Chinese Car Makers: Threat or Opportunity?

Khodrocar – Chinese car makers own 17 market share in Iran car market while they are mostly imported as CKD parts with roughly 20 percent of localization, they are literally considered as raw imported vehicles that does not help the employment and carry no significant capital for the country, thus now the presence of these car makers in Iran have raised a red flag for Iran automobile industry.

The cabinet suggest the increase of localization of Chinese cars 10 percent annually to toughen the commitment of Chinese automobile corporations to Iran car market. But does it really help Iran to reach its goals as set in the 1404 vision plan?

"The highest production figure of Chinese vehicles in Iran was only 30 thousand units a year, the increase of localization would only lead to increase of the final price of the vehicles because the production figure does not worth it. By the way, the high price tag of the vehicles will also be on customers’ shoulders. Increase of localization most of the time is not logical and economical.” Said Farbod Zaveh, an automobile industry expert.

"Let’s imagine we have localized a vehicle up to 99 percent and the only thing needed to complete the production is just the ECU, what if they could not import that only one part? The vehicles would be useless. Automobile is a machine that even if one part is not available it will worth nothing. Now imagine the 20 percent of current localization is just consist of the production of some elementary parts. That is why it is necessary to stay in relation with the world and the increase of localization is no logical act to play.” He added.

The 1404 vision plan sets the production of 1.7 million units of vehicle that will not be achieved considering the rout the government is taking. Zaveh said in this regard: "You will achieve no goals just by some unreal assumptions. The path of Iran automobile industry was not parallel to what was set in the 1404 vision plan right from day one. That vision plan was written in an impossible format right from the beginning. If we are looking for a 1 million vehicle export figure, first we have to be capable of competing in our domestic market.”

"Chinese car makers did not weaken or improved Iran automobile industry. They just used an opportunity, a weak hole in our system, to reach their goal. It is not Chinese fault, it is ours.” Said Zaveh regarding the effects of Chinese car manufacturers on Iran automobile industry and their threats.

"The total mental, management and economy paradigm must alter basically. The government must stop its unlimited support toward automobile industry and let the economy take over and do its job. The government needs to step aside of decision makings in directing fields and get back to the post of major legislation. The rest are just technical issues that will dissolve automatically.” Added the expert as an approach to survive the situation.

Apparently the government has not used enough of technical advices of the experts in its decision makings. Let us have fingers crossed that they will fine the good solution out of this chaos before it is too late.

Khodrocar Journalist and Translator: Mostafa Anisi