60 million in bribes and continued to develop Iranian oil and gas fields. 69 A Strategy for becoming more Competitive I ntegration, shared production, having a business partners familiar with the most recent knowledge, etc. are some of the ways to develop industry, because despite some improvements occurring at the country level, in order to gain knowledge at the international level it is recommended that we exactly use the knowledge of that level; and this matter will not take place unless we take part in the international level and enter shared production. However, with extended integrations taking place in global auto manufacturing and parts manufacturing, shared production is a matter that has been focused on by many experts but has not yet been taken 70 into enough consideration, not even at the national level. This is happening to Iran’s automotive industry while it has been years since international auto manufacturers have been integrated and received many developments. Besides, many other industries have also become integrated in the world. In this regard, a simple approach for the development and improvement of competitiveness is thought to be the use of advanced technology and utilization of knowledge at the international level. Parts manufacturing is an area that needs development. About 80 per cent of the quality of an automobile relies on the parts that form it and Iran in this regard is considered as one of the countries with superior potentials in the industry worldwide. Although printing in millions is economically necessary for international presence in global networks, it is still not sufficient; and the required conditions are development and improvement of quality, diversity of products and creation of a sustainable competitive advantages combined with the continued decline of prices. In addition to the integration of auto manufacturers and capacity growth, it is essential for the field of automotive industry and parts manufacturing of our country to prepare the grounds of strategic alliances with major industries of the world. Doing so will provide the opportunity to transfer knowledge and technol- SPRING 2013 / ISSUE NO.6 ogy, improve quality and sustainability of the industry and prepare the grounds for export business development and better stability of the automotive industry on the country. Appropriate potential capacities and the current position of Iran in international automotive industry and also appropriate advantages of parts manufacturing industry can all be the right potentials for strategic unions. The emergence of supersuppliers through integrations and owning the greatest parts manufacturers have significantly decreased the number of first class suppliers in the automotive industry to only a few super suppliers and resulted in the decline of the number of second class suppliers from thousands to only hundreds. It is therefore essential that necessary arrangements in parts manufacturing industry of the country take place at the right time and with wise measures to support international events. The motto of today’s world is “Networking or Not Working!” So, individual activities can no longer guarantee economic development in various industries including parts manufacturing industry. The main incentive in the networking of parts manufacturing and automotive industry is to achieve synergy and it requires the exchange of human resources, science and technology. Changing roles in the current era and the need to re-arranging and re-engineering the tasks in the automotive and parts manufacturing value-making chain should be emphasized in each of the processes of the chain, from the third class parts manufacturers to the auto manufacturer company. For example, today the auto manufacturer takes responsibility from customer relationship to auto design. First Class suppliers provide systems and manage supply chain. Second class manufacturers provide innovative services and technology of modules and third class ones provide raw materials and perform parts manufacturing processes. So the key for success is that all stakeholders in the chain play their role properly so that there IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE will be no disturbance in the chain. In this regard, we can say that competition together with interaction and cooperation is a necessary and sufficient condition in the development of parts manufacturing industry. Our country emergently requires competition and cooperation to succeed in national and foreign markets and they are both now available in the parts manufacturing industry. It is called competition for cooperation and cooperation for competition. It means each of them is ineffective without the other. So the focus of development strategies on automotive industry and its subsequent parts manufacturing must be based on the principle of competition together with cooperation and collaboration. The perspective of resource finding and globalizing the supply chain in automotive and parts manufacturing industry on one hand and the reinforcement of relationships with key suppliers to the aim of gaining competitive advantage on the other hand are the two main and strategic ways of the international automotive 71 REPORT supply. From the perspective of the supply chain, the future of the automotive and parts manufacturing industry in Iran is also in the development and reinforcement of the above mentioned vision and following a strategic direction towards it. Thus, recent changes in the industry and trade has facilitated the movement and stressed the importance of this issue more. Turkey among the neighboring countries, due to its strategic location and the growth of parts manufacturing industry in this country, is becoming one of the poles of the parts manufacturing and automotive supply chain worldwide. Therefore, this country is one of the best choices in creating a foreign base for Iran’s automotive industry supply chain in Europe and CIS and can act as the gate to take and join Iran’s supply chain to the international auto industry. To this end the custodians of automotive industry of the country from the governors to small business owners should provide the right grounds for the connection with international and big auto manufacturers and for the globalization of production and trade in this industry, and by having the efficient kind of connections with the international supply networks, pave the way of Iran’s automotive and parts manufacturing industry toward international markets. To develop Iran’s parts manufac- 72 turing industry we need “invigorating actions”. Adding knowledge to activities and programs, constant improvement of the quality and institutionalizing cost reduction movements are crucial in the industry. Development patterns that are based on the current resources of the world are being obsolete and giving their places to developments on the basis of knowledge, creativity, innovations and technology. Hence the formulation of development programs for the automotive and parts manufacturing industry without regarding these matters is completely meaningless. Following the things mentioned above, other requirements and proposed strategies for the development and empowerment of parts manufacturing industry include taking advantage of modern methods of production as well as standardization approaches, shared production to achieve economies of scale by creating variety in products, suppliers and manufacturers. The reduction of the time and cost of designing and producing products and increasing competitiveness in the industry, increasing the scale for parts manufacturers and orientation for the development of work capacities, encouraging re-investments and developing science and technology to nationalize parts manufacturing industry are all of utmost importance. Another requirement for the de- velopment of parts manufacturing industry of the country is to compensate for the shortcomings and flaws by supporting the internal production, internal work and capital, concentration on development and improvement of the quality of the products and parts, and avoidance of copying, distributing or selling parts with nonstandard quality. So we can strengthen the industry by paving the way for the connection with international supply, production and distribution networks, attention to the development of technical knowledge and technology of electronic parts manufacturing in the country with regards to the nature of the new generation of automobiles and the improvement of integrated network of automotive industry and programing to become a cheap but high-quality base of auto manufacturing with respect to parts manufacturing industry in the country. Furthermore, utilizing market strategy against markets (internal markets against a share of the international market), attempting to increase export and attendance in international auto and parts markets, organizing retails parts and spare parts stores in the market and developing professional settlements for parts making with other countries can help the parts manufacturing industry of our country to flourish more. SPRING 2013 / ISSUE NO.6 REPORT Iran’s Auto Parts Industry; The Strategic Industry Mother and strategic industry, an interpretation of Iran’s auto parts industry by experts and market analysts, is the industry that provides essential infrastructures to Iran to be an automaker in the world. This industry in Iran, dating back to the 70s, initiated its activity in manufacturing auto parts with the cooperation of European and Asian companies. Since then, by experiencing a developing process, the number of auto part manufacturing companies has increased. Growing of the number of part manufacturing companies happened in the postwar condition in which the car market was an untapped one. As a result, part manufacturing as one of the main sub-branches of automobile industry evolved. This is a part of our dialogue with the engineer Mohsenian. You can read the full interview below: Can you tell us your general assessment of Parts Manufacturing Industry of Iran? Parts