The history of auto making in Iran can be divided into various eras, but the most significant era started in March 1994, the pioneer of which was Iran Khodro company which laid the foundations of “auto making” within the Iranian industry. Before this period started, the industry was evolving and the main task was just “assembling the auto parts which used to be designed and manufactured outside the country”, and not designing, manufacturing and exporting of automobiles.
The first practice for local manufacturing was Paykan and then the experience was used to make Peugeot 405 cars. The project of new Paykan (X7) cars is an indication of a movement to launch designing and manufacturing of parts domestically.

An important link in the production chain is procuring the auto parts, which is the responsibility of Sapco. At first, in 1994, Sapco was set up as the main core for supplying local auto parts and with the growing trend of localization in auto parts production, a main part of the activity came under the control of Sapco. In early 2000, it was decided that Sapco should be responsible for all procurement activities of auto parts, which is now the most significant role of Sapco.
At first about 120 auto parts manufacturers were covered by Sapco. That production chain was not satisfactorily organized. Now about 550 parts manufacturers supply auto parts to Sapco. These were selected after assessment of the qualifications of about 4,000 manufacturers.

Two major elements are involved in “exporting” auto parts or services to international markets: the first is to acquire necessary capabilities to offer high quality products, and the second is providing foreign exchange needs. The program we adopted for exporting parts, was at a value of $19 m. We have now on our agenda both providing parts to domestic auto industry and exporting products to other countries.

The foreign exchange balance is discussed for each individual contract signed for a specific type of car. For example, regarding Peugeot 206, we should export parts to France on the basis of foreign exchange equivalent. At the same time, Sapco provides parts to Iran Khodro Diesel for minibuses, buses and trucks which are from Mercedes group.
Regarding Peugeot 206 cars, Sapco attempts to establish a direct relationship between domestic parts manufacturers and Peugeot manufacturers. This takes some time. Such a relationship may be in form of an engineering or a joint venture contract. The foreign exchange needed for producing a Peugeot 206 is about $6,000. But this has not been finalized yet.