The global financial crisis and Iranian automakers
Changing the course in relations between Iranian and European automakers does not seem probable...A commentary by Saeed Leylaz
As a consequence of the US financial crisis and its penetration to European countries, the western automakers have become very fragile. This fragility has led to discussions on the probable cooperation between Iranian and western automakers. Here is a commentary by Saeed Leylaz, an economic expert and analyzer, on the issue.
The Iranian automakers do not seem to be able to take advantage from western automakers’ plight. The Iranian market is not that vast to be able to absorb the extra productions by European automakers. The extra production of western automakers is so high; and the total auto production of the world is about 70 million cars. But the auto import of Iran is something between 70 thousand and 80 thousand cars.
On the other hand, Iran is itself an automaker; and has the relative industries and infrastructure. So the Iranian automakers do not seem to be willing to stop domestic production and accept the import of foreign autos. There are also high tariffs on such imports which make this interaction impossible. Even if the Iranian automakers want to assemble the western cars, it would take 2 years to do so.
At the same time, one should notice the fact that the Iranian automakers are also suffering from the problems emanating from the global financial crisis. If Iran’s oil incomes continue to fall, then the Iranian automakers and importers would feel the pressure and the problems they face would be much more than that of the European and American automakers.
The other important issue in this regard is the problem of sanctions. Right now, Iranian automakers do not have the opportunity to sign cooperation deals with European and American automakers. In such a situation, Iran can not take advantage from the current crisis of European and American automakers.
Anyhow, the conditions upon which the Iranian automakers can build their cooperation with the European automakers are better now. The Euro value has fallen; and the products of European automakers are at risk. So they may be more willing to sell their products to Iran; but even such products should be selected from the products previously presented to the Iranian market.
One should pay attention to the fact that the dollar and Euro value is increasing against the Iranian currency. So we would also face the same problems as the European automakers; and this would decrease the flexibility of Iran’s economy. So I do not think that there would be a real change in dealings of Iranian and European automakers in the next 2 or 3 years.
The negotiations
There were some negotiations going on between the western automakers and the Iranians. But the western side has always been a dealer or representative of western automakers. For example, Iran was seeking to buy Fords and Chevrolets for its ambulances. During that time, Iran was negotiating with dealers in Dubai. The truth is that in recent years, the American automakers have had no contact with Iranians and a change of course does not seem much probable now. Iran is itself an automaker; and if it wants to import western cars, it should stop its auto production; which does not seem probable.