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Already with 1 Million Vehicles, Iran's Annual Production Capacity Will Increase to 1.5 Million by the End of 2010Large-scale production of Renault Logan/Fiat Palio/VW Gol/Kia Rio is leading Iran's production expansion

Jun. 7, 2006 No.476


  Iran's automobile production totaled 984,000 in 2005 (calendar year: announced by Iranian Ministry of Industries & Mines. The figures include 884,000 passenger cars). Looking at production by auto manufacturer: production by the Iran Khodro, which mainly manufactures Peugeot models, numbered 553,000, and production by the SAIPA group, which mainly produces Kia models, was 413,000.

  The total annual production capacity of passenger cars and SUVs/pickups by Iranian auto manufactures has already amounted to 1.5 million (including planned production capacity); CSM Worldwide also forecasts that Iran's light vehicle production will amount to 1,489,000 in 2011.

  Production projects for vehicles such as the Renault L-90 (Logan), Fiat Palio series, and the VW Gol are currently leading the expansion of production in Iran. With regard to the production projects by Renault and Fiat, the start of the production is delayed from the initial plan; Renault and Fiat plan an initial production volume of 300,000 and 100,000 (to be increased to 250,000 in the future), respectively. VW, which has already started production of the Gol, currently has an annual production capacity of 20,000 while VW's Iranian partner has indicated its intention of boosting the capacity to 200,000. In addition, Kia, which formed a partnership with SAIPA, started production of the Rio in 2005 with an annual production capacity of 100,000 in addition to 200,000 Pride-base models.


  Concerning Japanese auto manufacturers, SAIPA manufactures Nissan model vehicles at its subsidiary. Iran Khodro plans to begin producing Suzuki Grand Vitara at its subsidiary starting in the autumn of 2006. Bahman Group, which manufactures Mazda's former models, newly initiated production of the Mitsubishi Pajero in 2005. Besides, Toyota started import/sales of passenger cars in 2005 while Fuji Heavy Industries will begin import/sales of the Legacy in 2006.

(Note) With regard to the development of the automotive industry in Iran until the first half of the first 10 years of the 21st century, please refer to the Oct. 2004 issue of MarkLines Report No.311 "Car Production in Iran Grows to 700,000; Renault Starts Production in 2006 http://www.marklines.com/en/report/rep311_200410".
■Vehicle production in Iran (forecast by CSM Worldwide) (1,000 units)
Vehicle production in Iran (forecast by CSM Worldwide)
■Vehicle production by auto manufacturer in Iran (unit)
  2003 2004 2005 2006 2007 2008 2009 2010 2011
Iran Khodro 414,809 485,800 537,013 537,685 614,116 673,016 689,995 708,814 720,171
SAIPA 201,812 241,807 285,549 314,761 320,398 369,540 371,841 406,962 422,836
Others 42,759 60,122 94,283 181,144 210,361 247,560 249,961 315,351 346,108
Total 659,380 787,729 916,845 1,033,590 1,144,875 1,290,116 1,311,797 1,431,127 1,489,115
Source: CSM Worldwide "Light Vehicle Forecast (April, 2006)"
(Note) 1. Total production volume of passenger cars and light commercial vehicles with gross vehicle weight of less than 3.5 tons. Figures for 2003-2005 are also from CSM Worldwide.
2. All rights to this table are reserved. To copy this table, you must obtain permission from CSM Worldwide.

