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Substituting the
National Vehicle
Directors of Iran Khodro Company knew
that production of Paykan sedans is not to cease in the Iranian year 1383
(2004-05). They had plans to produce 25,000 Paykans in 1384; that is, 12,500
vehicles in the first Iranian month of Farvardin (March 21 – April 20)
followed by 12,500 Paykans in the following month (Ordibehesht). The company
was to manufacture 320 Paykans per day during March 26 – 31 followed by 670
Paykans per day from April 3 until the early June. Now, even if we phased out
Paykan, could we claim that we had discarded it altogether?
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The main problem with the vehicle is its polluting
engine and, for this reason, Ministry of Petroleum agreed to pay $300
million to Iran Khodro to help the company phase out the vehicle. |
The answer is negative. The main problem
with the vehicle is its polluting engine and, for this reason, Ministry of
Petroleum agreed to pay $300 million to Iran Khodro to help the company phase
out the vehicle. However, the company is to increase number of Paykan pickups
by twofold and also increase production of Peugeot RD (operating on Paykan
engine) by 70% to 85,000.
In other words, about 130,000 new
vehicles carrying Paykan’s engine will be produced in 1384.
39 Years Ago:
Iran National was
established by Khayyami brothers in 1963 with initial capital of 100 million
rials, but it took four years before production of Paykan started in 1966.
The contract for manufacturing Paykan
goes back to 1966 when Ali Akbar Khayyami, Mahmoud Khayyami and Ahmad Khayyami
went to England and signed a contract with the British Rotes Company for
production of Paykan and 51 Paykan sedans were produced in the same year.
Paykan was an ideal car from the
viewpoint of appearance, body space, and engine acceleration for the Iranian
people four decades ago and rapidly found a place among the youth and the
middle class. Therefore, its production increased from 6,600 in 1967 to 12,100
in 1968, 22,000 in 1970 and, finally 74,000 in 1975.
The year 1977 was the peak of Paykan
production, which is a record of 98,000, which was not repeated until 20 years
ago. Public enthusiasm for Paykan led to production of five different models
from 1967 to 1978 including working, luxury, youth, state car, and pickup
models.
Rotes was renamed Talbot in the early
years of 1970s. During those years apart from body, battery, tires and some
simple parts, all other parts of Paykan were imported from England. Mahmoud
Khayyami (the most innovative of Khayyamis) took over Iran National Co. as
managing director and took the first steps toward automobile manufacture in
Iran. He was the first to talk about self-sufficiency in producing Paykan in
1973.
Replacing Paykan,
a 28-Year Old Idea:
It is interesting to know that
Khayyami decided to manufacture more up-to-date cars including Peugeot 304,
Peugeot 504, and Fiat 131 in 1977 to replace Paykan. He knew that Paykan is
not suitable for the 1980s anymore. Victory of the Islamic Revolution in 1979
caused problems for private investors and Khayyami left Iran like many
productive and nonproductive investors. However, he did not take his capital
out of Iran. Total capital of the company upon victory of the Islamic
Revolution stood at 15 billion rials. Paykan manufacture took a nosedive after
1979 and fell from 84,000 to 56,000 in 1980 and 49,000 in 1982. however,
improvement in oil revenues caused a resurge in Paykan production to 72,000 in
1983-84.
Problems
resulting from war with Iraq, on the one hand, and reduction of oil revenues,
on the other hand, caused production of Paykan sedan to fall to 28,000 in
1985, 17,000 in 1978, and 9,300 in 1988. Termination of war, however, did not
lead to repeated increase in Paykan production, which fell below 4,000 in
1989-90.
Revival of
Paykan:
Iran Khodro, which was mainly
involved in supplying war requirements during 1986-1988, was given a new
mission after the war. The domestic market was badly in need of sedan
production and something should have been done. During the same year,
directors of Industrial Development and Renovation Organization as well as
Iran Khodro went to England and bought 20 machines related to production line
of Talbot at 8 million pounds (about $14 million). Since that time, Paykan was
revived and its production was increased from 3,900 to 27,000 in 1991 and
32,000 in 1992.