manufacturing in Iran returns to the first of 70s, when the Iran-Iraq war was finished and automotive industry, with the cooperation of European and Asian companies, gradually began to develop. Automakers faced with an oil country and a market which had remained untapped due to the problems of the 8-yearwar. Economic development, development in political foreign relations, rise in oil revenues and rise in people’s purchasing power provided fa- vorable conditions for the growth of the automobile industry and its major sub-segment, the part manufacturing industry. The production line of 3-dimentional auto bodies was established in IranKhodro Company. Investments from different trades flowed towards Parts manufacturing industry and Parts manufactures bought many advanced and modern production equipment by spending huge expenses. As a consequence, Iranian cars were produced with international standards. Actually, the qualitative and quantitative systems developed widely among Parts man- IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE ufacturers and good products were produced. In recent years, some political and economic decisions at the macro level caused some problems that appeared in this industry as well. Cutting slots of energy for Iranian industries coinciding with the integration of exchange price and some restrictions in international relations greatly affected the country’s auto industry; the most significant of which was an increase in the prices of imported goods and hardships in the financial transfers. Meanwhile, some industry executives with this 73 REPORT confidence that everything is under government’s control did not look for any solution, did not anticipate the necessary arrangements and procedures and continued their prior manners. Gradually, the development projects were ceased and rupture in relations with foreign companies caused special consequences. All this happened while privatization began with reductions in the government’s support for auto industry. As a result of these events, the auto industry and then, its main segment, parts manufacturing industry quickly damaged. On the other hand and due to the delays in payments, the financial expenses of parts manufacturers got increased. What are the highlights of Iran’s Parts Manufacturing Industry comparing to the other countries? The level of technology, economic conditions, indigenous culture of production, engineering knowledge and cooperative European companies are the most significant factors of Iran’s Parts manufacturing industry. In recent years, most of the Parts manufacturing companies have established offices in countries such as the United Arabic Emirates, China, Taiwan, Korea, Turkey and ... to provide their raw materials and to do foreign trade. During last years and through relationships with European companies, most of the Parts manufacturers have learnt many production techniques but it did not lead to localization of these techniques or reduction of production expenses. In recent years, there were good opportunities for Iranian part manufacturers to buy European machines and production lines in lower prices which could lead to more developments in Parts manufacturing in Iran; but because of more sanctions and limited international relations, this opportunity was lost. I used the word “technique” not “technology” for technology has its own specific and detailed factors which comes together with economic and social factors in societies. Economically, economic conditions during the 70s were so that 74 Parts manufacturers were able to use the bank facilities or facilities provided by automakers to launch the Parts production line. Then, by receiving prepayment of contract from manufacturers, they were able to buy raw materials and meet production costs of the first batches of the product. But, gradually the conditions changed and the reduction of supports went so far that not only there were no longer pre-payments, but also the prices of the sold goods were paid with three months or more delays. In the late 80’s, many of the Parts manufacturers who did not anticipate these situations met serious economic problems. Following these problems, management of supply chain became difficult for auto makers and then problems for Parts man- automakers are facing today, do you think the parts manufacturers have such capacity to continue their activities? Certainly and as the result of auto makers’ and market’s circumstances, conditions for parts manufacturers have been hard and inappropriate. Meanwhile, there are some companies, among Parts manufacturing ones, which are investing and developing. Because of these problems, many Parts manufacturers were not able to continue their work or lost their power. Today, most of them have invested in other domains and have taken out their investments from this industry. Obviously, with the economic revival, companies that used this opportunity and surpassed the others would ufacturers were exacerbated. Now, due to increased exchange rate and probable boom in automotive market and industry, Parts industry is also expected to boom again. Moreover, reduction in production expenses provides the opportunities of exports for Parts manufacturers. But, it is on the condition of reduction in sanctions and trade restrictions and of changes in Parts manufacturers’ strategic approaches in this area. gain more success. It seems that it is a rule that in economic stagnation conditions, the probability of forming experienced and strong companies will increase. Actually, although many companies are involved in numerous problems, quicker companies will have more chances to enter and develop new work. But this is the exception rather than the rule. Therefore, if the situations continue to go on, major automakers and Parts manufacturers will face basic damages. But, I per- Considering the condition that the SPRING 2013 / ISSUE NO.6 REPORT sonally believe that the situation will not go ahead as before. Changes in the government program can help us to get rid of this situation. On the other hand, as the answer of your question I can say that the development in auto industry and huge investments in it are significant factors shouldn’t be forgotten. This investment has provided the capacity of producing over two million vehicles per year and therefore has created a big market for Parts manufacturers. This production capacity will put us in the tenth or eleventh place in the world ranking. However, in recent years, due to the problems, our actual production rating has plummeted to the seventh place. Before the years of crisis in Iran, automobile manufacturers managed to produce a large number of cars from which a great deal were sold in domestic markets. Consequently, a large market in spare parts and aftersales services was created. This market helped many parts manufacturers to survive in recent years. Can you tell us about the level of Iranian Parts Manufacturers from technology points of view? Answering your question in a general view is difficult. Technologically, Iranian Parts manufacturers are on a spectrum. At one extreme, there are Parts manufacturers with the most advanced production lines and testing equipment imported from European countries which are producing auto parts with their partners’ close cooperation and support. At the other extreme, there are some Parts manufacturers with the minimum necessary standard equipment or maybe nonstandard ones which are manufacturing Parts. So, between these two extremes, there are Parts manufacturers who have imported secondhand equipment and production lines, and try to produce auto Parts with acceptable qualities by machineries which are considered old now. Since I had the opportunity to visit many reputable auto parts manufacturing companies in European and Asian countries, I can judge that Parts manufacturers who produce original parts (OE) for Iranian auto makers are working an appropriate and internationally acceptable level of quality. Certainly, IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE recent sanctions have reduced foreign companies’ supports and have caused some problems, but in some technological areas it has led to independence. For example, there are some developed and advanced factories in Iran which are producing pistons, cod rods and fuel systems. Moreover, the Peugeot engine cylinder and cylinder head machining lines in Iran are perhaps unique in the world, as many of the French Peugeot employees were willing to visit these lines as soon as they arrived in Iran. In which sector of this industry do we have any competitive advantages? Iran, in terms of metal and polymer materials, in comparison to many countries has the advantage. For example, aluminum and steel industries are at an acceptable level. In addition, Petrochemical industry and some polymeric products with good quality and price are available in this country. Meanwhile, the increase in the exchange rate has led to a lower cost of production. Therefore, taking into account two factors of raw materials and production costs, it seems that there would be enough capacity for business development in many sectors of Parts manufacturing industry. On the other hand, the local market has always had enough charm for foreign companies. For example, the foundry industry has significant advantages from this point of view and is rapidly developing now in export area. In my opinion, the field of plastic parts is also a very fascinating one, because lightening cars is the highly regarded case these days and, maybe with low expenses on research and development, a very profitable business in this area can be made. As other metal resources, I can mention magnesium. This is one example of cases which need expenses on research and development. Using magnesium instead of usual metals can make a very profitable business in manufacturing many parts. This metal can be used in making steering wheel in cars and 75 REPORT experts think that it can be used in the construction of the cylinder block and cylinder head too. So, perhaps the area of research