IAIIC & Opportunities for Foreign Investment in Iran
The Second Iranian Auto Industry International Conference 2014, held in Tehran on December 1, was attended by over 500 representatives of more than 250 automobile and auto spare parts production companies from 30 countries and ambassadors of other states to Iran. The number of participants showed the importance of Iran’s auto industry and market at regional level.
Investment opportunities in Iran's automotive industry, Iranian automotive industry’s status quo, Iran’s policies and regulations for attracting foreign investments and investors’ expectations from Iran’s automotive industry were the main topics discussed in this conference, which can be considered as one of the main industrial achievements of the country regarding its dimensions and how it might affect Iran's industry and economy.
Realization of 95% of this year's production plan
One of the main heights of this conference was the clarifications that Iran's Minister of Industry, Mine and Trade, Mohammad-Reza Nematzadeh made on the outlook of this country's car industry.
Ranking first, fifth, and 11th in the region, Asia and the world respectively, producing around three million cars, exporting at least one million sets of cars to global markets and supplying about 25 billion dollars' worth of car parts produced by local part makers are counted as the main objectives to be achieved by 2025.
Nematzadeh noted that Iran's auto industry turnover totaled $12 billion this year, hoping that it would rise by 30 percent next year.
Referring to Iranian carmakers schedule to produce 1.2 million sets of cars by the end of this Iranian year, the minister added, "Exporting five to six billion dollars' worth of parts and manufacturing 120,000 sets of CVs, 30,000 sets of which to be sold in target markets are other goals of Iran's car industry."
"Iran is ranking 17th and 19th in terms of passenger car production and total production respectively, growing by two grades comparing to last year," he said and added, "the country has managed to produce 724.000 cars in the first eight months of the Iranian calendar year, (started on March 21)."
According to him, Iran's Ministry of Industry, Mine and Trade has focused on producing competitive cars following the government's policy of reducing dependence on oil revenues and focusing on export-oriented economy through production and non-oil export, taking advantage of foreign resources.
Foreign investment in car industry
As one of the strategies to reach the car industry's outlook, Nematzadeh emphasized the need for foreign investment in Iran through joint ventures and direct investment, which would lead to the development of this industry's infrastructures.
He also has urged top Iranian industrialists to hold talks with their foreign counterparts heading the giant companies. "Producing strategic parts and establishing test centers can as well help us to produce a joint car that meets global standards, while we can improve our car and part export," asserted the Minister.
"In the meantime, we have considered some tax incentives for foreign investment as 50% tax credit and offering stocks to prominent carmakers, should they export 30% of the production," declared Nematzadeh.
Investment development plans
Referring to investment development plans in Iran's car industry, Nematzadeh mentioned, "We have set the ground for the annual production of three million cars by 2025, production of gas-sipping cars that meet Euro V and VI, annual export of one million cars, design and development of 500 thousand sets of cars in cooperation with well-known companies, manufacturing 50,000 sets of MPVs and establishing automatic gearbox production line to produce 200 thousand sets in collaboration with foreign partners and also production line for light diesel engines."
However, Nematzadeh added that the ministry had other plans to renovate and establish diesel engines for 100 thousand sets of commercial vehicles, improving the quality and quantity of polymer and composite parts and designing and developing ECUs.
It's noteworthy that bettered fuel economy, lowered carbon dioxide emission i.e.100g in kilometer from 190g in kilometer and investment in low capacity, electric and hybrid engines were high on carmakers' agenda.
Focus on export
During the Second Iranian Auto Industry International Conference, IKCO CEO and president also presented a speech which revealed his company's approach regarding foreign investment.
"We are not worried about production and we are mostly focused on after sales service, quality of our cars and export, while designing cars is what matters to us as well," said Yekehzare.
Recalling his ideas about cooperation with foreign partners, IKCO CEO claimed that investment in IKCO operations would be in the fields of production technology, cooperation in designing and developing a joint platform and taking part in foreign partner's export markets.
According to Yekehzare the conference brought about the opportunity for the world's prominent carmakers to get acquainted with the market capacity in Iran, which should be appreciated. "We precisely follow the investment development plans and goals in the car industry and wish to establish car production lines that meet Euro V and VI, produce cars with the least emission, car design in collaboration with famous carmakers and set production lines for main parts and components as automatic gearbox," said the CEO.
The stage for international cooperation is set
Sassan Qorbani, the secretary of the Second Iranian Auto Industry International Conference also discussed that the ground was prepared for foreign investment in Iran and added, "Iran offers a secure and stable market for the investment of international companies."
The secretary said the conference aims to boost domestic and foreign investments, Iran's international cooperation, and improve quality and status of the country’s products.
"Last year's conference led to a close cooperation between carmakers and part makers, which paved the way for achieving production goals and introducing new cars with high percentage of localization," stated Qorbani and added, "there have been many negotiations between Iranian and foreign car and part makers and some of them have been concluded."
Emphasizing the role of this conference as a motor for improving international cooperation, he hoped that getting closer in reaching an agreement between Iran and the 5+1 could bring about the opportunity for boosting international cooperation in Iran car industry.