Two French Carmakers Moving Ahead at Full Speed

Reporting "Asre Khodro", During the first four months of the current fiscal that started in March, 434,295 cars, buses, light and heavy duty vehicles were produced. According to the report, the key auto sector registered 17.6% year-on-year growth.

Cars have the biggest share overall with 410,673 units and 20.9% y/y rise in output.

Production of vans also tripled and 261 units were produced by local companies. While this sector has been lagging behind others in the industry, in recent months and with a rise in demand local van production has seen significant growth. In the recent past that was not the case as van output for unknown reasons was negligible.

Three Peugeot Models

Puegeot had 32.4% share of the domestic car market during the four months. Iran Khodro (Peugeot’s local partner) produces three models of Peugeots, namely 206, 405 and 2008.

Overall, the company manufactured 133,286 units of the three models and the three models had a 63.5% share of IKCO’s total output.

The report says 42,686 Renault cars were produced in Iran with the French brand claiming a smaller 10.4% share of the local auto market.

With sanctions against Iran eased, the two French automotive giants PSA Group and Renault have made a big comeback. Peugeot has signed a deal with IKCO and Citroen has a production agreement with SAIPA.

Renault is on the verge of signing a joint venture with the Industrial Development and Renovation Organization of Iran.

However, the introduction of new models by the three French brands has been delayed due to a number of issues, namely localization of auto parts.

Iran is pushing for stricter rules in new contracts with foreign carmakers and insists on a big percentage (40%) of locally-produced parts in the new cars along with substantial exports by the foreign companies producing cars in the country.

Foreign companies are disinclined to embrace such rules ostensibly for reasons of quality. How far the Industry Ministry will be able to assert itself on this contentious issue remains to be seen.

Local Race

Established in 1962, IKCO has so far held fast to its title as the largest automaker. However, during recent months its arch-rival SAIPA is fast catching up.

In the four months with total output of 209,632 units through all its subsidiaries, IKCO is still ahead of SAIPA, which produced 178,401 cars.

The two have recorded 12.2% and 20.1% y/y growth respectively. If both rivals maintain the present growth trajectory, SAIPA will beat IKCO’s production rate in less than 2.5 years.

Together IKCO and SAIPA have 89.3% share of the huge local auto market, the Ministry of Industry says.

India’s Mahindra Enters

It further provided data on operations of a subsidiary of IKCO, Iran Khodro Diesel (IKD), which produces pickup trucks along with light and heavy duty vehicles.

According to the report, IKD has started production of Mahindra pickup trucks.

However, no details about IKD’s collaboration with the company has been made public.

Mahindra is an Indian multinational auto manufacturer. In case IKD and Mahindra forge a joint production deal it would be the first time that an Indian firm will have entered Iran’s auto industry.

Chinese Share

In all 61,239 Chinese cars were produced in Iran during the period and had 14.9% share of the market.

Chery produced 20,974 units recording a 35.2% y/y growth. This company with its local production facility now has 5.1% share of the market.

This Chinese company is followed by Kerman Khodro and its subsidiaries, Karmania and Kerman Motor. The two produced 13,614 cars in collaboration with Chinese carmakers BYD, Lifan, and JAC. The industrial family had a 3.3% share of the local market.

Source: financialtribune.com