and development can also be considered a suitable field for foreign participation. How do you evaluate the capabilities of the Iranian Parts Manufacturers for the export purposes? In past years, we’ve had a lot of Parts manufacturers who exported their products. Recently, according to the domestic automakers’ demand reduction and economic fields, many Parts manufacturers have turned to export their products. However, the automotive industry has a relatively long history in Iran and many of Parts manufacturers are of acceptable quality standards. It is a fact that exports and international markets have their own challenges and many strong competitors should be surpassed. But, from the qualitative view, which seems the main issue of your question, it should be said that the Iranian Parts manufacturers are at an acceptable rank. All parts of the France Peugeot Company (PSA) which are produced in Iran have enjoyed European standards and consequently the international standards. For example Peugeot 206 which is sold in many agents in other countries is only produced in Iran. Also, companies like VALEO in France purchase from Iranian Parts manufacturers. But in terms of business processes, I think that marketing is not properly done for Iranian Parts manufacturers and systematic solutions have not been provided for these processes. It seems that a lot of work in this field is to be done. In the field of auto parts, we can also refer to neighboring markets. CIS and Arabic countries in the Persian Gulf region countries are good markets. Turkey has also a good market and from exportation view it can be seen as a threshold for entering into the European markets. Iraq has a growing market. Today, it is not very difficult to enter this market, but keeping the Iraqi market needs a careful planning and monitoring. 76 Considering the fact that the foreign investment is a significant element for the industry, you think in which sector we can have this potential? As far as I know, there are facilities and equipment for foreign cooperation in different fields of Parts production in free trade areas and industrial and special foreign investment fields. In metal or plastic parts, High tech or electronic components many activities can be done. Customs duties on these components will be much less if they be imported in CKD and then be assembled in Iran. In the software areas, we can also use the internal abilities. Today, the wages of software programmers in Iran is lower than its international norm. However, these products are sold at higher prices than other products. much work can be done. Even in areas of power electronics and power control, in my opinion, we are able to take advantage of foreign investment. However, many factors can be used to assess the type of activity. For example, components such as cylinder block or cylinder head that has a lot of weight are better to be localized. Since the transportation costs of these partrs are high, local manufacturing will bring more benefits and advantages. Moreover, in the areas of low cost and availability of raw materials is in Iran, foreign investment can also be used. In relation to this question, I can mention the energy costs. Despite the rise in energy prices in recent years which was performed with the aim of eliminating government’s subsidies, still the energy cost in Iran is much lower than many other countries. Thus, the manufacturing processes which are dependent on energy are more efficient and profitable in Iran. In addition, in the areas of 8- In your opinion and based on your experience in this industry, is it better to have joint ventures or foreign direct investment? I think this question should be answered case by case. We can mention 4 important factors: Laws of the source country, the type of work and production, the capital stock depending on the market and the purpose. However, more than 15 million vehicles are in use in Iran which is a good market for spare parts. Although automobile production has dropped due to the recent problems, the potential production capacity of two million cars a year is still available. This is a generating market for the output of each car will bring its spare parts market. For example, consider bumper part. With each produced car, a large number of bumpers are required. Moreover, bumper is one of the high consumption parts which are highly demanded in the market. Since bumper is Bulk volume, the cost of shipping this item is SPRING 2013 / ISSUE NO.6 REPORT high. On the other hand, polymeric materials are available and cheap in Iran. Thus, this piece is in very good investment. As I said before, there are now companies in Iran which are established with a significant capital and are producing by the best European technologies, but are in demand of new capitals for development. So, they are good opportunities for investment. By analyzing the parts manufacturing companies, we conclude that Parts making is actually a specialized field. Consequently, the role of technology in comparison to that of investment is highlighted. So, joint venture is assessed as a better solution rather than the direct investments. Iran is still not a member of the WTO and indigenous procedures are working alongside the regularized ones in trade domain. Although techniques and technical services are purchasable, a foreign investor may prefer JV. Since the Iranian part is more familiar with the business situations in Iran, he can play a better role as guarantee for success. There are many advantages in terms of domestic JV. Because, domestic resources are also being used in the JV and it pleasantly affects the economic boom. In addition, a part of the net benefits will be used as resources in the country again. Do foreigners get any benefit from their presence in Iran’s Parts manufacturing industry? Foreign Parts construction companies have always had a positive outlook on Iran’s market. European and Chinese companies who have currently had a significant presence in Parts making area are greatly desired to enter the Iranian market. Moreover, many advanced Parts manufacturing companies have been established in Iran whose techniques are fairly attractive to the Chinese Parts manufacturers and it can be a good ground of cooperation. Chinese companies want to enter the OEM and auto manufacture market in Iran and have a greater incentive to cooperate in this area. For example, in past years in col- laboration with European companies, an advanced production line for producing Bearing Shell was established in Iran. Products of this company can pass the best international standards and test equipment in its laboratories is absolutely efficient and helpful. But in recent years due to lack of capital it was not able to develop further and it can be a field for foreign participation. However, Iran is a good market for Parts manufacturers and, because of labor, raw material and energy costs, it is a suitable base for production. So, from different points of view, Parts manufacturing industry in Iran can be attractive to foreign companies. Is the Parts Manufacturing Industry of Iran affected by the foreign countries sanctions? As I mentioned previously, sanction is one ring in the chain of Parts manufacturers’ problems and it shouldn’t be considered in isolation. However, industry’s condition has suffered a crisis in recent years that has certainly damaged this industry. Besides, the resultant conditions are difficulties in purchasing foreign raw materials and shipment to the country and cutting ties with Iranian companies by foreign countries. In addition, energy price increases, reduction in people’s purchasing power and weakened power of our money (RLS) in comparison to others are all factors that have affected Parts manufacturing industry in Iran. However, passing the previous conditions and entering into a new situation in which the transaction can be resumed will be a great opportunity, an opportunity of creating new businesses and development in Parts manufacturing industry. It should be noted that improvement in conditions is a gradual process which takes time to adjust to the tense foreign policy. Exchanges will expand gradually as well. Is there any foreign investor in this industry now? If yes, from which countries? As far as I know, there are foreign investors from countries like IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE India, Taiwan, China, etc. who are investing in this industry. There are also some companies with foreign origin who are in direct partnership with Iranian companies and have invested in Iran. For example, in a production company, the Iranian part purchases a part of the foreign company’s share in the source company, and the foreign company purchases a part of the domestic company’s share. Some foreign investments are made up of capitals belonging to some Iranians who had migrated to European countries or the United States, but are still investing and working in Iran. However, this group, within the investment attractions abroad, is still willing to do business in Iran. In the third case, the Iranian company and the foreign company share to produce specific products for the local Iranian market. Regarding sanctions on Iran and preventions from sending some raw material to Iran, it is a good solution; because the foreign part can play a role other than financing and will provide raw and semi-processed materials. For example, the Seal Ring is a good example in this regard. Some of the silicon and polymeric materials used in this piece has also military applications. Thus, providing its raw materials in bulk is difficult to Iranian companies. But, presence of a seal Ring manufacturer and supply of raw materials indirectly by that Company (rather than supplying it from PTFE manufacturers) is possible. These are the things that I know. Parts manufacturing companies from Taiwan, Turkey and China have participated in Iran’s Parts manufacturing industry in these ways. In recent years, there were proposals from France, Germany, Britain and Italy but unfortunately they have remained at the