Auto Industry

2 June 2016- Bruegel

By: Mohsen Pakparvar Senior Expert Head of Energy & International Economics studies group Institute for Political and International Studies (IPIS) Ministry of foreign affairs Islamic Republic of IRAN E-mail: [email protected], 1 Content IRAN AT GLANCE IRAN’s Economics Index IRAN Auto Industry IKCOIKCO Vs.Vs. ISAIPASAIPA GroupGroup Opportunities and suggestions Iran’s Spare Parts Industry

IRAN

The Cyrus Cylinder is a document issued by Cyrus the Great and known as The First Charter of Human Rights. Persepolis 500 BC

5 A Country for All Seasons I.R.IRAN at glance

Official name Islamic Republic of Iran Head of State President H.E. Dr. Hassan Rouhani National Day 11th of February (Islamic Revolution of Iran-1979) Capital Tehran Area 1,648,196 sq km Land 4,137 km boundaries Sea 2,700 km (Including the ) boundaries River 1,918 km boundaries Border , , , , , , countries +9 sea neighbors Mostly arid or semi-arid, temperate along Caspian coast and Climate mountainous temperate along west and north-west. , , coal, chromium, Natural resources copper, iron ore, lead, manganese, zinc, sulfur Land use: Arable land 300,000 sq. Km 18.2% Meadows and 900,000 sq. Km 54.6% pastures Forest and 120,000 sq. Km 7.3% woodland Other 258,000 sq. Km 15.7% Irrigated land 70,000 sq. Km 4.2%

Population 78.03 million (2015) Population growth 1.30% (2015) rate Iran at glance 3

Muslim 99.56% Religions Zoroastrian, Christian & Jewish 0.44% Persian, Azeri, Kurdish, Lori, Baloochi, Languages Arabic Population 79,668,323(2015) Literacy (2015) Total 94% University's 5 M (annually 1 M graduate,<300,000 students Engineers, <60% ladies) Total Imports 53451 million US $ (2012) Total Exports 98033 million US $ (2012) Foreign Direct 4870 million US $ (2012) Investment Iran at glance 4

Electricity Production: 232,955 GWH (2010) Transportation: Railways networks 12000 km (2013) Road networks 220000 km (2013) Ports 11 commercial ports Airports 54 Economic sectors contribution to GDP growth Iran’s trade balance Unemployment Rate Government Budget Current Account Balance Iranian Oil Resources IRAN: ECONOMY, OIL AND GAS o Mixed and transition economy o Large public sector o 60% of the economy is centrally planned o Dominated by oil and gas production o One of the best performing exchanges in the world

With 10% of the world's proven and 15% of its gas reserves, Iran is considered an ".

IRAN: AGRICULTURAL PRODUCTS

Iran is known for its agricultural products which are mainly related to soils:

o Wheat o Rice o Other grains o Sugar beets o Sugarcane o Fruits o Nuts & dried Fruits o Cotton o Dairy products o Wool o Caviar o Saffron IRAN: EDUCATIONAL SYSTEM o Iran has free public schools and private schools at all levels o Educating more than 18 million students at segregated schools o Education in Iran is highly centralized Education is considered a top priority in the o Iran is one of the few developing development plans of the countries with great success in country. girls' education

IRAN: TOURISM

There are several types of . Some of them include historical, cultural, educational, Eco-tourism etc.

The image part with relationship ID rId5 was not found in the file. IRAN: INDUSTRY OVERVIEW o Electrical o Pharmaceutical and health o Chemical and cellulose o Construction industry o

Iran is the ’s biggest car producer. Its car industry, comprised of companies such as the , and Saipa, ranks 13th in the world for total production and 5th in the world in terms of fastest growth. IRAN AUTO INDUSTRY

24 Iran Vs. World q More than 38 countries are active in Auto Industry q 90% of Auto production belong to 22 countries q World Auto Industry’s turn over annually 2700 B$ q Auto industry share in Iran’s GDP= 3.5% q 18.8% of Iran’s Industry belong to Auto Industry q & 12% of total employment of the Country 25 production

26 Production (by type in 2015-2016)

Type of vehicle 2014 2015 % change

Car 958339 892600 -6.9 Pick up 151044 73187 -51.5% Mini & 276 511 85.1% middle bus Bus 651 696 6.9 Heavy vehicle 20977 9842 -53.1

total 1131287 976836 -13.7 27 Export

28 Export by Iranian car manufacturerٍ

company Actual Exp. Programmed exp. % success

Saipa 14450 45000 32.1

IKCO 10198 30000 34

Saipa Diesel 10 250 4

IKCo Diesel 107 350 30.6

Others 0 900 0 32.4 Total 24765 76500

* Total Export in 2014( Units) 28432 * 12.9% reduction of export in 2015 29 IRAN Auto Industry’s prospective in 2025

30 Quantitative goals of 2025

Ø Total annual production of 3 M. Vehicle (2 M for domestic& 1 M for Export)

