By Mahnaz Abdi

Domestic manufacturing of imported auto parts to be strengthened

July 21, 2019

TEHRAN- In mid-May, Iranian Industry, Mining and Trade Minister Reza Rahmani issued a directive on “strengthening domestic manufacturing of imported auto parts”.

Addressing two of his deputies, Farshad Moqimi, deputy for industrial affairs, and Mohammad-Baqer Ali, the board chairman of Iran’s Industrial Development and Renovation Organization (IDRO), the minister put emphasis on using the highest potential of human resources for strengthening domestic manufacturing of auto parts which are currently imported to the country.

Highlighting the orders of the Supreme Leader of Islamic Revolution Ayatollah Seyed Ali Khamenei on supporting production in the current Iranian calendar year (began on March 21), which is named the year of “Pickup in Production” by the supreme leader, Rahmani stressed that cooperation among all car makers, auto part manufacturers, knowledge-based companies and enterprises is vital for strengthening domestic manufacturing of imported auto parts.

This movement should be all-out promoted to combat sanctions and also prevent from exit of foreign currency from the country, the minister noted.

He said the policy of domestic manufacturing of auto parts should be seriously followed up, and in this due the capable manufacturers should be seriously supported.

Given that 1.25 million vehicles are anticipated to be manufactured in the country during the current Iranian calendar year (ends on March 19, 2020), the part manufacturers will need 150 trillion rials of working capital (about $3.571 billion) for the purchase of raw materials and other required items.

As previously announced by Industry, Mining and Trade Ministry, Iranian car makers manufactured 42,623 vehicles during the first Iranian calendar month of Farvardin (March 21-April 20, 2019).

The ministry’s data show that car manufacturing in Iran has fallen 47.2 percent in the first month of this year from 80,794 cars manufactured in the same month of the previous year.

10-section plan to improve statue of car makers

The ministry has also unveiled a 10-section plan on early February for improving the status of car makers, in which the two major car makers of the country have been ordered to support auto part manufacturers.

Mentioning this plan, Farshad Moqimi said: “Under the condition when the enemy has put the country’s auto manufacturing industry under the pressure, we should try to reduce our reliance on imports in this sector specially imports of auto parts.”

On Saturday, the official announced that the country’s car makers will soon sign deals worth $7.4 trillion rials (about €157.4 million) with domestic spare parts manufacturers, which will save the country €85 million in a year.

According to Moqimi, based on the mentioned contracts, 32 domestic car parts manufacturers will manufacture 35 different items which are currently being supplied by foreign manufacturers.

Moqimi also said that five specialized workshops and meetings are scheduled to be held this year in order to discuss and explore ways for indigenization of automobile industry.

 Regulations for removing hurdles

Earlier this month, Moqimi had also stressed that the regulations should be in a way that remove the barriers in the way of domestic production.

“When a regulation is set, it may remove a problem but creates another one. Taking this issue into account and also considering the special current condition of the country, some special approach should be taken when setting the regulations”, the official said.

In late May, Moqimi had announced that Industry, Mining and Trade Ministry will launch a comprehensive system for registration of domestically-made products in near future.

 Research on agenda

Following the orders of Industry Ministry, domestic car makers have started a research movement in recent weeks titled “Domestic Manufacturing of Imported Parts”.

The movement is aimed at creating the condition and opportunity for cooperation among domestic manufacturers, knowledge-based companies and startups.

If being supported seriously by the related officials and also implemented through serious contribution of the scientific centers and knowledge-based companies, this movement will pave the ground for the country’s auto part industry to achieve modern technology of manufacturing sensitive parts.

And if domestic manufacturing of auto parts will be materialized, domestic auto makers’ needs will be met, manufacturing of vehicles will increase, needs of auto market will be met in a normal process in which the prices will be based on supply and demand which will all lead to formation of production and supply in an economic environment, a stabilized and calm market and production sector.

Although, it should be considered that while domestic manufacturing of auto parts will lead the country toward self-reliance, “quality” should not be ignored in this process.

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