Iran's Auto Industry Plagued With Daily Losses Of $3.7 Million
An Iranian auto industry expert says the country’s state-owned carmakers are incurring daily losses of $3.7 million, totaling over one billion dollars annually.
An Iranian auto industry expert says the country’s state-owned carmakers are incurring daily losses of $3.7 million, totaling over one billion dollars annually.
Farhad Ehteshamzad, the head of Iran Auto Importers Association, said in an interview Friday that the huge loss is the direct result of the government’s interventions in the auto industry.
Iran’s car industry is mired with a wide range of problems. The main manufacturers are owned by the state and enjoy huge incentives and support from the government. Despite the losses, Iran’s automotive industry is the third most active industry in the country, after oil and gas sectors, accounting for about 10% of Iran's GDP and 4% of the workforce (700,000 persons).It was valued in 2020 at $26.4 billion by India-based Modor Intelligence, which forecasts 10 percent sectoral annual growth to 2026. This would be possible without sanctions and with a new infusion of investments and foreign partnerships.
However, the carmakers are unable to satisfy domestic demand and they keep raising prices to levels several times higher than international prices of similar cars. This is partly the reason why imported cars are also expensive. For example, one Tehran showroom was selling an unused 2017 Mercedes-Benz E 200 class for about six times the price of the newest model in global markets. The government has long restricted car imports, turning the country into a vast parking lot of dilapidated cars. In recent years, it announced plans to import cars but the number of units hitting the market insignificant. A total of 241 vehicles were imported in the first quarter of the current Iranian year (March 21-June 21).
There are about a dozen state-and quasi-state-owned automakers in Iran, of which two -- Iran Khodro and Saipa -- accounted for 94% of the total domestic production, with nearly 1,500,000 units of light and heavy vehicles produced annually, mostly sub-standard and older foreign models. Criticizing Iranian automakers for low-quality vehicles responsible for a high rate of road accident casualties, Iran’s traffic police said last year that substandard and unsafe cars lead to at least 17,000 deaths and 300,000 injuries every year.
Ehteshamzad added that considering the huge loss of the state-run carmakers, decisions should be made whether to privatize these companies. He said, "For this industry, significant investments have been made, and a substantial amount of money has been spent to reach this point. If this industry collapses, we will lose a considerable amount of capital."
Highlighting the complexities and dangers of privatization, fraught with corruption in Iran, he said decisions about such fundamental steps need to be made at the highest levels of government. Criticizing the unrealistic figures in the administration's budget bill, he said that the government has set a revenue target of 320 trillion rials ($640 million) from high import taxes on cars.
For years critics and politicians have criticized the government-controlled auto industry and have referred to a “mafia” running the money-losing and inefficient sector. In 2019, it was revealed that these carmakers owed $9 billion, a considerable sum in Iran, due to corruption and mismanagement. "Widespread financial corruption has turned automakers in Iran into a powerful Mafia," a lawmaker said at the time. In 2019, the then CEO of Iran Khodro was arrested on charges of corruption and several managers from Saipa are also in jail.
Also on Friday, another car industry expert Hassan Karimi Sanjari criticized the high price of foreign cars assembled in Iran, saying that a Chinese car that costs around $10,000 is sold for about $30,000."In addition to huge profits, mismanagement in assembly companies has also affected prices, leading to increased costs for assembled cars, ultimately borne by the people. On the other hand, for assembled cars, a monopolistic market has been created, resulting from inflation, sanctions, and the insufficient import of cars to meet demand."
According to Ehteshamzad, the government is only providing lip service to Iran’s car industry, making the sector stuck in a quagmire of “speech-therapy” in a sense that officials only deliver speeches about the car industry instead of acting to deliver results.
The case involves Hamid Nouri, a key figure implicated in the 1988 massacre of Iranian political prisoners, a massacre that left thousands dead and many more scarred for life. While the appeal court's verdict is still pending, it's worth reflecting on the trial's significance and what it represents for justice, human rights, and the pursuit of accountability.
The 1988 massacre of political prisoners in Iran is a tragedy that should never have happened. It is a stain on the pages of history, a moment when the world should have stood up and cried out against the unspeakable atrocities that took place. But justice was elusive for decades. Families of the victims longed for answers, and survivors carried the physical and emotional scars of that horrendous period.
Fast forward to November 2019, when the Swedish authorities arrested Hamid Nouri, a man alleged to have played a pivotal role in the 1988 massacre. Sweden's decision to act under the principle of universal jurisdiction was a beacon of hope for those who had waited for justice for 35 years. It was a reminder that justice knows no borders, that human rights are universal, and that those responsible for heinous crimes must be held accountable, no matter where they hide.
The subsequent trial in Sweden was not just a legal proceeding; it was a message to the world that the pursuit of justice and accountability remains steadfast even decades later. It demonstrated the power of international law to reach across time and distance to hold individuals accountable for crimes against humanity. The trial was a symbol of solidarity with the victims and survivors of the 1988 massacre, their pain acknowledged, and their voices heard.
As we await the verdict from the Swedish appeal court, we should take a moment to commend Sweden for its commitment to justice, human rights, and the rule of law. By conducting this trial, Sweden has exemplified the principles of international justice and demonstrated that no one is above the law. It has shown that nations can play a crucial role in holding perpetrators accountable for their actions, even when their crimes were committed in a different time and place.
We also thank the Swedish government for its dedication to upholding human rights. By pursuing this case, Sweden has sent a clear message to the international community that justice is not a mere concept but a tangible, achievable goal. It has provided a glimmer of hope to countless victims of human rights abuses worldwide, reminding them that they, too, can seek justice.
The road to justice can be long and arduous, but it is a journey worth embarking upon. As the appeal court's verdict approaches, let us remember that it represents not just a legal outcome but a triumph of humanity over cruelty. Regardless of the final judgment, Sweden's commitment to this trial is a testament to the enduring importance of accountability and justice. It is a beacon of hope for all those who have suffered and reminds us that the pursuit of justice is a cause worth fighting for.
In the end, whether the appeal court confirms the life sentence or not, one thing is certain: December 19, 2023, will be a day to remember, not just for Sweden but for all those who believe in the power of justice and accountability to heal wounds, restore dignity, and build a more just and humane world.
This opinion article was submitted by Laleh & Lawdan Bazargan, sisters of Bijan Bazargan one of the victims of the 1988 Massacre, and Plaintiffs in Hamid Nouri’s Case.
Opinion expressed by the authors are not necessarily the views of Iran International.