The Forum for Partners in Iran's Marketplace
 
 
 
 
 
 
 
 
 
 
 
     

July 2004 / No. 30


Auto Industry

Saipa Diesel Speeding Ahead

The Middle East market is among high priorities for marketing at
Saipa Diesel. About 95% of our exported products have ended up in
that market during the past years.

Alireza Ghamgosar, Managing Director of Saipa Diesel Co.

Iranian carmakers are preparing to enter the competitive international sphere at a time that the industry has undergone considerable developments across the world. Such developments have given rise to a series of threats and opportunities for our country.

A cursory look at important trends of the Iranian automobile industry will show that its most prominent feature is being overcome by the trend of globalization. This is evident both with regard to car manufacturers and global markets.

Along its development course, our automobile industry must inevitably determine its position in relation to international car industry, especially that Iranís accession to the World Trade Organization will greatly affect the Iranian economy and industry, including automobile industry.

1. How can Iranian automakers take part in the global competition?

Stated briefly, adopting the following strategies can speed up the march of the Iranian automobile industry toward globalization:

  • Unification of industrial automobile manufacture capacities through more cooperation among domestic automakers;

  • Expanding cooperation with foreign automakers through manufacturing joint products under license of renowned companies as well as overseas marketing and sales activities and cooperation in such fields as design and development;

  • Taking advantage of joint platform projects between domestic and foreign automakers to elevate production scale and reduce costs of research and production;

  • Bolstering parts manufacturing sector through encouraging part manufacturers to cooperate with global manufacturers of auto parts within a framework of producing under licenses and the like.

2. How does Saipa Diesel Company intend to achieve a more active presence in global markets?

The company is considering plans for the entire global production market the most important of which include:

  • Defined Strategy: Having a defined strategy to delineate our position in the world, both at the present time and in the future;

  • Having a Certain Brand: Developing a brand and protecting its identity is among our most important goals for profitable development.

  • Design and Research: One of our important plans is to encourage design and research. Major components of this plan include research and development (R&D), development of new products, changing engineering design of major automobile parts, defining goals as well as defining and developing products.

  • Production Process: This plan includes capability for designing production processes, ability to design control and quality assurance processes, ability to manufacture products needed for production processes and taking advantage of pure production system.

  • Marketing and Sales: This is among our plans to launch powerful marketing, provide widespread after sales services, and embark on purposeful exports.

  • Procurement Cascade: A global automaker would need a powerful network of part manufacturers to accompany it in an orderly manner.

3. What is the volume of Saipa Dieselís exports? Where do these exports go to?

Our automobile industry must inevitably determine its position in relation to international car industry, especially that Iranís accession to the World Trade Organization will greatly affect the Iranian economy and industry

Saipa Diesel has increased exports during recent years, so that, it exported 500 various kinds of trucks and trailers worth about $35 million in 2001. Developing exports has constituted one of the most important strategies and plans of Saipa Diesel during recent years.

In view of its export activities during the past years as well as conformity of its products to accepted standards of target markets, the company has set its target markets as follows:

A) Middle East

B) African countries

C) Persian Gulf littoral states

D) Commonwealth of Independent States (CIS)

The Middle East market is among high priorities for marketing at Saipa Diesel. About 95% of our exported products have ended up in that market during the past years. We are going to take advantage of the social concept strategy for marketing in the Middle East and similar markets. One of the main characteristics of that concept is paying attention to the demands and interests of the target marketís consumers.

4. Does Saipa Diesel observe environmental regulations and global standards?

The following are some of the major steps taken by Saipa Diesel to observe environmental regulations and conform to the national automobile document:

Choosing modern, state-of-the-art products conforming to the latest European technologies and observing environmental standards regarding pollutants emitting from their engines for the following purposes:

A) Reducing concentration of fuel pollutants emitting from vehicle engines

B) Reducing fuel consumption by modern automobiles

Discarding outdated F12 products and transferring technology for modern products of Volvo including FH12, FM9 and Renault Midlum conforming to the latest technological achievements of Europe.

5. Does Saipa Diesel have any plans for manufacturing new makes of Volvo and Renault products?

To supply domestic needs and continue cooperation with Volvo and Renault companies, Saipa Diesel is planning to manufacture the vehicles shown in table 1. The necessary studies are currently underway in this regard.

Table 1

Product Name

FH12 (6*2) trailer truck

NH12 (6*4) trailer truck

FM9 (6*2) trailer truck

FM12 (8*4) truck

Badsan Midlum truck

6. Are Volvo and Renault trucks assembled as full CKD (completely knocked down) or domestically manufactured parts are also used?

To maximize use of domestically manufactured parts in order to take advantage of customs duties exemptions and reduce forex costs, the company has taken measures as outlined in table 2.

Table 2

Product Name

Domestic Manufacture (%)

FH12

39.36

NH12

26.86

FM9 (4*2)

27.41

FM9 (6*2)

31.7

MIDLUM

About 30

Meanwhile the approach taken by Saipa Diesel to increase domestic manufacture of needed parts includes:

  • Supporting companies supplying vehicle parts (i.e. Kaveh Khodro Company) in their efforts to establish quality assurance management

  • Continued assessment and audit of part makers that have signed contracts through Kaveh Khodro and helping them upgrade their processes and products

  • Reducing number and diversity of domestically produced parts to boost quality

  • Inquiring about customersí viewpoints regarding domestic manufacture of parts in order to increase quality and eliminating defects

7. Is the International Auto Exhibition useful for automobile manufacturing companies, especially Saipa Diesel?

Tehranís International Auto Exhibition presents the latest achievements of the automobile industry and related industries and presents an annual report of the industryís performance. The exhibition also showcases the sectorís capacities and investment opportunities for foreign companies.

A summary of the exhibitionís benefits runs as follows:

  • A review of performance of automobile and related industries

  • A place for consultation and exchange of viewpoints and experiences between Iranian and foreign companies

  • Presenting technological capabilities and potentials

  • Familiarizing visitors with activities of automobile manufacturing companies and their products

  • Attracting foreign investments to the part making sector

  • Demonstration of organizational thoughts aimed at meeting the needs of the society

 

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