Iran goes it alone!

Seemingly alone amongst Middle Eastern countries, Iran appears intent on developing its own automobile manufacturing industry. Since the 1960s, the Paykan car (a variant of the long defunct Hillman Hunter cal of the UK) has been the mainstay of Iran's domestic car market. Peugeot have been licensing the building of variants of their vehicles in the country since 1990, with each new model containing more local content as a nascent component industry was developed. A similar licensing deal was struck with Hyundai for the manufacture of buses. Currently the Peugeot 206 and 405 Estate, plus various Nissan and Daewoo models, are being built in Iran by the Iran Khodro Industrial Group (IKIG), one of six major automobile manufacturers in Iran--the others being Pars Khodro, Saipa, Kerman Khodro, Bahman Autos, and Kish Khodro who build agricultural machinery, trucks, mini buses, passenger coaches and other commercial vehicles. And in recent months Proton of Malaysia, Renault of France and Mitsubishi of Japan have all reached agreements to build cars in Iran.

Last year President Khatami inaugurated a new IKIG assembly line for the locally designed Samand X7 project car that Iran had been developing since 1996. The Samand is expected to meet part of the country's demand for some 500,000 new cars each year. Iran's Industries and Mines' Minister Ishaq Jahangiri says Iran expects the demand for new cars to double to one million cars a year by 2012, and has said that annual production has now reached 370,000 units and is growing in line with the third development plan (2000-2004) that foresees production reaching 500,000 units by next year.

However, there have been some mixed messages from the government. Last August, Hossein Faraji, a senior official in Iran's Commerce Ministry told the press that Mitsubishi, Toyota, BMW, Hyundai and Lada had been given permits to import 33 types of cars and two types of minibuses. Just days after this announcement, the Iranian Commerce Minister Ali Shariatmadari seemingly rescinded this decision, reportedly saying "until we become confident that the domestic conditions for car imports are ready, we will not allow foreign car imports". It would have been the first time since the 1979 Islamic revolution that Iran had sanctioned car imports, albeit under a heavy import tax regime.