■Production capacity of major auto manufacturers in Iran

  Local production
company
Production model Annual production capacity
(1,000 units)
Remarks
Renault Iran Khodro Renault L-90 150 Production is expected to begin
at the end of 2006
Pars Khodro Renault L-90 150
Renault Megane 15 Production is expected to begin
in the summer of 2006
PSA Iran Khodro Peugeot 405 600 Including vehicles developed in Iran
Peugeot 206 Including vehicles jointly developed
with the Iran side
SAIPA Citroen Xantia 20 Production started in 2001
DCX Iran Khodro
Diesel
M-Benz E-Class 2 Production started in the autumn of 2005
VW BAMCO VW Gol  20 Production started in May 2005
Fiat PIDF Palio series 100 Start of production is delayed
(initially planned to start in the middle of 2005)
Multipla/Doblo
Hyundai SAIPA Kia Pride 200 Including vehicles developed in Iran
Kia Rio 100 Production started in May 2005
Rayen Co. Hyundai Verna 20 Production started in Sep. 2004
Hyundai Avante Production started in Aug. 2005
Nissan Pars Khodro Maxima, SUV, others 26 Including vehicles based on the Renault R5
Suzuki Iran Khodro
Khorasan
Suzuki G. Vitara 33 Production is planned to begin
in the autumn of 2006
Mitsubishi Bahman Group Mitsubishi Pajero 50 Production started in May 2005
Mazda Mazda 323, Pickup  
Total 1,486
(Note) 1. Production capacity for passenger cars/SUVs/pickups.
Trucks/buses are not included. DCX represents DaimlerChrysler.
2. Iran Khodro Diesel and Iran Khodro Khorasan are Iran Khodro's subsidiaries.
Pars Khodro is SAIPA's subsidiary. BAMCO and Rayen Co. are Kerman Khodro's affiliated companies.
3. Iran's export of finished vehicles in 2005 numbered approximately 15,000 mainly for Syria and the former republics of the Soviet Union.
The Iranian government is reported to be targeting exports of 100,000 for 2007.

■Production of models based on PSA, Hyundai, Renault, and VW will increase to 440,000, 330,000, 300,000, and 100,000 units, respectively, by the end of 2010

  According to CSM Worldwide, Iran's light vehicle production will expand to 1.49 million in 2011 (up 570,000 from 2005). By Design Parent, including vehicles jointly developed with Iranian auto manufacturers, production of PSA model-base vehicles will increase to 440,000, Hyundai-base models to 330,000, Renault/Nissan-base models to 300,000, and VW-base models to 100,000.

■Iran: Light Vehicle Production by Design Parent (forecast by CSM Worldwide) (unit)
Design Parent Brand 2005 2006 2007 2008 2009 2010 2011
Brilliance-Jinbei Zhonghua   1,960 8,468 14,952 18,012 22,554 27,955
Chery Chery 2,147 5,348 7,395 10,559 10,521 11,918 11,933
DaimlerChrysler M-Benz   2,640 3,924 4,296 2,653 4,417 4,698
Fiat Fiat 684 7,435 11,303 32,150 44,371 64,184 67,503
Ford Mazda 13,996 15,359 16,232 17,243 22,966 26,742 28,488
Land Rover 7            
Total 14,003 15,359 16,232 17,243 22,966 26,742 28,488
Hyundai Hyundai 7,485 27,654 35,759 39,687 42,190 50,137 58,806
Kia 305,000 317,926 238,420 235,292 241,226 268,942 271,555
Total 312,485 345,580 274,179 274,979 283,416 319,079 330,361
Iran Khodro Iran Khodro 103,297 16,875     116,504 120,665 126,541
Kish Khodro Kish Khodro 61            
Mitsubishi Mitsubishi 399 3,765 5,851 6,761   10,266 12,559
Proton 3,693 6,616 8,817 528      
Total 4,092 10,381 14,668 7,289   10,266 12,559
Proton Proton   3,748 10,903 15,104 19,173 19,916 17,255
PSA Iran Khodro 76,808 99,685 113,076 116,323      
Peugeot 356,908 402,599 396,434 412,265 417,254 426,396 426,506
Citroen 12,984 16,522 21,031 22,937 9,398 11,623 15,199
Total 446,700 518,806 530,541 551,525 426,652 438,019 441,705
Renault/Nissan Renault   34,087 168,147 248,594 269,751 281,249 296,861
Nissan 7,217 10,092 10,690 8,953 10,441 11,363 11,239
SAIPA 19,661 20,601 10,906        
Total 26,878 64,780 189,743 257,547 280,192 292,612 308,100
SAIC Ssangyong 482 1,765 1,561 982 587 560 507
SAIPA SAIPA 968 1,081 1,062 905 700 514 400
Suzuki Suzuki   1,064 3,568 5,724 8,226 9,565 10,202
Volkswagen Volkswagen 5,048 27,404 47,404 66,481 49,169 57,570 65,896
Chery   9,364 23,924 30,380 28,655 32,546 35,012
Total 5,048 36,768 71,328 96,861 77,824 90,116 100,908
Grand Total 916,845 1,033,590 1,144,875 1,290,116 1,311,797 1,431,127 1,489,115
Source: CSM Worldwide "Light Vehicle Forecast (April, 2006)"
(Note) 1. Light Vehicle consists of passenger cars and light commercial vehicles with gross vehicle weight of less than 3.5 tons. Figures for 2005 are also from CSM Worldwide.
2. All rights of the table are reserved. To copy the table, you must obtain permission from CSM Worldwide.

