Iran Car Production Nears 1 Million In 2005

Iranian car manufacturers made a record of nearly one million vehicles in 2005, making the Islamic republic the Middle East's leading car producer, reports said Jan. 7. Industries ministry statistics published in newspapers said the country produced 984,000 vehicles in 2005, including 884,000 passenger cars and 104,000 heavy vehicles, altogether worth US$ 11.6 billion.

Iran's two major car manufacturers, Iran Khodro and Saipa, produced 553,000 and 413,000 vehicles respectively in 2005, with smaller companies making up the rest.

Iran's car industry was heavily subsidized in the early 1990s in a bid to prevent the exit of hard currency through foreign car purchases although production was limited to less than 50,000 cars a year. With increased revenues due to a buoyant world oil market, Tehran in March reduced the import tax on foreign cars from 300% to 100%.

Iran imported 10,000 cars in 2005 and exported 15,000, mainly to Syria and the former Soviet Union. Iranian companies are hoping to improve the quality of their vehicles in a bid to increase exports to 100,000 cars in 2007.

Iran's auto market is tightly protected, and foreign companies have to strike minority-stake joint-venture deals with local firms or allow their cars to be assembled from imported or locally made components.

Iran's traditional domestic car, the Paykan, was taken out of production in March, bringing to an end more than three decades of service. Before its demise, the Paykan was already being eclipsed by more modern models made by France's Peugeot, South Korea's Kia and Japan's Nissan, in partnership with Iranian manufacturers. France's Renault has also set up shop to build the low-budget L-90, or Logan.

DaimlerChrysler announced a deal in February for public sector auto giant Iran Khodro Diesel (IKD) to assemble a limited numbers of luxury Mercedes-Benz cars in the Islamic republic, initially 2,500 a year expanding to 5,000.

Copyright Agence France-Presse, 2006

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