Iran’s Auto Industry Faces Crisis Amid Currency Shortages and Policy Missteps

As the country’s auto parts manufacturers issue a “red alert,” the Iranian automotive industry is experiencing one of its most challenging periods in recent memory. The core of the crisis lies in a deepening currency shortage—a result of flawed foreign exchange policies—which now threatens to paralyze the entire supply chain.

According to Khodrokar News, the failure of the Central Bank to allocate foreign currency on time has left many parts manufacturers unable to import raw materials and semi-finished components. This has already led to halted production lines and widespread concern within the industry. Suppliers warn that if the current trajectory continues, the collapse of the automotive supply chain is imminent.

Supply Chain Bottlenecks Escalate

Parts manufacturers urgently require foreign currency to clear imported goods from customs and resume production. However, ongoing delays in the currency allocation process, compounded by inefficiencies in the import registration system, have caused a severe backlog. These disruptions are not only slowing production but also increasing operational costs and amplifying the risk of full-scale shutdowns.

The ripple effects of this crisis are already being felt—car prices are rising rapidly, industry competitiveness is eroding, and layoffs are beginning to spread. Parts manufacturers have called for immediate government action, including emergency currency allocation and reforms in banking and customs procedures, to prevent a broader economic and social disaster.

A Fragile Ecosystem Under Threat

The auto industry’s heavy dependence on a stable parts supply chain means that any disruption reverberates throughout the economy. A breakdown in production capacity reduces the supply of vehicles, fuels price hikes in the open market, and adds to inflationary pressures. Furthermore, thousands of jobs—ranging from factory workers to engineers—are at risk, which could trigger a wave of unemployment and social instability.

At stake is the future of an industry that, directly and indirectly, supports nearly one million jobs across the country. If the supply chain collapses, the loss of employment could drastically reduce household incomes and consumer purchasing power, further dragging down economic activity.

Broader Economic Repercussions

In addition to job losses and inflation, continued inaction could lead to a sharp decline in investor confidence. A prolonged shutdown in such a vital industrial sector would signal systemic risk and discourage both domestic and foreign investment—threatening long-term economic growth.

There are also upstream effects to consider. As auto production declines, so too does demand for raw materials such as steel, plastics, and chemicals—negatively affecting related industries and reducing their output.

A Call for Urgent Government Action

To avoid a full-blown economic crisis, experts insist that the government must intervene swiftly and decisively. Financial support, a reformed and responsive foreign exchange policy, and targeted tax incentives could restore hope and stability to the parts manufacturing sector.

The survival of Iran’s auto industry depends on immediate coordination between the Central Bank, customs authorities, and economic policymakers. Without such intervention, the current crisis could escalate into a long-term economic and social emergency.