Iran’s automotive industry is the one of the most vibrant industry of the country. Being one of the Middle East’s largest automobile producer and consumer country is lately opening its doors to foreign investors and allowing import of foreign products including car and vans. Today, Iran is the 12th biggest automaker in the world and the biggest in the Middle-East.

The Iranian auto manufacturers at present produce 6 different types of vehicle, including buses, minibuses, passenger cars, 4WD, trucks, and pickup trucks. About 500,000 people are directly employed by this sector and more in related industries.

Iran requires about 4,000 buses each year and thus producing buses and exporting all the way through the Middle East. Iranian automaker and Daewoo Bus Corp. have joined to build buses in Iran. The plant has a production capacity of 2,000 buses each year and produces about 800 buses in 18 months. The agreement states that the engines and gearboxes will be manufactured in South Korea and production will be transfer to Iran where about 60 % of the parts would be made.

When we take decision to buy a car; we are very specific for our requirements and this is possible only when we purchase from someone where cars for dealers are offered in a wide variety of selection. More than 40% of the cars in Iran’s automotive group are over 20 years old, a standard that only few countries can match. The government has set an aim not only to produce more cars to meet the ever-rising demand, but also to produce an adequate amount of new cars to substitute the old ones.

Foreign companies are encouraged to take benefit of the Iranian market, as long as they export a preset proportion of the Iranian production to other countries. In due course, the Iranian automotive manufacturers want the technology, proficiency and management skills that foreign companies can offer.

Imports of cars in Iran have been increased from $184 million to $1.5 billion in the period of 2002 to 2007. The government decreased the import tariff on automotive industry to 90% for light weight vehicles and since then a big arrival of imported vehicles has been observed in the country. The tariff for of heavy vehicles import is decreased at 20%, due to high demand and low levels of local production. Consequently, a variety of automotive brands are being presently imported into Iran including luxury brands like Toyota, BMW, Mercedes Benz, Rover, and other brands like Ssangyong, Audi, Subaru, Volkswagen, Renault Leon, Altea and variety of heavy vehicles, construction and mining equipment from leading manufacturers such as Mercedes Benz, Iveco, Mann, Renault, Kamaz.

There are numerous R&D projects both at the private and governmental sectors. These projects are generally aimed at local market of Iran and its problems. There is some research being done on electric and hybrid vehicles for the prospect Iranian market as well.

Like other sectors, the automotive industry is also suffering from a lack of capital imports and foreign direct investment. The privatization process is moving awfully slow. High inflation, international sanctions, aggravate by fuel price hikes, and unexciting consumer demand have affected growth in the passenger car segment, however industrial growth coupled with infrastructural development is increasing demand in the commercial vehicles sector. Iranian automotive market will contract in the coming years Experts think that the removal of subsidies is expected to have an adverse impact on the profitability of the automotive sector for some years.