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Path to Mergers

Mohammad Reza Soroush, Managing Director, Bahman Group

The problem with the Iranian auto industry seems to be the economical scale of production. Only when this problem is removed, could the auto industry be expected to be competitive in quality and price. If the production scale is increased, we have to see whether there is domestic demand for this production scale. In today’s highly competitive global auto industry even those manufacturers with a production capacity of two million automobiles are giving up production. They are either shutting down or merging with others. If, according to the Iranian Third Economic Development Plan, the environment is to become competitive and non-tariff barriers are to be removed in the customs, we have to be able to compete with major foreign manufacturers. To be able to compete we have to adopt new visions toward the auto industry. The increasing number of mergers around the world indicates that by 2005 there are going to be five or six major auto manufacturers and others are going to operate under these umbrellas.

For Iran to have an auto industry new strategies have to be adopted to turn the current production scale into a proper scale. To avoid problems in the future, we must determine the direction toward which the auto industry will head, the companies we are going to cooperate and merge with, and have a proper definition and division of work when working with our partners in order to achieve economical production.