preliminaries of cooperation and transaction; recent sanctions have stopped them too. We hope that the change of government and the available potentials provide us with a better viewpoint from Parts manufacturing industry in Iran. 77 The specifications of Iraniancars car engines Iranian engines 78 SPRING 2013 / ISSUE NO.6 ARTICLE ngine production in Iranian car manufacturing factories was first realized about one decade ago in the nation’s car industry and thereby the domestic factories tended toward the more advanced car production. Some collaborations were put in action with reputable nations in this filed simultaneously with the commencement of National Engine production in Iran and this trend led to fully-specialized production. Of course, some engines were also manufactured which are originally the previously-assembled ones with some optimizations. Other commonly used engines are also assembled. In the next sections, this paper describes the specifications and features of some most commonly used engines in Iran. E Iran Khodro’s family of National Engines The family of National Engines can be an appropriate option for Iran Khodro’s future cars. Substitution of EF7 engine for XU family of engines is among the next plans of this company. This turbocharged engine can produce up to 150 hp. Firstly designed based on CNG fuel, this engine has been also designed based on gasoline fuel in its newer model. The mass production of 1.7-L National Engine, the first among this family, has been commenced. However, the production of this advanced engine, perhaps the most advanced engine produced by Iran Khodro, was postponed several times. This engine features low emission (Euro 4 standard), high durability and an advanced smart “brain” and can produce 110 hp and 98 hp in gasoline and CNG modes, respectively. It can travel up to 300 km with CNG mode while the current CNG cars travel 120-200 km. This advanced engine has an engine displacement equal to 1.7 L and features the Variable Valve Timing (VVT) system which enhances the engine efficiency. This engine receives the lowest damage in CNG mode with respect to other internal combustion engines. Another engine from the family of National Engines is the turbocharged national engine which feeds additional air into engine and hence produces 155 hp in both CNG and gasoline modes. Regarding this point that Iran is a high-altitude country, about 13 per cent of engine power is lost in average. The turbocharger which feeds additional air into the engine can resolve this problem to some extent. This engine is said to be mounted on Iran Khodro (IKCO) Soren ELX in 2011. The design of 1.4-L engine from the family of National Engines is also finished and is under tests. But, the main issue about this low-displacement and cheap engine is the lack of clarifications about the desired car which hosts it. Iran Khodro (IKCO) can mount it on Rana, but cannot mount it on Peugeot 206 or Tondar 90 (Renault L90) because of disagreement from foreign partners. This engine has an engine displacement of 1397 mL and produces 95 hp and 84 hp in gasoline and CNG modes, respectively. The engine torque is 125 N.m (in 4500 rpm) and 111 N.m (in 4500 rpm) in gasoline and CNG modes, respectively. This engine’s compression ratio is 11:1. These three engines have been designed with the participation from RWTH Aachen University, Germany. • Engine type: EF7(NA) • Engine displacement: 1648 Ml (4 cylinders) • Compression ratio: 11:1 • Engine power at 6000 rpm: 113 hp (gasoline mode), 103 hp (CNG mode) • Max. torque at 4500 rpm: 155 N.m (gasoline mode), 136 N.m (CNG mode) • Fuel Injection system: Sequential (multi-point) Fuel Injection (SFI) • Fuel type: compressed national gas(CNG), alternative fuel: RON95 unleaded gasoline • The number of valves: 16 IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE 79 ARTICLE • Velocity: 189 km/h (gasoline mode), 181 km/h (CNG mode) • Power transmission system: BE3/5 gearbox, PreDamper, single-plate dry friction mechanical clutch, Differential type: Pinion Crownwheel: location: front EF7 Diesel Engine Iran Khodro’s New Diesel Engine Diesel engine is an appropriate option during lack of gasoline, especially because of lower price or diesel fuel with respect to gasoline. Many restrictions should be handled in Iran for supplying the diesel engine because of lack of diesel cars. Of course, a new engine is under design in IKCO named EFD Diesel Engine. Having designed EF7 National Engine with the participation from FEV Company (Germany) and 1.4L turbocharged National Engine from the family of National Engine, the diesel engine is the fourth one which is designed based on EF7 engine. This engine (EFD) has been designed with the participation from a German engine engineering company which is a subsidiary of AVL Company (Austria). The cylinder bore has been decreased in this engine so that its engine displacement has reached 1.5L. This engine produces 120 hp; namely the engine power would increase about 10 hp and the fuel consumption would decrease by 25% when the engine displacement decreases about 200 mL. The reason behind the power increase is the highpressure system, diesel spray and powerful turbocharger and the reason behind the lower fuel consumption is the higher efficiency of diesel engines with respect to gasoline counterparts. The torque produced by the engine is a symbol of its high power and is about 100 N.m more than the 1.7L gasoline engine; namely, the torque would increase about 100 N.m when the engine displacement decreases about 200 mL. It should be checked how would be the engine performance in real conditions but based on the available information it would be the best option for purchasing if it is mounted on a car because it would have more power torque and power despite its lower fuel consumption and emission. The direct injection fuel system with high-pressure multi-point system has been considered for this engine. Moreover, this engine features spark plug preheating, Variable-geometry turbocharger (VGT) and air intercooler. This product is equipped with exhaust gas recirculation system (EGR) and intercooler and the set of these advanced and new parts have led to a more difficult production in Iran. Regarding the current trend, it is estimated that over half the engine parts should be imported for engine production, but it is predicted that the engine production would last more than 3 years. However, the EF7 engine won’t be the only diesel engine mounted on passenger cars because it is said that the PEUGEOT engines would be also used for diesel passenger cars. The PEUGEOT 206 engine is among them. 80 TU3 Engine This engine is currently used on PEUGEOT 206 and some parts are manufactured in Iran. It may be weaker than TU5 engine but it has lower fuel consumption. Definitely, the lesser number of valves is among its weakness points. The torque produced by this engine is also about 30 N.m less than that of TU5 engine which results in weaker performance. • Engine displacement: 1360 cc , 4 cylinders, compression ratio: 10.2:1 • Engine power at 5500 rpm: 75 hp, Max. torque at 3400 rpm: 111 N.m • Fuel Injection system: multi-point with electronic injection • Fuel type: RON 91 gasoline • The number of valves: 8 • Combustion system: spark plug internal combustion • Emission limit standard: Euro II • Fuel system: Injection type with exhaust catalyst and oxygen sensor • 0-100 acceleration: 14.1 seconds • Manual gearbox named MA5N, single plate dry friction mechanical clutch, location of Differential: front SAIPA Tiba’s engine Tiba The design team from RWTH Aachen University (Germany) increased the engine displacement of SAIPA Pride up to 1500 cc and by increasing the compression ratio up to 9.7:1 the engine power has reached 80 hp. Based on the announcement of Megamotor Company, the manufacturer of engine drives for SAIPA Company, the fuel consumption of this engine is 8% lower than that of SAIPA Pride. Megamotor Co. has increased the engine displacement with the aid of German FEV Company and has increased the compression ratio up to 9.7 (the previous ratio was 8.5). With regard to gearbox, a member of SAIPA’s Research Center explains that the gear ratio of SAIPA Pride has been changed based on the new car and engine. It is said that the fuel consumption of this car is 10% lower than that of SAIPA Pride. So this engine is a better choice with respect to Pride’s engine. It is also one of the cheapest Iranian engines is this class. The torque produced by this engine has also been enhanced from 103 N.m to 124 N.m. The gearbox of SAIPA Pride cannot withstand the high torque produced by this engine. Hence, in new Tiba passenger car, the gearbox was reinforced in gear 2 in order to withstand the high torque. The clutch of SAIPA Pride has also undergone some changes in order to be used in Tiba among them one can mention the more stiffness of clutch disk in order to withstand the 124 N.m-torque produced by the new engine. On the other hand, the spline shafts at the end of the wheel hubs were also reinforced because of higher engine power. SPRING 2013 / ISSUE NO.6 Participation of Iran Chamber of Commerce, Industries, Mines and Agriculture in Qinghai International Halal Fair IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE 81 Based upon the invitation made by China Council for the Promotion of International Trade (CCPIT) Qinghai-Sub Council and coordination of Iran Embassy in Beijing, representatives of International Affairs Dept. of Iran Chamber of Commerce, Industries, Mines and Agriculture participated in Qinghai International Halal Fairs 2013 on April 29-May 4, 2013 in Xining, Qinghai Province. The aim to organize Iran Chamber booth in the above-mentioned fair was to introduce the potentials, capabilities and capacities of Iran Chamber members, as well as that of Iran Chamber affiliated union, associations and trade societies. In this visit, Mrs. Assadi, expert for international affairs met and held talks with the governor and vice governor of the province; Chairman, secretary General and director for International Affairs