Market Share: The market share of the auto industry in Iran is now 20%, which will definitely increase by the end of Third Economic Development Plan. Today, the highest share in our industrial market belongs to auto industry, and chemical industries stand at the second place, while non-metal minerals and textile are the next. This is mainly because of the fact that auto and petrochemical industries have played significant roles in recent years, and have contributed significantly to the growth of industrial GDP.
The share of industry has also gained a larger share in the total GDP of the country. The industry had a share equal to 15% in the country’s GDP in 1997, but today the figure is 18.2%, though this is not a satisfactory percentage. The ideal share for the industry is above 30%.

Status of Auto Industry: The latest statistics of 1996 showed that 110,000 automobiles were produced in that year, while in 1997 this figure reached 165,000 and in 1998 it was 198,000. This figure is 240,000 for 1999, and in 2000, 320,000 cars have been produced. The prediction for next year is over 400,000 cars and in the year after that 500,000 cars are to be manufactured. All the investment which was due to be made by IDRO has been fulfilled.
The total production capacity of Iran Khodro and Saipa is now 500,000 automobiles per year, but parts manufacturers should make a notable progress to reach that capacity.

Prices: The price of Iranian made cars is lower than foreign markets. For example, a “Peugeot 405” car is $16,000 in France, but what Iran Khodro gets for each car is only about $12,800. We admit that the quality of our cars is lower than the French cars, because the technology for making parts in Iran is not as advanced as the French technology. There is a huge capacity in the Iranian market, and many people like to enter this market; that is why the quality of cars is a topic of discussion these days.

Auto Imports: In the past 20 years we have seen fluctuations in the oil prices; the country has suffered many hardships when the prices decreased sharply two years ago. Oil prices are high now, but nobody can predict what will happen in the future. Then it is not wise to spend the country’s excess revenues from oil for importing such consumer goods as cars. Rather, these revenues should be spent primarily on industrial projects which are now being “financed” by foreigners.
When a car is produced and exported, it creates two job opportunities in the producing country. If we import cars, we are actually “exporting” job opportunities to the country of origin. There are many factories, which manufacture parts for IDRO, and they will have to close down if the country imports cars instead of manufacturing them. This will escalate the unemployment problem in the country. We can produce a wide range of cars with higher quality by importing parts from abroad; this way we would get a higher profit. But this is not right due to the unemployment problem which it creates in the country.
Today, competition is not about occupation of land; it is about seizing new markets. Under such circumstances we should defend and keep our domestic markets, not to submit it to the foreigners. In spite of this fact, there are some types of vehicles which are not manufactured here, such as special cars for the disabled. They should be allowed to be imported.
Iran has been able to export some Xantia cars to the markets which Citroen Company tries to introduce itself. However, we have not been successful to absorb foreign investments in auto industry.

Attraction of Foreign Investment: China has practical experience in absorption of foreign investments. But statistics show that 83% of the attracted investments belong to the Chinese expatriates, and only 17% belong to foreigners. Regarding Iran, it is said that there are two million Iranians living in the United States only; these Iranian Americans like to invest part of their savings in their home country. The fact is that there are some difficulties in the way of absorption of such capital which should be removed. We should find mechanisms to attract investments of Iranians living abroad before we aim to attract foreign investment.
I propose that some investment companies be set up for that and some projects be launched, primarily in the Free Trade Zones. The projects can cover a wide range such as oil, gas, petrochemicals, steel, automobiles, etc., and should be led and supervised by expatriates themselves.