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Solution in Joint Ventures

The main difficulty for parts manufacturers is market instability and import of cars

Ramezan-Ali Pourmojib, Managing Director, Shetab-Kar Company

Shetab Kar is an affiliate of Iran Khodro Company and produces about 17 different parts for Paykan and Peugeot cars by employing 500 staffs.
A major policy which is pursued by giant auto manufacturers today is to transfer their production capacity to developing countries and this can contribute to exports promotion and prosperity of auto parts market. Western countries prefer to transfer such industries and instead, focus on the high-tech fields like satellites, IT and microchips.
Since each Iranian car can create two employment opportunities and the Iranian society has young and educated population, the auto industry would be effective in elimination of unemployment in the country. However, in the absence of customs tariffs, it is not possible to compete with foreign rivals. Iranian auto making companies should form joint ventures with foreign manufacturers and this would contribute to the growth of domestic production of auto parts.
This is while the country should prepare itself for competition on the global market and this needs precise planning. The main reason the Iranian companies cannot compete with foreign car producers is the issue of quality and higher final prices.
The best way to enter such competition, is adopting a long-term plan for the auto industry. In 3-5 years, Iranian auto industry should be able to form joint ventures with the world top companies in order to receive the modern technology and know-how for development of the production capacity.
Iranian manufacturers should look at sustainable and lasting exports, while the main difficulty for parts manufacturers is market instability and import of cars.
Advantages of the Iranian auto industry can be short-listed as:

• Higher value added comparing with other industries

• Less investment for each job opportunity it creates

• Technology-intensive

• The driving force for other industries including steel, textile, aluminum, etc.

• Can raise capacity to a large extent because of high consumption in the world

• The growing market in the country, while in other countries the market may be saturated.

Domestic Supply of Toolkits

Auto manufacturers must be supported so that parts manufacturers would prosper

Mohammad-Mehdi Mazloumian, Managing Director, Mehdi Tools Co.

Auto manufacturing companies in Iran belong to one holding company. There are many factories, which cooperate with each other to get successful in business. In Iran, the government should support auto manufacturing companies so that the affiliate companies which manufacture auto parts can grow and prosper by keeping pace with the modern technology.
In the past years about 20% of the parts needed by auto industries were made domestically but now in the case of some cars, about 100% of parts are provided by domestic manufacturers and this is a notable progress, particularly the fact that these industries conform with the modern world standards.
Regarding the imports of cars, if such imports are allowed without any limitation, then the business security of auto parts manufacturers and other affiliated companies would be threatened and they would certainly stop growing, thus the employment opportunities which these industries now create, would be lost.
Mehdi Tools Company provides 90% of toolkits for Paykan, Peugeot, bus, minibus and Benz trucks and moreover, the tools needed for Saipa products are also made in this company. The company produces a total of 760 types of products. Having established fine relations with four Italian companies, Mehdi Tools is able to provide all factories with their needed manual tools. This is a good progress for the country since it can save on foreign exchange and create more job opportunities on the domestic scene. The company has also been able to export its products for some wholesale companies with “Mehdi Tools” trade name.
The government should prevent the import of foreign tools which are illegally labeled with American or German brands and suffer poor quality.