Overview of Iran’s Automobile Market in 2021

Iran’s automobile production decreased 3.7% in FY 2021 from the previous year to 900,794 units. Since the resumption of economic sanctions by the United States in 2018, production has remained below 1 million units. Since domestic production is not meeting the Iranian government's projected domestic demand of 1.5 million units, some models are being sold through a lottery system. In an effort to improve production scale and competitiveness, the privatization of state-owned automakers Iran Khodro and Saipa, which account for 90% of all domestic automobile production, is promoted.

Iran: Recent Developments

Production Trends

・Iran's automobile production in FY 2021 decreased 3.7% from the previous year to 900,794 units. - Iran Khodro’s production dropped 6.1% to 451,121 units in FY 2021, the Peugeot brand accounting for 297,817 units. Saipa’s production declined as well, going down 4.0% to 304,533 units. On the other hand, Pars Khodro raised production 6.6% to 109,838 units. - Production of the Kia Pride, which was the top production model from 2003 to 2020, ended in FY 2020.

Policy Trends

・In May 2022, the Ministry of Industry, Mine and Trade said the privatization of Iran Khodro and Saipa, state-owned enterprises under its jurisdiction, had entered the final stages. - The purpose is to recover production scale and acquire competitiveness. In particular, the low quality and safety performance of the two companies' products are seen as problematic. - However, even after privatization, the Ministry of Industry, Mine and Trade intends to present production plans to both companies. ・At the end of May 2022, the Ministry of Industry, Mine and Trade lifted the ban on automobile imports for the first time in three years. - This was done because the domestic demand for automobiles is 1.5 million units per year, while Iran’s domestic production capacity is around 1 million units. - As a result of this measure, imports of about 100,000 units per year are expected.

Economic Trends

・The GDP growth rate in 2021 was 4.0% year-on-year. The growth forecast for 2022 is 3.0% (IMF, as of April 2022). ・In June 2022, Iran applied for membership in BRICS.

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