Ø Minimum of 50% of production under domestic Brand

Ø 25 B$ Revenue of spare part manufacturers from local market

Ø 6 B$ export of spare part

Ø Production of 120,000 heavy vehicle (75% domestic, 25% export)

Ø Increasing of Auto industry share of GDP to 4%

Ø reaching of 20% share in industry sector of Economy. 31 Quantitative goals of 2025 p/2 Prospective of production on 2025 (1000 Units)

Year 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Car 1600 1750 1900 2100 2250 2400 2550 2700 2800 3000

Export 1400 200 260 320 380 500 580 690 830 1000

Heavy 35 43 52 60 69 80 90 100 110 120 vehicle

Export 1 1.5 2.5 4 6 8 10 15 22 30

32 Qualitative goals of 2025

vImprove and enhancing of Quality and aer sells services vReducon of polluon(all kind) vReducon of fuel consumpon

33 Auto industry’s posision

34 World Ranking of Vehicle Production

In 2014 Iran ranked 18th in the volume of Vehicle Production Auto industry capacity

36 Type Capacity (annually)

Car 1800 Pick up 175 Mini bus and Bus 36 Tracks and trailer 170 Total 2126

37 List of car manufacturer

38 List of Iranian Automotives manufacturer No. name of company No. name of company 1 Saipa Group 25 Azar Etesal 26 Arya everest Mashin 2 Saipa Dessel 27 Arya dessel motor 3 Khodro Mayone 28 Aras Khodro Dessel 4 Sepeh dessel Kaveh 29 Iran Khodro Industry group( Ikco) 5 Saman Khodro Kumesh 30 Iran Khodro dessel 6 Sinad Khodro Tus 31 Brojen Khodro 7 Siba motor 32 Bahman dessel 8 Sair o safar Toseeh fanavariyae pishrafteh Azar 9 33 Abagan 10 Sanaye Arg Dessel 34 Toseeh bynolmel lutus 11 Sanaye Puya Khodro Garmsar 35 Tolidy Tajhizat Sangin Hepco 12 Sanaye Khodro Sazan Modiran 35 Tirajh dessel 13 Sanaye Khodro Rili Akia Douche 37 Khodro sazan Bam 14 Sanaye Khodro Kavir 38 Khodro sazan rein 15 Oghab Afshan 39 Khodro sazi pishro dessel 16 Karsan Yekta 40 Khodro sazan Desslel Azarbayjan 17 Karizan Khodro 0 Qazwin 41 Khodro sazi Zagros 18 Kerman Khodro 42 Khodro sazi setareh Nik Arya 19 Bahman Groupe 43 Khodrokaran Iran 20 Mamut Dessel 44 Raniran 21 Mobarez 45 Rayan Fangostar dessel 22 Moratab 46 Rakhsh Khodro dessel 23 Huran Khodro Dessel 47 Zamyad 24 Yavaran Kodro Sharq 39 48 Zarrin Khodro Iran Sale volume and Market share

Iran sale Volume

SAIPA Group’s market share 1.800.000 SAIPA’s market share in SAIPA Group 43.389 35.405 Others 1.600.000 9% 41.610 Import 1.400.000 50.633 4% 42.691 41.767 80.000 1.200.000

1.000.000 78.498 800.000

600.000 SAIPA SAIPA Group 400.000 30% 7% IKCO 43% 200.000 44% 0 2007 2008 2009 2010 2011 SAIPA2012 2013 2014 2% 1%Production Import IRAN MARKET (PASSENGER CAR)

SAIPA Group’s market share SAIPA’s market share in SAIPA Group

Import Others 4.8% 6.5%

SAIPA 35.1% SAIPA Group 45.2% IKCo 43.4%

ParsKhodro 7.7%

SAIPA Kashan 2.4%

PARS KHODRO A good companion for whole life IRAN: OPPORTUNITIES TO INVEST

Iran is certainly a unique market in o Strategic Location the Middle East. o Market Potentials and Proximity It is populous, rich in natural resources and apt to technological o Labor Privileges progress and international developments. o Developed Infrastructure

The country's natural resources create o Low Utility and Production Cost a significant wealth. o Abundant Natural Resources In fact, based on a resource-based evaluation, the Iranian economy is the o Climatic Characteristics 20th strongest in the world o Fiscal Incentives Auto industry : OPPORTUNITIES TO INVEST

Internally Regionally and internationally •Iran ‘s domestics market rapidly expanded. o The most stable and safe country of •Most of infrastructure needed are ME o 16 neighboring countries , more than available 400 M population •Most of raw materials and cheap o Advantages of regional energy accessible. corporations( ECO, Shanghai, IOR-ARC) •Iranian Greet industrial groups could o Hub of transit route (NS/ EW) support and provide requirements. o Easy access to the sea (Persian golf & •Huge Talented engineers and skilled Caspian see,..) man power available. o Links of railway network to • advanced law and regulation of neighboring countries investment protection with a lot of o All of auto industry’s sanctions removed after JCPOA incentives. o Several financing, FDI and insurance •50% empty capacity of industry covers suggested (more than 100 B$) available (means no need for o Major foreign partner : (30%), capacity building of new produces) South Korea (25%), Japan, , •Free trade zones and SPZ,s with a Sweeden lot of incentives. o Neg, partner: Italy, , UK,