of CCPIT-Qinghai Sub-Council, Chair- 82 man of CCPIT-Xinjiang Sub-Council, Chairman of Macao Chamber of Commerce and other officials of the country. In her statements in the seminar on “Trade and Economic Cooperation Between China and Islamic Countries”, Mrs. Assadi introduced Iran Chamber of Commerce and its responsibilities and touched upon the importance of this organization as the consultant to the three Executive, Legislative and Judiciary branches of the government, which plays a key role in the decisionmaking sources of the country. It is deemed necessary to mention that in presence of a huge number of officials including the vice governor, director for economic commission and director for trade commission of the province, a Memorandum of Understanding was signed between Iran Chamber of Commerce and CCPIT-Qinghai Sub-Council. SPRING 2013 / ISSUE NO.6 On 3 June the ICC Working Group on Digital Media heard an update on mobile marketing developments from Genie Barton of the US self-regulatory body and Digital Advertising Alliance (DAA). Ms Barton explained the state of US efforts to draft rules for self-regulation of mobile marketing, expanding on the DAA’s existing schemes for online behavioural advertising (OBA) and multi-site data sharing. Scott Meyer, Chief Executive Officer of Evidon, demonstrated how existing digital rules are put into self-regulation practice through the technical mechanisms his company has developed and introduced their solutions for the aspects unique to mobile marketing. The working group deliberated global needs – as identified by members and national committees across all regions – and will begin framing an outline for a guidance tool on mobile that can offer a consistent approach to self-regulation across all markets. ICC guidance will take inspiration from the industry consensus on mobile, when the DAA’s work is published, but any further rules on mobile for global consumption will be based on the ICC OBA framework published in the Consolidated ICC Code of Advertising and Marketing Communications Practice in 2011. On 4 June, in the commission meeting, responsible practice on digital media remained a key topic as Marc Groman, Executive Director of Network Advertising Initiative (NAI) briefed members on their unique approach to self-regulate third party online advertising and shared developments on the company’s new mobile rules. Following that, Garrett Bechler, Senior Principal Security Architect and Strategist from Symantec Corporation, gave members the low down on cyber security evolvement, explaining how the advertising sector is affected by current threats and what companies can and should be doing to protect consumers’ trust and the integrity of digital advertising. In addition to digital media, members discussed current developments in the drafting of a companion code for responsible marketing of beverage alcohol as well as an update on activities to promote awareness and use of the Consolidated ICC Code of Advertising and Marketing and Communications Practice through APEC. ICC Chairman elect, Harold McGraw III, Chairman, President and CEO of McGraw-Hill Financial, made a guest appearance at the meeting to share his vision for ICC and to present the ICC Merchant of Peace award to John Manfredi, long-serving former Chair of the ICC Marketing and Advertising Commission, in recognition of his significant contribution to advancing ICC’s mission to promote peace and prosperity through international trade and investment. IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE Digital advertising tops agenda of responsible marketing experts meeting Ensuring trust in digital media practice and the need for a set of global dos and don’ts for mobile marketing were among the key discussions at the biannual meeting of the ICC Commission on Marketing held on 3-4 June at the News Corporation offices in New York. The meeting agenda featured a roster of high calibre speakers, most notably ICC Chairmanelect Harold McGraw III, Chairman, President and CEO of McGraw-Hill Financial, who shared his views on ICC policy work and positioning. 83 REPORT Tabriz: One of Iran’s most Attractive Cities 84 SPRING 2013 / ISSUE NO.6 REPORT T abriz is the capital of East Azerbaijan province, in the Azerbaijan region of Iran. It is an ancient city with a history going back about 4,500 years. Archeologists have found evidence for this in digs near the Blue Mosque. Provincial capital of Eastern Azarbaijan, it is 310 km southeast of Bazargan (Iran- Turkey frontier); 159 km south of Jolfa on Iran-Azarbaijan Republic border, and can be reached by good road; rail (742 km from Tehran, with connections to Europe and Moscow), and air from Tehran, Istanbul and other major cities. IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE Geography Situated at an altitude of 1,340 meters above sea level, 619 km northwest of Tehran, the second largest city in Iran until the late 1960’s and one of its former capitals ( with a population of 1,400,000 according to 1992 census), Tabriz is in a valley to the north of the long ridge of Mount Sahand. The valley opens out into a plain that slopes down gently to the northern end of Lake Orumieh, 60 km to the west. The 160-km long Aji ,Chai or Talkheh River is the major river of the city, formed by merging of three smaller rivers, namely the Ab 85 REPORT Nahand, Quri Chai, and Ojan Chai, all of which originate from the Sabalan Mountain and the heights in the southeastern part of the town. The river and streams join the Orumieh Lake after passing through the valleys between the Sorkhband and Yekkeh Chin mountain north of Tabriz and Osku district. Mehran River or Maidan Chai, also called Liqvan River, originates from the peaks between Karim and Sultan mountains overlooking the Liqvan village (a: major center of cheese production in Iran) near Esparakhoun and Qeshlaq. Its worst natural disadvantage, however, is its vulnerability to earthquakes, one of which utterly destroyed the city in 858. Rebuilt in a minor key, it was again devastated in 1041, when more than 40,000 people lost their lives. believed to date back” to distant antiquity, perhaps even before the Sassanian era (224-651 AD). The oldest stone tablet with a reference to Tabriz is that of Sargon II, the Assyrian King. The tablet referrers to a place called Tauri Castle and Tarmkis. The historians believe that this castle was situated on the site of the present Tabriz. It was the capital of Azarbin the 3rd century AD and again under the Mongol Ilkhanid dynasty (1256-13 53), although for some time Maragheh supplanted it. During the reign of Aqa Khan of the Ilkhanids, as well as under the reign of Ghazan Khan, Tabriz reached the peak of 1 glory and importance. Many great artists and philosophers from all over the world traveled to Tabriz. During this same period 1 Khajeh Rashid od-Din Fazlollah, the i..: learned historian and Minister of Ghazan , Khan, built the famous Rob’e Rashidi center. In 1392, after the end of Mongol rule, the town was sacked by Tamerlane. It was soon restored under the Turkman tribe of r the Qara Qoyunlu, who established a short-lived local dynasty. Under the Safavids it rose from regional to national capital for a short period, but the second of the Safavid kings, Shah Tahmasb, moved the capital to Qazvin because of the vulnerability of Tabriz to Ottoman attacks. The town then went into a period of decline, fought over by the Iranians, Ottomans and Russians and struck by earthquake and disease. Tabriz was the residence of the crown prince under the Qajar kings, themselves of Turkish stock, but the town did not return to prosperity until the second half of the 19th century .The greatest boost to Tabriz came with the opening up of Persia to the West at the turn of this century, when it became the main staging post between the interior of Iran and the Black Sea and, for a short time, the economic capital. In 1908 it was the center of a revolt against Mohammad Ali Shah, which was only put down with the brutal intervention of the Russians. In the second Irano-Russian War the city was occupied by the Czar troops. However, it was returned to Iran following the signing of Turkmanchai Treaty, a peace and trade settlement that ended the Ira- Climate By virtue of its situation, Tabriz has an agreeable summer climate, but the cold in winter is severe. Altogether, it has a continental climate with low humidity. The average annual rainfall is 288 mm. History The town has a long and checkered history: Although the early history of Tabriz is shrouded in legend and mystery, the town’s origins are 86 SPRING 2013 / ISSUE NO.6 REPORT no- Russian War of 1826-1828. The Iranian Constitutional Revolution originated in Tabriz and culminated during the reign of Mohammad Ali Shah of Qajar dynasty (1779-1925). Sat tar Khan and Baqer Khan were the two most prominent leading figures behind the movement. Tabriz was occupied by Russians several times in the first half of this century, including most of both world wars. A railway line to the border at Jolfa, built by the expansionist Russians, was of little importance until recently, but it has increased in significance in the ‘90s as a result of Iran’s friendlier relations with its northern neighbors. With a very rich history, Tabriz used to house many historical monuments. Unfortunately, many of them were destroyed in repeated invasions and attacks of foreign forces, negligence of the ruling governments, as well natural disasters such as earthquakes and floods. What remains now mostly dates back to the Ilkhanids, the Safavids, and the Qajars. Some of the monuments are unrivaled masterpieces of architecture. The Shahrdari Square is the center of the town, on the south-west of which stands the imposing edifice of Municipality. The railway station (5 km from the center of the town) is at the western edge of the town. The Quri Chai river runs through Tabriz, and most places of interest to the visitor are to the south of this river and alone or north of Imam Khomeini Avenue. - El Goli (formerly Shah Goli) A superb park around a square