■Renault will begin production by commissioning of the Megane in the summer of 2006 and also production of Logan at the end of 2006

  In 2004, Renault established Renault Pars, a supervising company for the L-90 (Logan) project, jointly with AIDCO (AIDCO is a joint venture company between IDRO, a state-controlled company under the umbrella of Iranian Ministry of Industries & Mines, and Iran Khodro, an auto manufacture, as well as SAIPA). In the field of automotive industry, Renault Pars is the first company in which a foreign capital was approved to hold more than a 50% stake; it is owned 51% by Renault. Renault Pars does not have its own production facilities and outsources production of the L-90 to Iran Khodro and SAIPA's subsidiary - Pars Khodro. Production was originally planned to begin in the middle of 2006, but is currently expected to start at the end of 2006.

  With respect to the export of the L-90, it is reported that in May 2006 an agreement was reached on the addition of Renault's export of 20% of the production to the contract document for the L-90 project (by request from the Iranian government, export of about 20% of the production, which Renault was reported to expect, was made clear).

  Prior to the launch of production of the L-90, Renault is expected to begin production of the Megane at Pars Khodro by commissioning in the summer of 2006.

■Renault's production base in Iran: outline of Renault Pars

Production
model
Renault Megane, (planned) Renault L-90 (Logan)
Outline and
recent trends
  Renault holds a 51% stake.
  In 2004, the L-90 project was contracted among four parties - Renault, IDRO (Industrial Development and Renovation Organization), Iran Khodro, and SAIPA. Based on the contract, Renault and AIDCO (Automotive Industry Development Company) jointly established Renault Pars. IDRO is a state-controlled company under the umbrella of the Iranian Ministry of Industries & Mines and supports the establishment of high-tech companies. AIDCO is a state-controlled company established by IDRO, Iran Khodro, and SAIPA and supports a strategic partnership between Iranian and overseas auto manufacturers.
  Renault Pars does not have a production capacity of its own and outsources production to Iran Khodro and SAIPA's subsidiary, Pars Khodro. Initially, the two companies have a combined total annual production capacity of 300,000, each having 150,000.
  Renault plans the initial local-content ratio for L-90 to be slightly more than 50%, which is then planned to be increased to 60-70%.
  It is reported that there was a difference in views for the export plan for the L-90 between the Iranian government and Renault. In April 2006, the Minister of Iranian Ministry of Industries & Mines announced the suspension of the L-90 production project.
  Renault Pars said that Renault expected to export about 20% of production, but that it was not assured. In May 2006, Renault and the Iranian Ministry of Industries & Mines announced that they had reached an agreement on the export of the L-90 (it is reported that they would export 20% of production).
  Production of the L-90 was originally planned to begin in the middle of 2006. In March 2006, it was reported to be delayed until November. As of March 2006, some suppliers had not concluded a contract to manufacture parts to be used in the L-90. Therefore, production may not begin in 2006.
  Renault Pars also outsources production of the Megane to SAIPA's subsidiary, Pars Khodro.

