Iran Plans To Produce Two Million Cars By 2015

While admitting that sanctions had started to affect the industry, the head of major auto manufacturer Irankhodro Manouchehr Manteghi on July 11 said that Iran plans to double its car production to two million a year by 2015. "Iran made more than 1.1 million cars in 2006. Our objective is to manufacture at least two million in 2015," he said.

Irankhodro is the largest car manufacturer in the Middle East and one of Iran's largest, with its production level slightly above that of Saipa, the country's second largest manufacturer. Manteghi said Irankhodro itself produced 635,000 cars in 2006, and planned to boost production to 1.2 million annually in 2015, 200,000 of which would be made in its factories outside Iran.

But Manteghi said that financial sanctions and U.S. pressure on Iran over its refusal to suspend sensitive nuclear work had begun to affect the car industry. The sanctions "have not had a significant effect as far as technology and material are concerned, but there has been an effect regarding financing sources. Our financial costs have risen by 15%," he said.

Irankhodro has contracts with close allies Belarus, Syria and Venezuela to install assembly lines in those countries.

Manteghi said he hoped production of the Logan (Tondar 90), a joint project with France's Renault, would ramp up to an annual 300,000 in 2008. "We hope to reach this capacity with Renault's help as the demand exists. The minimum production for this year will be 80,000. He said that Iran had exported 23,000 cars last year, mainly the Peugeot 206 model and Iran's national car the Samand.

Manteghi said that a large number of cars produced by Irankhodro functioned well on compressed natural gas (CNG) as well as petrol, which Iran rationed amid protests in June in a bid to cut down on hefty imports. The government has urged car owners to switch to natural gas instead of petrol, which is sold at a heavily subsidized price of 10 cents a liter. "Our aim is to produce cars that meet international regulations and use little fuel and cars that can also run on gas in response to the rationing policy," Manteghi said.