artificial pond. In the center, a small hall is on an island and hosts a restaurant. Very nice for eating some tchelokebab or sip some tea while enjoying the freshness of the park in summer. - Blue Mosque Originally built in 1465, this mosque which was once certainly superb, but was severely damaged in an earthquake in 1778, leaving only the entrance Iwan. It was reconstructed at early 1900 by the Iranian Ministry of Culture. The inside of the mosque is tiled with superb blue ceramic, unfortunately, many pieces went missing during the quake and were simply replaced by painting instead of tiles - some of the original tiles can be found around the entrance. - The Bazaar of Tabriz is one of the oldest bazaars of the Middle East and the largest covered bazar in the world. It was inscribed as World Heritage Site by UNESCO in July 2010. Tabriz has been a place of cultural exchange since antiquity and its historic bazaar complex is one of the most important commercial centres on the Silk Road. Located in the center of the city of Tabriz, Iran, IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE this spectacular structure consists of several sub-bazaars, such as Amir Bazaar (for gold and jewelry), Mozzafarieh (a carpet bazaar), a shoe bazaar, and many other ones for various goods. The most prosperous time of Tabriz and it’s bazaar was in 13th century when town became the capital city of Safavid kingdom. The city lost it’s status as capital in 16th century, but it’s bazaar has been being important as a commercial and economic center. Although, numerous modern shops and malls have been established nowadays, the bazaar of Tabriz has remained economic heart of both the city and northwestern of Iran. It is worthy of mention that Tabriz bazaar has been being an important political place, and one can point out its importance in the Iranian Constitutional Revolution in the last century and Islamic Revolution in the contemporary time. - Ark-e-Alishah also known as Arg e Tabriz, is a remnant of a fortress built in the Ilkhanate period. Currently it was located in the center of Tabriz. Historians believe that it was used as a military castle but clerics claim that the structure was initially used as a mosque in its early days. After the Revolution, large parts of the building were destroyed by the clerics to prepare a new place for Friday prayers in Tabriz. The structure today stands 28 meters high, and is still used as part of a space for holding Friday prayers. - Constitution house a house retracing the story of the Iranian constitutional revolution in the early 20th century, Tabriz being a high place of the uprising. Quite well documented and well kept, although few English translations are available. The edifice is located next to the Tabriz grand bazaar, on Motahari Ave. During the years leading up to the Constitutional Revolution and afterwards, the house was used as the gathering place of the leaders, activists, and the sympathizers of the movement, among them Sattar Khan, Baqer Khan, Seqat ol-Eslam and Haji Mirza AqaFarshi. The twostory building was constructed in 1868 by Haj Vali Me’mar-e Tabrizi. It 87 REPORT has numerous rooms and halls. The most beautiful parts of the house are a skylight and a corridor decorated with colorful glasses and mirrors. - Bazaar one of the most beautiful and largest in Iran and world. Some parts have been renovated and are truly wonderful. You will find mosques, bid selling halls, and all kind of trades possible. Worth to get lost inside for a few hours. - Azerbaijan Museum a good place encompassing the long Iranian history. But poorly kept: very few translations and erratic classification make the trip inside the numerous dynasties intricate for first timers. There are also numerous places to see around Tabriz. The mountainous region of south Azerbaijan offers breathtaking views and excellent treks among castles, rocky paths and remote villages. • Orumyeh Lake a salted lake with salt beaches and improbable bathing spots (gender separate, of course). Numerous migratory birds stop there on their long trip for some rest and food. • Babak Castle breathtaking castle, nested on a rocky peak at an altitude of 2,700 m. Babak was apparently one of the last Zoroastrian heroes fighting the Islamic invasion, 1400 years ago. A 2-hours walk to get up there, but definitely worth it. What a view! • Kandovan a troglodytic village 2 hours away from Tabriz. Great for discovering both the odd beauty of the place and the daily life of an Iranian village, among sheep, donkeys, hens and cats... Women in printed chadors can go outside and playing kids are all around. Mullahs obviously don’t bother going there too often. Resistant walking shoes are mandatory if you want to climb up the village. A living example of human adaptation to exceptionally unusual natural surroundings, Kandovan village is located 50 km to the south of Tabriz, Osku, on the northern slopes of a valley at the foothills of Mount Sahand. A river originating from the Sahand peaks passes through the valley. There are a number of natural springs to the north of the river, the 88 water from which has traditionally been used for the treatment of kidney stones, according to the locals. The physical structure of the village looks like images from fairy tales. Natural cones, scattered over a vast area, serve as human dwellings on rock formations which themselves seem to have been the work certain sculptors. The road from Tabriz goes through this natural artwork. On getting nearer to the dwellings, the visitor finds out that large families are living inside two or three of these hollow interconnected cones with features such as openings on their surface playing the role of actual windows. The lowest cones are used as stables and those on top as the living quarters. The interiors of the dwellings, usually divided into a living and a bed room, are dimly lit; however, the villagers are used to it. The interconnecting corridors are very narrow. From the outside, the dwellings look so similar to each other that one may easily get lost in the village. Steep pathways and steps are made of rock pieces for animals as well as human beings. As the legend goes, the first people to settle here were the soldiers involved in military operations nearly 800 years ago, who found the cones by chance and used them as their temporary camouflage and accommodation. However, among archaeologists, it is considered to be of Pre-Islamic Period. • Mount Sahand big dome topping at around 3,700 m. Interesting to climb in summer, or for skying in winter (1 lift available, another in project) • Rob-e-RashidiThis complex was built 700 years ago. This place was a place that they do all surgeries in there. The books were made of leather. They teach science in there. • Gholestan Garden Is good place to relax under the shadows of trees. • Tabriz Art Museum Is the first art museum in Asia and Iran and the fifth in the world. • Poets Tomb Also known as Maghbarato-Shora many poets are buried here, as well as Shahriyar. • Canonical palace This beautiful palace was built approximately 60 years ago. If you have (lots of) money, the Tabrizi carpets are among the finest in the world, and you will find masterpieces in shops and inside the Bazaar. Tabrizi rugs are among the most decorative rugs and frequently use colors like pink, red and cream. SPRING 2013 / ISSUE NO.6 The fifth Iran-Bangladesh joint economic commission session The Handicraft Workgroup Meeting on Handicraft Export to Egypt Iran & Turkey, Increase of mutual trade to $30bln by 2015 Lebanese Trade Delegation and Iranian Tradespeople’s Meeting Vietnam keen to expand trade ties with Iran Emphasis on the expansion of bilateral ties between Iran chamber of Commerce and Japan The Meeting of HE Mr. Abadir Hassan, Acting Commercial Attaché, Somali Embassy, Tehran With Mr. Farahzadi, Exports, Pars Darou The Meeting of the Tunisian Delegation with ICCIMA International Affairs Deputy Iranian and Egyptian Tradespeople’s Meeting The Joint Seminar of the ICCIMA Delegation and Polish Businesspeople at the Polish Chamber of Commerce A Closer Look at China-Iran Relations Iran – Thailand to boost trade turnover Seminar for Introduction to the Regulations for Export to Iraq The Conference of the Economic Delegation of the Confederation of West Africa with Iranian Businesspeople The Meeting of the ICCIMA Delegation with the President of Radomsko Chamber and Radomsko Businesspeople The Meeting of the Polish Deputy Minister of Economy and the ICCIMA President IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE 89 NEWS The fifth Iran-Bangladesh joint economic commission session According to the report of ICCIM’s international department, Iranian Minister of Industry, Mines and Trade Mehdi Qazanfari and Chairman of the Federation of Bangladesh Chamber of Commerce, Kazi Akrameddin Ahmed, in a meeting in Dhaka underlined the need for the further expansion of the bilateral ties and bilateral cooperation, trade relations in particular. During the meeting held in the Dhaka on Monday, Qazanfari and Ahmed explored avenues for bolstering and reinvigorating bilateral ties between Iran and Bangladesh, especially in trade field. During the meeting, Qazanfari pointed to the current status of trade exchanges between Iran and Bangla- desh, and said, “Indirect trade imposes further expanses on both sides.” Ahmed, for his part, said that Bangladesh is willing to broaden its trade ties with Iran. “Private sectors play a crucial role in promoting mutual trade cooperation,” the Bangladeshi trade official said. Ahmed expressed the hope that the current $101bln worth of mutual trade cooperation would increase through exchange of delegations and holding exhibitions. The Iranian minister called for the establishment of an expert group for pursuing the implementation of the agreements made at the two countries’ Fifth Joint Economic Commission meeting. He also voiced Iran’s preparedness to export technical and engineering services to Bangladesh. Bangladesh’s Prime Minister, for her part, welcomed Iran’s proposals and called on the expert teams to pursue implementation of the agreements. The ceremony was held on the sidelines of the two countries’ economic commission meeting and was attended by Qazanfari and Bangladeshi Finance Minister Abul Maal Abdul Muhith. The Handicraft Workgroup Meeting on Handicraft Export to Egypt A handicraft workgroup meeting was held on the third floor of the ICCIMA building, participated in by government officials, private sector representatives, the head of Iran’s Interest Section in Cairo, Mr. Miraboutalebi, and the expert at the Egypt Desk of the African-Arab Region. This meeting investigated the ways of entry into the Egyptian market, and it was decided that considering the short time available, the administrative committee make their proposal about participation in the Cairo Carpet and Handicraft Exhibition, to be held this June. Mr. Miraboutalebi commented that ICCIMA will be cooperating with the Egyptian representation in Iran to facilitate the participation in the Egyptian market of Iranian tradespeople in these fields. He proposed that representatives from the handicraft industry accompany the second tourism delegation, which is leaving for Egypt on May 10, 2013. 