■PSA, jointly with Iran Khodro, developed the 206 Aryan and is currently developing a model based on the 307

  PSA, tying up with Iran's biggest auto manufacturer Iran Khodro, produces the Peugeot 405/206. PSA cooperates in the development of a domestically-produced vehicles in Iran; the company supplied the powertrain used in the 405 to Iran Khodro's proprietary model Samand, production of which began in 2002, and based on the 206, jointly developed the Peugeot 206 Aryan, production of which started at the end of 2005. These two models are the export models of Iran Khodro.

  PSA and Iran Khodro are currently developing a new-model vehicle based on the 307, planning to begin production as of about 2007 and to export the product as well.

  PSA also produces Citroen Xantia at Iran's second largest auto manufacturer - SAIPA.

■PSA's production base in Iran: Iran Khodro Auto Manufacturing Co.

Production
model
Production model Peugeot 405 sedan/station wagon, Peugeot 1600 RD (based on 405),
Peugeot Pars (based on 405), Iran Khodro Samand,
Peugeot 206, Peugeot 206 Aryan (206 sedan)
Renault L-90 (production by commissioning is planned)
Outline and
recent trends
  Iran-based IDRO's affiliated company.
  Annual production capacity: 750,000 including 150,000 of L-90, which the company produces by commissioning from Renault Pars.
  Production of Peugeot 206 Aryan started at the end of 2005. Planning annual production of 120,000. Aryan is a sedan model of 206, which PSA jointly developed with Iran Khodro. The local-content ratio of parts made in Iran is approximately 50%.
  Production of Paykan (based on Hillman Hunter), which started in 1967, was terminated in the spring of 2005.

■DaimlerChrysler started producing the M-Benz E-Class at its production base for commercial vehicles in 2005

  In the autumn of 2005, DaimlerChrysler (DCX) initiated production of E-Class at Iran Khodro Diesel, with which it forms a partnership on the production of M-Benz brand trucks and minibuses.

  It is reported that DCX and Iran Khodro Diesel are currently negotiating the introduction of a new model, which replaces the current commercial vehicle model. Production of the new model is expected to start as early as in 2007.

■DaimlerChrysler's production base in Iran: Iran Khodro Diesel Co.

Production
model
M-Benz Truck/Minibus, Hyundai Minibus, Neoplan large bus
M-Benz E-Class
Outline and
recent trends
  Iran Khodro holds a 63% stake.
  Annual production capacity for commercial vehicles: 26,000 (15,000 trucks, 7,000 minibuses, and 4,000 buses). The annual production capacity of E-Class is planned to be 2,000 in the middle of 2007. The company is targeting annual production of 5,000 in the future.
  SKD production of E-Class began in the autumn of 2005. CKD production is planned to begin in the spring of 2006.

■VW began producing the Gol in 2005 and is currently considering production of Bora as well

  VW, tying up with Kerman Khodro, started production of VW Gol in May 2005 at Bam Auto Manufacturing Co. (BAMCO), which is an affiliated company of Kerman Khodro. VW's base in Brazil supplies the parts to be used in the VW Gol. Though the current production capacity is 20,000, Kerman Khodro is reported to have proposed to VW that it will boost the capacity at BAMCO to 200,000 by 2008.

  VW is currently considering small-lot production of the VW Bora at BAMCO (it is reported to be about 200 a year). In addition, the company started importing finished vehicles of the Touareg and Passat through BAMCO in 2006.

■VW's production base in Iran: Bam Auto Manufacturing Co.

Production
model
VW Gol, (under consideration) VW Bora
Outline and
recent trends
  Kerman Khodro's affiliated company.
  Annual production capacity: 20,000. Production started in April 2005. Production in 2005 numbered approximately 5,000.
  The Iran side indicates its intention to boost the annual production capacity to 200,000 by 2008. The investment in the enhancement totals approximately USD166.5 million. The company proposes that the local-content ratio be boosted to 70% by manufacturing MT/engine/axle in Iran.
  The parent company, Kerman Khodro, is established with 51% by IDRO and 49% by the former Daewoo Motor. Kerman Khodro produced Daewoo brand vehicles for about 10 years since 1992. Currently, the company itself does not manufacture vehicles.

