Iran has made great advancements in the parts manufacturing industry in recent years, where more than 1,850 parts manufacturing companies are operating at full throttle in the country.
Today, Iran is the 20th largest automaker in the world and one of the largest in Asia, with annual production of more than 1.2 million.
The automotive industry is considered a strategic industry in the country, but it requires a parts manufacturing industry as a support for its movement and production cycle.
Therefore, the parts manufacturing industry is of great importance as the foundation of many industrial units.
Parts manufacturing is completely separate from the automotive industry in terms of expertise, facilities, and infrastructure, but they are members of the same family. This is because producing good, high-quality parts leads to producing high-quality vehicles, and as a result, increases the safety of the vehicle and its occupants.
The economic power of any country, after the military power which is considered an important deterrent tool for defending the country and its territory, is of great importance.
After the Islamic Revolution in 1979, sanctions have been a significant component of US policy towards Iran.
When the Trump administration reimposed sanctions on Iran in August 2018 after a brief hiatus, it reserved Washington’s first hammer blow for the auto and parts manufacturing industry, because of its crucial role in the country’s economy.
Just as the sector appeared all set for a long hibernation, domestic manufacturers sprang into action and began producing the parts which Iran depended on imports to assemble cars.
Currently, Iran is a country with an indigenous automotive sector with a local capacity to assemble semi knocked-down (SKD) and completely knocked-down (CKD) kits.
The auto parts industry is responsible for producing and delivering advanced and high-quality parts that directly affect the safety, quality, and performance of vehicles.
The development of advanced automotive components requires the use of complex and advanced technologies that pose high technical challenges in research, development and implementation.
Compliance with strict industry standards and regulations that affect the innovation and development of new components is a significant challenge.
Moreover, innovation in the automotive component industry always entails high costs in research and development, testing and production. Managing these costs and achieving profitability is a challenge for many companies, especially those that are small and medium-sized enterprises.
Hence, the automotive parts industry is an opportunity for growth, sustainable development, and the creation of added value for the industry and society.
Having overcome technical complexity and cost control issues, Iranian companies need to value innovation in order to be able to strengthen their position in the competitive and dynamic automotive market environment and serve a more productive and sustainable society.
For the automotive industry to have high production strength and capability, Iran must have a capable parts manufacturing industry. The country seems to have realized that contrary to the traditional thinking, parts manufacturing is more important than producing cars.
The private sector, as the cornerstone of the economy, is key to achieving this goal and fostering growth in the industry.
Having said that, there is a huge market of 600-700 million people in Iran’s neighborhood which remains untapped for the most part.
The country’s back-to-back membership in the regional groupings such as the BRICS group of emerging countries, the Shanghai Cooperation Council and the Eurasian Economic Union has unlocked markets for its goods and services.
Iran is seeking to develop cooperation with Russia in various fields, including the automotive industry and parts manufacturing, Ambassador Kazem Jalali said this week.
Russia is fresh from holding its MIMS Automobility Moscow show which 15 Iranian companies attended to showcase their capabilities in the field of automotive parts, services, and technologies.
Many economists believe there is need for macroeconomic reforms which are difficult and time-consuming.
The current auto industry has the full state support and a monopoly on the market which, many critics say, has resulted in a laggard sector with no serious efforts to improve quality despite frequent price hikes.
To begin with, the government, instead of being an active player, should have the role of a regulator and leave the job to the private sector.
This would open up the environment for the growth of private and cooperative companies and enable them to flourish.
