Three projects for painting and assembling vehicles as well as engine manufacture were inaugurated in the presence of the first vice president, Mohammad Reza Aref, and Minister of Industries and Mines Esshaq Jahangiri.

Addressing the ceremony, the vice president noted that during recent years, the auto industry has not only improved qualitatively, but has excelled other industries in quantitative terms too, so that, its added value has exceeded the projections pertaining to the initial years of the Third Economic Development Plan.

Auto industry has always been amongst the priorities of Iran’s industrial sector. During the 1990s—after the approval of the Auto Law—the industry entered a new phase of high cost and risk, which is promising. Referring to situation of the auto industry during past years, Aref noted that the performance of the auto industry was studied in 2000 and experts reached the conclusion that banning imports was still necessary for supporting domestic automobile industry.

Today, however, officials believe that we have reached a position that we are confident that we can compete in the field. However, the fuel consumption of Iranian cars is higher than the global average and automakers are advised to produce cars with higher fuel-efficiency. Increasing annual gasoline imports is another reason for producing low-consumption vehicles.

In addition to global markets, the auto industry must also focus on domestic markets, addressing client needs and boosting quality. The official also touched upon the spare parts industry, opining that the industry should not be limited to the country, but Iranian parts must find their way to global markets.

Further in the ceremony, Minister of Industries and Mines, Esshaq Jahangiri noted that the auto industry enjoyed a special status in the world industry and was monopolized by a number of international automakers. Today, domestic automakers—who are aware of their weaknesses—are not only planning to eliminate them, but also aim to catch up with major international automakers. Jahangiri opined that the auto industry would become one of the main axes of the country’s industrial development during the upcoming years.

Referring to the 18% share of the auto industry in the country’s added value he noted that the industry grew by 30% in production, accounting for the highest figure among domestic industries. Domestic automakers have obtained all environmental standards; and among domestically produced cars only Sinad and Sahra Jeep have problems in this regard. The manufacturers have been warned that if the problems are not solved, their production will be discontinued.

Meanwhile, Managing Director of Iran Khodro Company, Manouchehr Manteghi stated that the company ranked 17^th among 142 world automakers during the current year. Furthermore, Iran Khodro’s production increased by 59% during the past year, enjoying the highest growth rate among world automakers! Iran Khodro enjoyed 63% of Iran’s domestic auto market during the past year.

The managing director announced that the company has so far pursued a market push strategy, but it is considering switching to a market pull strategy and that the company eyes cooperation with international automakers. Iran Khodro plans to manufacture luxury cars in cooperation with global producers and obtaining a modern platform for low-price automobiles.

The official also mentioned the production of a new model of Samand sedan starting in 2004 and a new model of Peugeot 206 from 2005 as the future plans of the company. Iran Khodro is currently negotiating with Benz for the production of luxury cars and the talks may be finalized by December.

Manteghi also stated that the company is reducing share of Paykan among its products. The share of Paykan in the company’s production line should reach 24% by the yearend and further reduced to 8% by 2005 so it can be completely discontinued thereafter.

Regarding Iran Khodro’s plans for boosting quality of its products, it was noted that the implementation of the "Sigma 6 Project" would lead to the manufacture of flawless products within the next 4-5 years. The company also intends to export 12-15% of its vehicles.

Referring to the company’s plan for reducing prices through declining surplus costs of auto production, Manteghi stated that the plan aims to reduce the cost for Peugeot 405 model.

The inauguration of new production lines is consistent with the company’s policy of promoting the quality of Iran Khodro products. The new painting line is capable of spraying 45 cars per hour, which can be increased to 50 cars. The new painting hall of the company is the biggest of its kind in the Middle East, which has been made operational by Iranian engineers.

The total cost of design and commissioning the line amounted to 350 billion rials and 8 million euros. The quality mark of the new painting hall is 70 while that of the French Peugeot is 63. The line for machining cylinders and engine assembly has a daily capacity of 600 cars, which can be increased to 1,000. The line cost $8 million plus 50 billion rials and has saved the country 70 million euros in a single year.

The managing director of Iran Khodro added that the TU5 manufacture line, which is a modern engine whose qualitative standards would be valid until 2010, would come on-stream within six months.