■Fiat plans production of the Palio series as well as Multipla/Doblo including a bi-fuel spec. model

  In January 2005, Fiat reached an agreement with the Iran-based PIDF (Pars Industrial Development Foundation) on production of Fiat brand vehicles. Under the initial plan, the company was scheduled to begin producing the Fiat Palio series, the Palio/Siena/Palio the Weekend/Strada Pickup/Strada MPV, and the Multipla/Doblo with an annual production volume of 100,000 in the middle of 2005, but Fiat's financial difficulties delayed the schedule.

  With regard to Multipla/Doblo, production of a bi-fuel spec. model, which is capable of using gasoline and CNG (compressed natural gas), is included in the plan.

(Note) Though Iran is an oil-producing country, it is also a gasoline-importing country as it imports about half of its consumption. The company pays a portion of its oil revenues for the import of gasoline. In recent years, the import of gasoline has been increasing 10% annually and is currently putting pressure on the country's budget. The Iranian government is pressing ahead on the construction of CNG stations and the introduction of CNG buses in addition to a plan to scrape the fuel-inefficient old model vehicles.

■Fiat's production base in Iran: PIDF (Pars Industrial Development Foundation) Co.

Production
model
(planned)
(All models are under Fiat brand) Palio hatchback, Siena sedan,
Palio Weekend station wagon, Strada Pickup, Strada MPV, Multipla/Doblo
Outline and
recent trends
  Annual production capacity: 100,000 initially. Planned to be boosted to 250,000 in the future. PIDF plans a total investment of 200 million Euros.
  Production was planned to begin in the middle of 2005, but is currently suspended since Fiat is not able to provide capital as originally planned. Fiat says that it would provide technical support.

■In the Hyundai group, Kia forms a partnership with SAIPA while Hyundai ties up with Kerman Khodro

  Kia, which belongs to the Hyundai Motor group, reached an agreement with SAIPA on the production of the Rio in 2004, starting production in May 2005. The company formed a partnership with SAIPA in the early 1990s, providing license for the production of Pride. SAIPA has already increased the local-content ratio of the Pride to 85% and has been manufacturing the Pride-based 141 since 2003. SAIPA has a total annual production capacity of 300,000-200,000 for the Pride including 141, and 100,000 for Rio.

  Hyundai Motor, through its partnership with Kerman Khodro, initiated production of the Verna (European name: Accent) in September 2004 and the Avante (European name: Elantra) in August 2005 at Kerman Khodro's affiliated company - Rayen Vehicle Manufacturing Co. (Rayen Co.). In addition, Hyundai manufactures the Hyundai Chorus minibus at Iran Khodro Diesel.

■Hyundai's production base in Iran: Rayen Vehicle Manufacturing Co.

Production
model
Hyundai Verna, Hyundai Avante
Outline and
recent trends
  Kerman Khodro's affiliated company
  Initial production volume is 20,000-30,000. Hyundai plans 100,000 in the future.
  Production of Verna and Avante started in Sep. 2004 and Aug. 2005, respectively.

■Kia's production base in Iran: SAIPA

Production
model
SAIPA Nasim/Saba/Safari (either model is the former Kia Pride),
141 (SAIPA developed the model based on Pride), Kia Rio
SAIPA 701 Caravan (proprietary model)
Citroen Xantia
Outline and
recent trends
  Iran-based IDRO's affiliated company.
  Annual production capacity: 320,000 (Pride-base model: 200,000, Rio 100,000, Xantia 20,000).
  Established as Citroen (Iran) in 1966.
  Production of Kia Pride started in 1994. In 1998, the company achieved a local-content ratio of 85%.
  In 2001, production of Citroen Xantia began.
  Production of Kia Rio began in May 2005.

■Trend of Japanese auto manufacturers: production by commissioning by Nissan/Mazda/Mitsubishi Motors/Suzuki

■Toyota started importing finished vehicles in 2005 while Fuji Heavy Industries plans to import finished vehicles of the Legacy

  Along with the lowering of import tariffs on passenger cars in March 2005, Toyota started import/sales of Corolla/Camry/Land Cruiser Prado; the company sold about 5,000 in the first year.