Gharavi and
Revival of Paykan’s Name:
Gharavi, a former
managing director of Iran Khodro, was criticized by many experts, but it was
revealed in the course of time that his role in 1994 was no less than
Khayyami’s in 1973. he took over as managing director of Iran Khodro in 1994
and, for the first time, drew up a seven-year plan for development of
automobile industry. Figures produced by him for production of Paykan looked
like whimsical to others.
Emphasizing the
policy of domesticating Paykan production up to 95%, he increased production
of Paykan sedans to 61,000 in 1995, 80,000 in 1996 and 90,000 in 1999 and, to
the surprise of observers, to 110,000 a year later, thus breaking Khayyami’s
22-year record. However, his insistence on continued Paykan production after
2001 was not agreeable for industrial policymakers.
A Dangerous
Remark: "Stopping Paykan Production":
The mere talking about
stopping Paykan production has been problematic since many years ago and many
authorities were not willing to even think about it.
At least, since 10 years ago, officials
have repeated promises for halting Paykan production, but they refused to give
an exact date. In 2000, Seyed Abrishami, the then deputy minister of
industries, told reporters that Paykan production would be stopped in the near
future and this increased price of various kinds of sedans by 5-8 million
rials. At that time, Paykan accounted for 44% of market share and any
disruption in its production would have had serious effects on sedan market.
The natural reaction of the market in
those years, enabled Gharavi and his supporters to appear stronger and note
that production of Paykan will continue as long as there are customers to buy
it.
After that unsuccessful experience for
testing automobile market, any talk about ceasing Paykan production was
abandoned up to about 2003. however, Eshaq Jahangiri, minister of industries
and mines in the second Cabinet of President Khatami, was determined to get
rid of this vehicle of 1980s at any rate and it has been rumored that a reason
for dismissing Gharavi was his insistence on producing Paykan.
To do this, the minister took a decisive
step by encouraging Industrial Development and Renovation Organization to
produce another sedan car to replace Paykan. The controversial contract for
producing L-90 was along the same lines and its production is to reach two
times that of Paykan by 2006. At present, cessation of Paykan production will
not worry anybody because its share from the Iranian market has decreased to
20%. at the present.
Surpassing
2-Million Limit:
Production of Paykan
surpassed 2.03 million in March and is projected to halt at 2.6 million.
Interestingly, production of Paykan started to soar just when it was supposed
to stop! Therefore, its production increased from 40,000 in 1994 to 89,000 in
1998, 110,000 in 2000 and 145,000 in 2003. Last year, all the said records
were broken and Paykan production reached 156,000 (14,000 per month).
Famous Like Fiat
and Volkswagen:
Paykan Avenger is one of the most famous brand names in the world. Like
Volkswagen and Fiat 131, which dominated global markets for three or four
decades, Paykan Avenger ruled Iran’s production lines for four decades.
However, production line of Paykan was dismantled in England in 1970s, but
Iran transferred and even indigenized its technology. Paykan was produced in
Iran as a die-hard vehicle with vast aftersales services and suitable for
climatic conditions of Iran while its production was stopped in England some
30 years ago.
A Substitute for
Paykan:
Phasing out Paykan will reduce Iran
Khodro’s production and the company will produce at least 600,000 vehicles
during the current year. However, none of them will be priced less than 7
million tomans. Other companies mainly produce lower numbers of luxury cars
while PK produced by Pars Khodro is low-quality. However, Saipa is faring
better. If Pride sedans were offered at less than six million tomans, they
could be a good substitute for Paykan, though its cost of maintenance is
higher and its body is weaker than Paykan.
About 240,000 Prides were produced last
year, but if it is to replace Paykan, at least 400,000 Prides should be
produced during the current year.
Peugeot RD can also substitute Paykan,
but it is 1.5 million tomans more expensive and is still suffering from some
technical flaws.
A Year without
Substitute:
Paykan will not be substituted
in 1384 (2005-06). If Iranian people want a new vehicle with good aftersales
services, they will have to wait until 1385 because at that time L-90 or the
new make of Peugeot 206 will be produced at lower price to meet the needs of
customers of medium-sized cars. |