90 HE Mr. Amani, the Head of the Interest Section of Iran in Cairo, referring to the Egyptian people’s interest in Iran, said that the several exhibitions held over the past few years are witness to this interest. He added that some of the Egyptian handicrafts, such as lanterns, are made in different types in China, and are abundant in the Egyptian market. However, those handicrafts the production of which is not industrially possible can be a good starting point for Iranian tradespeople and craftspeople. It was finally decided that an invitation be prepared and sent to Egypt Chamber of Commerce and Egyptian officials for the Handicrafts Week and the Exhibition of Egyptian Handicrafts in Iran. It was also decided that as June 10, 2013, the Handicrafts Day, is accompanied by an exhibition in Tehran, Egyptian tradespeople, artists and craftspeople and other interested people be invited to visit the exhibition. SPRING 2013 / ISSUE NO.6 NEWS Iran & Turkey, Increase of mutual trade to $30bln by 2015 According to the report of ICCIM’s international department, the joint meeting of Iranian and Turkish businessmen was held with the presence of Iran chamber’s president, minister of industry, mines, trade, Iranian vice-president for international affairs, head of trade promotion organization and Turkish minister of development and planning on 27 April in permanent exhibition in Tehran. Stating that the bilateral trade has the stable growth; Mohammad Nahavandian the president of private sector parliament said: “the increasing of two countries’ economic transactions is not limited to trade and it includes other economic areas such as: joint venture.” “The joint ventures create the common interests which will significantly help to the stability of relations”, He continued: Emphasizing that the countries should prepare themselves for the situation after sanctions, Nahavandian stated:” in near future, the new conditions will form in Iran’s economic relations with other countries. Certainly the countries which have trade relations with Iran under sanctions will be in priority of economic relations after sanctions.” “The joint chambers and councils of Iran and Turkey should collect and approve a plan for developing cooperation between two countries.” Pointing to the various capacities of Iran and Turkey, he said: “ECO, D8, ICC and Islamic chamber are the capacities that Iran and Turkey can develop their economic ties with using them. If Iran and Turkey come together, they will find higher power in the global economy.” The president of private sector parliament outlined that the removing of trade obstacles is a necessary element for developing relations between Iran and Turkey. “ in the last year the value of trade between Iran and Turkey was more than 22 billion dollars which was allocated 10 billion dollars for Turkish exports to Iran and 12 billion dollars for Iranian exports to Turkey”, Cevdet Yilmaz, Turkish Minister of Development has said. Cevdet Yilmaz emphasized on the improvement of trade tariffs, the development of free trade between two countries and joint ventures for expanding economic relations between Iran and Turkey. The two countries officials stressed the necessity for stronger relations and pursuing the planned increase of bilateral trade to $30bln by 2015. Lebanese Trade Delegation and Iranian Tradespeople’s Meeting This meeting, which was held on Thursday, April 27, 2013, was attended by the Head of Exports of Mapna Company, and representatives from Farab, Toos-Niroo, Shayan Marmarit, Estahban Shimi, Petro Pars, Fulman, Speed Age, and Seadolf companies, and also the head of Yazd Chamber of Commerce, Industries, Mines and Agriculture. The meeting was chaired by Mr. Shafiei, the Head of the Iranian side of the Joint Council. After the introductions and luncheon, the two sides engaged in discussions. The tradespeople were divided into three groups: chemicals and hygienic products, electricity and related services, and petrochemical products, discussing the corresponding topics in separate rooms. In this meeting, fruitful discussions were held regarding the organization of the commodity market, the Council’s services to members, and ways of entry into the electricity and energy markets of Lebanon. It was proposed that after making the necessary studies, the private sector produce electricity by light and IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE small-scale wind and water power plants. Later, this can be increased to higher voltages. As for stone glue, one of the Lebanese companies present at the meeting had the factory for the production of this product. When Mr. Shafiei explained that there were over 6000 stone factories in Iran and that there was a huge demand for this product, Mr. Jaber Jaber expressed his willingness to invest in Iran and establish a factory in Iran. Also, Estahban Shimi made an agreement with the Lebanese side regarding the export of paraffin and industrial Vaseline to African countries, in view of the high demand for these products there. In view of his active interest in new energies and the existence of a modern solar panel factory in Yazd, Mr. Mohyeddin expressed his interest in visiting this province. It was also decided that the two tradespeople present at the meeting, who worked in the fields of hotel industry and tourism, employ the tourist-recreation centers in this province and use the mutual capacities for cooperation. 91 NEWS Vietnam keen to expand trade ties with Iran According to the report of ICCIM’s international department, Mr. Mirabutalebi, Iran chamber’s deputy in international affairs in a meeting with Vietnam s foreign affair deputy said: “now, the volume of trade is not satisfactory despite of good relations between two countries and Iran chamber of commerce will welcome for exchanging trade delegation and expanding trade delegation.” In this regard, the establishment of a joint business council between the two countries in various fields of business and industry relationships will help to reach the desired level. “After visiting the Iranian president to this country is expected to increase trade relations between two countries”, Vietnam s foreign affair deputy said. In the end both sides were calling for more cooperation in joint venture and tourists. Emphasis on the expansion of bilateral ties between Iran chamber of Commerce and Japan According to the report of ICCIM’s international department, the meeting held between delegations of Fusion industrial & trade group of Japan and Iran chamber’s deputy in international affairs. Mr. Mirabutalebi, Iran chamber’s deputy in international affairs said:”Unfortunately, the Japanese approach is not appropriate in relation to economic cooperation and Japanese companies have lost their position in Iranian market and other countries have been replaced in the market because of lack of proper functioning in spite of insightful records in the past, Iran with its population of 400 million and neighboring countries can become a hub for trade with Japan in the region “. Japanese fusion group chairman, said: “Given the historically good relations between Iran and Japan after World War II economy, trade and economic cooperation with Iran are demanding.” The Meeting of HE Mr. Abadir Hassan, Acting Commercial Attaché, Somali Embassy, Tehran With Mr. Farahzadi, Exports, Pars Darou Following the correspondence and discussions with the Somali Ambassador to Tehran regarding the export of medicines to that country, the price and product lists of Pars Darou Company were sent to the Somali Embassy, and three Somali companies with three separate lists announced their demand for medicines. Therefore, a meeting was held at 10:00 AM, Saturday, May 18, 2013, attended by the export official of Pars Daru Company and the Acting Commercial Attaché of the Somali Embassy. 