Iran’s spare parts Industry

By: 1 June 2016 Mohsen Pakparvar Senior Expert Head of Energy & International Economics studies group Institute for Political and International Studies (IPIS) Ministry of foreign affairs Islamic Republic of IRAN E-mail: [email protected] Dispersion of Parts Manufacturers in the Country 7 clusters

Cluster 3 Cluster 6 (Northwestern Provinces) 59 q 1200 participants (Northern border provinces of 112 ) in the supply Cluster 1 Cluster 2 Tehran Mash’had chain. (Southern border provinces of (Great Khorasan) Cluster 5 Alborz) Saveh 718 units (Western Provinces) 48 Cluster 4 125 (Central Provinces) q Spare Parts 91 Manufacturers Cluster 7 Shiraz followed (Southern & Southeastern Provinces) Automakers in 46 industrial zones

45 Statistics on Parts Manufacturers in 1394 (2015)

qParts Manufacturers Companies: 1200 units

qDirect employee of Parts Manufacturers Industry 500,000

qIndirect Employee: 600,000

qInvestment: 3 B$

qThe Amount of Working Capital: 4.5 B$

46 Statistics on Parts Manufacturers in 1394 (2015)

u Spare Parts Sales: 7 B$ u Spare part's Share of total Industry: 9% u Salaries paid: 1.5 B$

u Interest Paid: 0.7 B$

u Imports of major items of Iran’s Parts Industry: $ 3 billion 47 ($ 1.6 billion in 92) International Cooperation of spare Parts Manufacturers & Iran auto Industry

Year Type of Cooperation 2005 2009 2013 2015 License 69 124 168 176 41 30 73 82 Technical Assistance 6 42 53 59 Technology Transfer 0 0 34 38 Exclusivity Agency 0 0 10 25 Total 116 196 338 380

48 The Production of Vehicles and spare parts in Iran (1990 - 2015)

More than 1.6 million vehicles 1000 Units In 1390 1800 1600 1400 1200 Almost 900,000 vehicles 1000 In 2015 800 spare Parts 600 400 200 0

49 Trend of domestics major spare parts Suppliers sales 1997- 2015

9 Megamotor 6 B$ 7 Saazeh Gostar SAPCO 3.5 B$ 5

3

1.5 100 M$

0 B$ سال سال سال سال سال سال 1376 1380 1384 1388 1393 1394

50 Spare Parts International Market

B$(2015)

400

1650 675 575

The spare parts Spare Parts The Export The total produced by manufacturers market spare automobile Produced Along (35%) Parts market. manufacturers with ( 25%) automobile manufacturers (40%)

51 Agreements with foreign spare Parts manufacturer

Cooperation agreements with:

q Indian spare Parts Manufacturers Association.

q French spare Parts Manufacturers Association.

q Austrian spare Parts Manufacturers Association.

q Turkish spare Parts Manufacturers Association.

q Spare Parts Manufacturers Association of Bavaria State (Germany).

Also cooperation with the Associations of spare parts manufacturing of Italy, Japan, Taiwan, China and Slovakia is under negotiation. 52 Exports of spare Parts (M$)

Export in Export in Plan of 2014 2015 2016

99 33 120

Major spare parts exported: ü Vehicle Frame& body and spare parts. ü Spare parts and rims and spokes. ü Radiator. ü Clutch Discs. ü Brake drums and discs and clutch plates.

53 Expectations of government from spare parts manufacturers u Using of foreign investment and cooperation with famous international brands. u Improving the quality of parts and focus on customer satisfaction u the establishment of Design and Engineering Units (R & D) in spare parts industry , effective corporation in the design and production and more cooperation with domestic and international companies.

u Development of spare parts manufacturing domestically in order to enhance competitiveness. u Expanding share in auto industry’s global market(vehicles& spare parts)

25 Suggestions

1. Exchanging of information via governmental and private sector of Iranian com. Vs. EU com. 2. Giving suggestions to promote bilateral relations 3. Sending EU. Com. Delegation to provide F.S report (micro level) 4. B2B meeting of Auto industries com. Vs. Iranian car and spare part makers under EU umbrella. 55 The End

• Thanks for your kind attention, Special thanks : • Dr. Simone Tagliapietra • Dr. Matilda Sevon • Dr. Giuseppe porcaro • And Bruegle For all arrangement and hope to have tangible business interaction with participants. All right reserved for IPIS, for more information ask: [email protected] 56