In the face of international sanctions, the Iranian government has prioritised its domestic auto industry. The government has invested in new capacity and the country's automotive production is reaching record levels. In early March, Reuters reported Iran Khodro as saying that it was setting a new record for output and that it expected to produce 680,000 vehicles for the 2009-2010 Iranian year ended March 21. The automaker, the largest in the Middle East, is bullish on the future and reportedly is aiming to boost production to 730,000 units in the 2010-2011 Iranian year. We are not surprised by this optimistic forecast. It is in line with our view of an uptick in overall vehicle production in Iran in 2010. BMI believes output growth will be driven by government investment in the sector. This is evidenced by the establishment in May of a new car plant that Iran claims is the largest in the Middle East. The US$350mn plant in Kashan, launched by state-run automaker Saipa, will have an annual output capacity of 150,000 units. Saipa was Iran's biggest automaker in the 2009-2010 year, according to official data cited by local press. Saipa accounted for 54% of total vehicle output in 2009. The launch of the plant in Kashan is part of the government's broader goal of minimising the threat of sanctions on local manufacturing. Saipa, increasing local production. Sanctions are an ongoing threat for Iran's auto sector, as evidenced by German automaker Daimler's decision in April to sell its 30% stake in Iranian Diesel Engine Manufacturing. Daimler also announced plans to stop exporting commercial vehicles to Iran. With the government standing behind it, the Iranian automotive industry has a fair amount of protection from external threats such as sanctions. But it cannot be completely sheltered from the global downturn in auto demand. With only moderate auto sales growth estimated for the domestic market, the sector will have to look to export demand to drive production growth. But this strategy has its risks, as the world economy remains on a fragile road to recovery. We foresee total vehicle production rising 5% to 789,066 units this year.

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Iran Autos Report Q3 2010
Published on June 2010
Report Summary
In the face of international sanctions, the Iranian government has prioritised its domestic auto industry. The government has invested
in new capacity and the country's automotive production is reaching record levels. In early March, Reuters reported Iran Khodro as
saying that it was setting a new record for output and that it expected to produce 680,000 vehicles for the 2009-2010 Iranian year
ended March 21. The automaker, the largest in the Middle East, is bullish on the future and reportedly is aiming to boost production to
730,000 units in the 2010-2011 Iranian year.
We are not surprised by this optimistic forecast. It is in line with our view of an uptick in overall vehicle production in Iran in 2010. BMI
believes output growth will be driven by government investment in the sector. This is evidenced by the establishment in May of a new
car plant that Iran claims is the largest in the Middle East. The US$350mn plant in Kashan, launched by state-run automaker Saipa,
will have an annual output capacity of 150,000 units. Saipa was Iran's biggest automaker in the 2009-2010 year, according to official
data cited by local press. Saipa accounted for 54% of total vehicle output in 2009. The launch of the plant in Kashan is part of the
government's broader goal of minimising the threat of sanctions on local manufacturing. Saipa, increasing local production. Sanctions
are an ongoing threat for Iran's auto sector, as evidenced by German automaker Daimler's decision in April to sell its 30% stake in
Iranian Diesel Engine Manufacturing. Daimler also announced plans to stop exporting commercial vehicles to Iran.
With the government standing behind it, the Iranian automotive industry has a fair amount of protection from external threats such as
sanctions. But it cannot be completely sheltered from the global downturn in auto demand. With only moderate auto sales growth
estimated for the domestic market, the sector will have to look to export demand to drive production growth. But this strategy has its
risks, as the world economy remains on a fragile road to recovery. We foresee total vehicle production rising 5% to 789,066 units this
year.
Table of Content
Executive Summary 5
SWOT Analysis ........ 6
Iran Auto Sector SWOT .............. 6
Political SWOT Analysis ............. 7
Economic SWOT Analysis ........... 8
Business Environment SWOT Analysis ........ 9
Regional Overview 10
Change Ahead For The GCC .... 10
Trouble In South Africa And Turkey, Uncertainty In Iran ............ 12
Impact On Production .............. 13
Business Environment Ratings .............. 15
Middle East And Africa Business Environment Ratings ............... 17
Industry Forecast Scenario .... 18
Production And Sales ................ 18
Iran Auto Sector ' Historical Data And Forecasts ..... 18
Trade ...... 20
Table: Iran Autos Sector ' Historical Data And Forecasts ......... 20
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Macroeconomic Forecast Scenario ........ 22
Table: Iran ' Economic Activity, 2007-2014 .............. 25
Competitive Landscape ......... 26
Financial Issues ....... 26
New Fuel Technologies ............. 27
Quality Control ........ 28
Trade Sanctions And The Iranian Car Industry .......... 29
Privatisation ............ 30
Industry Developments ............. 31
IKCO's Foreign Production ..... 34
Table: Samand's Overseas Reach .............. 35
Commercial Vehicles ................ 36
Table: Commercial Vehicle Production ' Share Of Production By Segment And Manufacturer (%) ............... 36
Government Policy .. 37
Foreign Investment .. 38
Suppliers . 38
Regulation................ 40
Company Monitor .. 42
Regional Case Study: Nissan Motor .......... 42
Production ............... 42
Table: Nissan MEA Production Facilities . 44
Sales ....... 45
Table: Nissan MEA Distributors ................ 45
Company Profiles .. 47
Iran Khodro Company (IKCO) . 47
Societe Annonyme Iranienne de Production Automobile (Saipa) .. 50
Pars Khodro ............ 52
IKCO Diesel ............ 53
Saipa Diesel ............. 54
Zamyad ... 55
Country Snapshot: Iran Demographic Data ........... 56
Section 1: Population ............... 56
Table: Demographic Indicators, 2005-2030 ............... 56
Table: Rural/Urban Breakdown, 2005-2030 .............. 57
Section 2: Education And Healthcare ....... 57
Table: Education, 2002-2005 ... 57
Table: Vital Statistics, 2005-2030 .............. 57
Section 3: Labour Market And Spending Power ........ 58
Table: Employment Indicators, 1996-2005 58
Table: Consumer Expenditure, 2000-2012 (US$) ....... 59
Table: Average Annual Manufacturing Wages, 2000-2012 ......... 59
BMI Methodology .. 60
How We Generate Our Forecasting Model 60
Sources ... 61
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