92 Mr. Abadir Hassan presented the lists of import demands of the three Somali companies to Mr. Farahzadi, and explained that they did not, for example, just need 5000 packs of a certain type of tablets, and that the lists were just the initial lists. He added that to avoid foreign exchange transfer obstacles, the finances could be arranged through the Somali Embassy, and delivery could be FOB at Bandar Abbas. He said that Somalia was on the reconstruction and development path and that Turkish companies were mushrooming there, while Somali people are interested in trade relationships with Iran SPRING 2013 / ISSUE NO.6 NEWS The Meeting of the Tunisian Delegation with ICCIMA International Affairs Deputy On Tuesday, April 30, 2013, the Tunisian delegation, headed by Mr. Badr Al Din met with Mr. Miraboutalebi, the deputy of ICCIMA International Affairs. Mr. Badr Al Din, IKCO’s exclusive representative in Tunisia, said that they managed to secure IKCO representation over the last two months, that so far agreements had been made for the export of Sarir, Runna, Soren and Samand, and that six vehicles were to be exported to Tunisia in the first phase of the cooperation. He also announced the agreement to export 500 vehicles to Tunisia per year. It should be noted that a barter system, the import of auto parts, olive oil and other products that Iran de- manded in return for the export of vehicles to Tunisia was a proposal made by ICCIMA last July on the sidelines of the 11th Joint Commission. The Proposal was followed up by the announcement of interested tradespeople on both sides. The Tunisian delegation, emphasizing the practicality of the proposal, underlined the significance of trade. The proposal of establishing a joint business council, previously made by ICCIMA, was welcome by the Tunisian side at this meeting, and it was decided that a list of tradespeople be sent to ICCIMA by Tunisia Chamber of Commerce and Handicrafts, and that the names of the founders be exchanged. Iranian and Egyptian Tradespeople’s Meeting In this meeting, held on Saturday, April 27, 2013, on the sixth floor of ICCIMA, after the introductions, tradespeople from both countries engaged in discussions. Representatives of the Union of Oil, Gas and Petrochemical industries discussed, with Egyptian tradespeople. Transportation problems and supply and delivery on the part of factories were among the most important issues discussed.Egyptian export products discussed in this meeting included cotton, cotton fabrics, technical-engineering services, and handicrafts. Discussions were also held on the manufacture and export of elevators, supplying spare parts, and cooperation for regional marketing, whereby the corresponding union on the Egyptian side was introduced. He added that the quality of Egyptian products is much better than that of Turkish and Chinese products and that using the expertise of Iranian manufacturers, Iran and Egypt can organize and supply the rising markets of the commonwealth countries, Iraq and Afghanistan. It was, thus, decided that a memorandum be signed with the Iranian Union or well-reputed Iranian companies. Also, Mr. Hajian, Head of Iran Khodro Diesel Exports, explained the services and the quality of Iranian products and heavy-duty vehicles. Mr. Mohammad Taha expressed his interest in continuing discussions on this subject. The Joint Seminar of the ICCIMA Delegation and Polish Businesspeople at the Polish Chamber of Commerce Headed by HE Dr Nahavandian, the ICCIMA President, ICCIMA delegation participated in a seminar, on Tuesday May, 7, 2013, which was attended by the Polish Chamber’s Secretary General, the Deputy of the Iranian Iran-Poland Parliamentary Group, and the Iranian Ambassador to Warsaw. The Polish Chamber’s Secretary General, the ICCIMA President and the Ira- IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE nian Ambassador all emphasized the durability of trade relations and the flexibility of policies. Discussions also included more attention to the trade potentials and the cooperation between both sides, boosting the relationship between the two chambers as facilitators of the relations between the businesspeople of the two countries, and more focus on Iran. 93 NEWS A Closer Look at China-Iran Relations According to the report of ICCIM’s international department, Mutual cooperation and investment strategies in the fields of engineering and technical services were examined by representatives of international affair of ICCIMA in a meeting with members of Iran chamber of commerce and Chinese delegations. The meeting was attended by several government officials, Chairman of the China Council for Promotion of International Trade and active Chinese companies in the fields of technical and engineering services, power plant, construction, road building and oil and gas. Asia Pacific Director General of ICCIMA will demand a codified program for future activities while emphasizing on the existing problems particularly financial barriers as well as trade ministry director general of Yun Nan province declared trader s interest to develop trade and cooperation with Iranian counterparts and hoped more information & trade delegation exchange between iran chamber of commerce and trade development council of china. Iran – Thailand to boost trade turnover According to the report of ICCIM’s international department, the meeting held between deputy of international affair of ICCIMA, Mr. Miraboutalebi and deputy of international trade promotion of Thailand. Seyed Mehdi Mirabutalebi, Iran chamber’s deputy in international affairs said: “we are ready to cooperate with Thailand in trade and commerce area. Now, the volume of trade is not satisfactory despite of good relations between two countries.” Mirabutalebi continued:” the holding of economy-day can help to promote the knowledge of two sides’ traders. Also the dispatching & receiving of trade delegation can be done mutually in order to become familiar Iranian merchants with potentials of Thailand “. Also the parties asked for removing current problems especially financial obstacles due to develop trade relations and economic cooperation between two countries and improving existing conditions to facilitate trade between two sides. Seminar for Introduction to the Regulations for Export to Iraq In view of the Iraqi government’s decision to inspect all imported goods and introduction of foreign inspection companies for the quality control of export goods, and the fact that only the French company BV works in Iran, a general initiation was issued to all ICCIMA members and the members of local chambers and associations across the country, and the Seminar for Introduction to the Regulations for Export to Iraq was held on Tuesday, July 9, 2013, which was attended by Mr Aghil al Mousawi, the economic attaché of the Iraqi embassy in 94 Tehran; Mr Rezazadeh, the attaché of the IRI embassy in Baghdad; Mr Ghorbani Faraz, Iraqi trade desk, TPO; Mr Ghassemian, international inspection manager, BV; and over 250 business and industrial companies on the 10th floor of ICCIMA. Mr Miraboutalebi and other members of the panel explained the present economic relationship between Iran and Iraq, and then elaborated on the laws, regulations and standards of export to Iraq. Emphasizing that the Ministry of Commere of Iraq offers many facilities to exporters to Iraq, Mr al Mousawi, the economic attaché of the Iraqi embassy, urged the audience and other Iranian businesspeople and industrialists to have permanent presence in Iraq in order to gain access to the Iraqi market. The QA period, at the end of the program, was the most important part, during which participants presented their questions and problems to the Iraqi embassy attaché in Tehran and BV officials. SPRING 2013 / ISSUE NO.6 NEWS The Conference of the Economic Delegation of the Confederation of West Africa with Iranian Businesspeople The conference of the economic delegation of the Confederation of West Africa with Iranian Businesspeople took place on Sunday, June 23, 2013, at ICCIMA. According to ICCIMA PRO, this conference was attended by Mr Mehdi Miraboutalebi, Deputy, ICCIMA International Affairs; Mr Tir No Danoup, Chair, the Confederation of West Africa; 22 representatives of member companies of the Confederation of West Africa; an IRI Foreign Ministry representative; a Bank Saderat representative; Mr Ali Bakhshi, IRI Ambassador to Dakar, Senegal; ICCIMA experts; and some 70 representa- tives from Iranian companies working in the fields of agriculture, fishery, energy and fuels, textile industries, pharmaceuticals, phosphate and urea industries, and auto and auto part industries. At the commencement, Mr Mehdi Miraboutalebi, Deputy, ICCIMA International Affairs, pointed out the obstacles in transportation and foreign exchange transfer and added that sanctions have also influenced our relations with African countries. He mentioned barter as a method of bypassing these obstacles, and advised the participating companies not to do “solo” trade with African countries but to do so in combination. For instance, exporters of technical and engineering services should work with mining investors, and oil products exporters with importers of fruit, coffee and cocoa, so that there will be no need for governmental support and financing. Mr Ali Bakhshi, IRI Ambassador to Dakar, Senegal, then, presented some information about the activities of the guest delegation, and encouraged Iranian companies to engage in trade in Senegal, especially in the fields of construction and building materials. The Meeting of the ICCIMA Delegation with the President of Radomsko Chamber and Radomsko Businesspeople In this meeting, which was attended by the President of Radomsko Chamber, representatives of Radomsko’s Municipality, Mr Tizhoosh Taban, the President of Rasht Chamber, the potentials of cooperation between the three cities were discussed. Discussions also included the conditions of the cooperation of a number of interested Polish companies with Iran and the conditions of Iranian investment in Radomsko. The Meeting of the Polish Deputy Minister of Economy and the ICCIMA President Mr Andrzej Deja, the Deputy of the Ministry of Economy, in a meeting with Dr Nahavandian at the Polish Ministry of Economy mentioned the February 2013 visit to Iran and expressed amazement at the rate of progress in Iran despite the propaganda of the Western media. Saying that energy and import and export affairs were all handled at the Polish Ministry of Econ- IRAN CHAMBER OF COMMERCE, INDUSTRIES, MINES & AGRICULTURE - QUARTERLY MAGAZINE omy, Mr Andrzej Deja made reference to the developments following Poland’s joining EU in 2004 and also to the problems arising from the 2009 recession. He expressed delight in the visit of ICCIMA’s President and delegation, and requested further economic information about Iran. 95 Last Word The publication of this issue coincides with the election of H.E. Dr. Hassan Rouhani as the sixth president of the Islamic Republic of Iran. The staff and editors of Iran Commerce wish him Godspeed and great success during his tenure 96 SPRING 2013 / ISSUE NO.6