  Fuji Heavy Industries also expects to begin import/sales of Legacy in 2006, targeting annual sales of 2,500.

(Note) The customs tax and the commercial benefit tax are imposed on the import of vehicles to Iran; the tax-rate on passenger cars ranged from 130 to 168% depending on the displacement. In March 2005, the import tax was integrated into the customs tax and the import tariffs were lowered uniformly to 100%.
  Incidentally, Iran adopted a licensing system for the import of finished vehicles, but dropped a ban on the import in April 2004 and set the import ceiling of 25,000 a year. However, because of the high tariff rate, only a small number of BMW vehicles were sold in 2004. In 2005, import/sales of Toyota vehicles as well as M-Benz and Audi models began; approximately 10,000 were imported.

■Nissan manufactures Maxima and SUVs/pickups at SAIPA's subsidiary

  Nissan, through its partnership with SAIPA's subsidiary Pars Khodro, produces models such as the Maxima, the D22 Pickup (North American name: Frontier), a D22 pickup-based SUV, and the Roniz SUV (Chinese name: Paladin). Nissan provided a license for production of the Patrol to Pars Khodro before it was acquired by SAIPA.

  Pars Khodro also plans to produce the Renault L-90 and the Megane by commissioning from Renault Pars.

■Nissan's production base in Iran: Pars Khodro

Production
model
Nissan Pickup (D22 Pickup), Pars Khodro Pariz SUV (based on Nissan D22 Pickup),
Nissan Seranza SUV (based on D22 Pickup), Nissan Maxima,
Nissan Roniz (Chinese name: Paladin)
Pars Khodro P.K (based on Renault R5)
Renault L-90 (production by commissioning is planned),
Renault Megane (production by commissioning is planned)
Outline and
recent trends
  SAIPA holds an 85% stake.
  Annual production capacity: 26,000. 150,000 for Renault L-90 and 15,000 for Renault Megane, which the company will produce by commissioning from Renault Pars, are expected to be added.
  The company was GM's production based in 1972-1981. In late 1980s, the company tied up with Nissan, starting to produce Patrol in 1987 (terminated in 2004).
  Production of Maxima and D22 Pickup started in 2001. Production of Roniz began in 2004.
  The company expects to initiate production of Megane in the summer of 2006 and L-90 at the end of 2006.

■Suzuki plans to produce Grand Vitara at Iran Khodro's subsidiary staring in 2006

  Suzuki plans for CKD to produce the Grand Vitara at Iran Khodro's subsidiary - Iran Khodro Khorasan - in the autumn of 2006; it plans to manufacture 6,000 in the first year. Iran Khodro has initiated import/sales of finished vehicles of the Grand Vitara at the beginning of 2006.

■Suzuki's production base in Iran: Iran Khodro Khorasan Co.

Production
model
Suzuki Grand Vitara
Peugeot Pars, Peugeot 405 GLX
Outline and
recent trends
  Iran Khodro's wholly-owned subsidiary.
  Annual production capacity: 33,000. The company plans to boost the capacity to 100,000 in the future.
  In 2001, production of Paykan Pickup started. Currently, the company CKD produces Peugeot Pars and Peugeot 405 GLX.
  The company plans to start producing Suzuki Grand Vitara in the autumn of 2006. It plans to produce 6,000 in the first year.

■Mitsubishi Motors produces Pajero at Bahman Group

  Mitsubishi Motors formed a partnership with Bahman Group in the middle of 2003, starting production of Pajero in May 2005. Bahman Group plans to manufacture 3,000-5,000 a year.

■Mitsubishi's production base in Iran: Bahman Group Co.

Production
model
Mitsubishi Pajero
Mazda 323, Mazda B2000 Pickup
Outline and
recent trends
  Annual production capacity: 50,000. The company produces Mazda models under license. In May 2005, the company also started producing Mitsubishi Pajero.
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