Two knots of handing over government shares in automobile industry
The Privatization Organization has published the list of 304 companies subject to transfer in 1402. The names of Iran Khodro and Saipa are also in this list. Although the pricing of the car and the shares of the car manufacturers are still undecided, however, the government has put the transfer of the car manufacturers' shares on the agenda, as in previous years. What is clear is that car pricing and Tudli shares can be considered as the main nodes for the transfer of car manufacturing shares.
Khodrocar - The issue of handing over government shares in the country's major automobile companies has been one of the goals of different governments for the past decade. In the government of Ebrahim Raisi, the issue of handing over the government's shares in the country's two automobile factories was discussed from the beginning, and the president in his eight decrees issued in March 1400 regarding the automobile industry, ordered that this issue be determined by September 1401. But there is still no news about the transfer of these shares, and it can be said that the issue is more complicated than the transfer of a percentage of the government's shares.
Nevertheless, this year also, the privatization organization has included the government's shares in two major automobile companies in the list of transfers of 1402. But as mentioned, there are two main knots in handing over these shares. One of these nodes is the cyclical stocks of car manufacturers. Previously, "World of Economy" in a report titled "Formal Privatization of Automobiles" based on the report of the Majlis Research Center, addressed the challenges that cyclical stocks create for the privatization of automobile factories. Based on this, if we do not consider the government's 5.71% shares in Iran Khodro and 17.31% of its shares in Saipa, still 21.12% of Iran Khodro's shares and 15.6% of Saipa's shares are in the possession of public companies that are affiliated and controlled by the government.
Also, 25.24% of Iran Khodro's shares and 39.66% of Saipa's shares are under the cyclical shareholding system. This is the reason why even though the government's direct shares in automobile factories are limited, its management is still in the hands of the government. In the definition of the cyclical shareholding of automobile manufacturers, it can be said that the subsidiaries of Iran Khodro and Saipa directly and indirectly bought the shares of Iran Khodro and Saipa and created a closed cycle of ownership. The volume of this part of shares is 25.24% in Iran Khodro and 39.66% in Saipa.
It can be said that cyclical stocks are also managed by the government. Therefore, it is quite evident that handing over only 5.71% of the government's shares in Iran Khodro and 17.31% of its shares in Saipa, which are listed by the privatization organization, will not help the so-called privatization of automobile manufacturers. Accordingly, in the first step of privatization, the role of these cyclical stocks should be determined.
Another issue that creates a challenge in handing over the country's major car manufacturers is the issue of command pricing. Mandatory pricing over the past years has caused the country's two car manufacturing giants (according to the latest official statistics) to face accumulated losses of 130 thousand billion tomans. According to the calculations made earlier by "Economy World" in a report titled "Deficit of 30 percent of the income of automobile manufacturers", the country's two largest car manufacturers incur an average loss of 29 million tomans for the production and sale of each car. In such a situation, it is certain that no investor will be willing to buy large shares of Iran Khodro and Saipa.
In addition, after privatization, no investor will accept that the government determines the production schedule and price of the products for another privatized company. This is evidenced by the challenges between private car manufacturers and the competition council over the past two months regarding the pricing of assembled cars, and these companies are still not willing to comply with the competition council. Therefore, before handing over Iran Khodro and Saipa, it is necessary to determine the mandated pricing of the products of these automobile manufacturers.
Now, while both of these knots remain blind and there is no solution to open them, the privatization organization has included the names of these two companies in the list of transfers for this year, although it does not seem that this matter will go beyond the paper. One of the thousands of reasons for this claim is the government's reluctance to cut its hand from taking over in this industry. Automobile industry is of great importance in terms of political economy for policy makers. This industry is one of the driving industries of the country, which involves about 60 other industries. In addition, it can be said that during the past years, the automotive industry has been a kind of showcase for the industrial policies of the policymakers. Therefore, the government has no desire to lose the ownership of this industry in general, of course, this is in direct conflict with the policy maker's claims.
The last state of privatization
Even though the country's two largest car manufacturers are on the list of transfers this year, our follow-ups show that the issue of the transfer of government shares in car factories has been left silent since several months ago. It was the summer of 1401 when a joint meeting was held between the Ministry of Security and the Ministry of Economy regarding the transfer of these two major car manufacturers. In this meeting, the head of the Privatization Organization, the head of the Development Organization (as a shareholder of these two companies) and also Manouchehr Lagi, the Deputy of Transportation Industries of the Ministry of Security were present. This meeting was repeated several times and also three brainstorming sessions were held in Amir Kabir, Sharif and Allameh Tabatabai universities. The sum of these meetings finally resulted in three scenarios for the privatization of automobile factories.
The first scenario was that if 71.5% of the government's shares in Iran Khodro and 17.31% of its shares in Saipa are kept and cyclical shares are handed over, this issue would lead to the privatization of large automobile companies. The second scenario was the transfer of both cyclical shares and direct shares of the government in automobile factories. The final scenario was that the common shares would be bought by Iran Khodro or Saipa. Finally, a meeting minutes were signed by Hossein Gurbanzadeh, the head of the Privatization Organization, Ali Nabovi, the head of the Development Organization, and also Manouchehr Raogi, based on which the cyclical shares of car manufacturers and mandatory pricing were to be determined by the end of 1401.
Of course, it should be noted that this agenda was not binding. The final step was that it was decided that the Minister of Economy and the Minister of Security should reach an agreement on one of the three mentioned scenarios. However, after months of this, nothing has happened. It seems that the assignment of this issue is pending the establishment of the new minister's team.
One of the scenarios that has been discussed in the past years is that the shares of automobile companies are transferred in a phased manner, that is, todali and cyclical shares, subsidiary companies and main companies are transferred separately. This idea was proposed during the ministry of Reza Rahmani, Minister of Peace Hassan Rouhani. However, in addition to the previous process, there is a question whether the fragmentation of these stocks is in the interest of the country's automobile industry or not?
The answer of many automotive experts to this question is negative. The argument of the opponents is that fragmenting these shares would make car production out of economic scale. Of course, even now, the scale of car production in Iran is not very economical, and some people suggest that the two companies Iran Khodro and Saipa should be merged with each other so that the production reaches an economic scale. In spite of all these problems, we have to wait and see where the fate of the government's shares in automobile factories will end up.
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