Auto Industry For Sale

One of the government officials complained that the Minister of Industry would allocate all the budget to his own sector as the Minister believes that "if the wheel of the automobile industry spins then the wheel of other industries will start turning as well". He continues that there is a strong competition in administration gatherings between Mohammad Nematzadeh (the Minister of Industry) and Mahmood Hojjati (the Minister of Agriculture) regarding the revenues out of the second phase of cutting subsidies. Hojjati argues that this money must be allocated to the Ministry of Agriculture in order to produce agricultural infrastructures. Nematzadeh, on the other hand, demands for this same revenue to develop the automobile industry. What follows is an interview with the Minister of Industry, who explains his strong support for the automobile industry. Moreover, he talks about the globalization process before Iranian automobile industry.

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It is said that you are one of the defenders of the Iranian automobile industry in the government gatherings. You are accused of extending your hand to grab as much of the revenue out of the subsidy-cut as possible. What is the reason for this firm stance of yours?
Since the first day that I took office, I have believed that the car industry is one of the most important industries in Iran. There might not be an overall consensus on this issue. Yet, in my opinion we have to protect the automobile industry and let it develop to its optimal level. The plan for the automobile production is to focus on quality, quantity and export more than ever. The Iranian car industry is the the largest in the Middle East and it deserves to gain a big share of this market. In the last few years, we had a considerable output. We could capture a good share of this market. Yet, we did not act properly to maintain and develop this opportunity. As an example, we were exporting cars to Iraq having a suitable market there until one and a half years ago. Then Iraq has banned the registration of Iranian cars. My Ministry could not accept this. Therefore, we started negotiations in order to talk the Iraqi officials out of this policy. Fortunately, this problem was resolved a few weeks ago and the Iraqi government has lifted this ban, leading to Iran's car exports restarting.

Are you willing to sell the share of the automobile industry to a foreign company?
Yes, as I want this industry to prosper. A foreign investor can help this industry to enhance the quality of its production. At the moment one foreign company has demanded to buy our company. The car industry must develop in a way that it can set up shared investments with its international counterparts. I intend to suggest President Rouhani that we could negotiate with those Chinese companies that have requested investment in the Iranian car industry. This way, we can produce exportable cars. In short, the automobile industry has great potential and it is possible to achieve such industrial advancement that enables us to produce cars suitable for export.

Which steps have you taken to enter the international market?
I have suggested the company board of Iran Khodro to hold annual conferences in an international level. In Davos, President Rouhani has invited international investors to invest in the Iranian industries such as the car industry. We must focus on trust-building in those proposed annual conferences so that we can provide opportunities for foreign companies to invest in Iran in the years to come.

Considering the negative attitude of Iranians towards the car industry, do you have any plans to change that mentality?
I believe our main goal should be creating a favorable public atmosphere in order to protect this industry. Of course protecting the car industry must not give the consumers the impression of being neglected. The domestic consumers must feel the benefits from the advancement of this very industry. The government authorities should also hold a positive approach towards the automobile industry. They must know that if the car industry runs well all other industry will follow suit. If such an atmosphere is formed then foreign investors will be willing to invest. Auto industry has a key role in realizing the 20-year vision document for Iran. In short, the negative atmosphere which has been created during the last years must be transformed into a positive one in a way that an overall public backing is shaped for the auto industry. Otherwise, all the efforts to develop the auto industry will face resistance which consequently adds more challenges to the industry.

What is your Ministry's stance regarding the development of the car industry?
It is the duty of the Ministry of Industry to remove barriers and to provide a comfortable business atmosphere for all sectors. We have already reviewed some of the goals and policies of the automobile industry to assure the domestic and foreign investors, car manufacturers and part suppliers about the procedures to enter the Iranian market. At the moment, the plan is not merely to assemble, but rather to introduce energy saving models. For such a purpose, we need to buy the latest state-of-the-art engines and import them. The other option is to rely on domestic knowledge in designing low consumption cars. These views must be considered whilst making the policies.

How is the cooperation with internationally recognized car companies considered in those policies?
Our policy is clear in this respect. Mutual cooperation in the automobile industry can be directed towards technical and technological cooperation as well as mutual investment. We insist on the cooperation with recognized companies so that by focusing on well-known brands as one of our principles we are determined to produce shared brands with foreign companies as well as domestic ones suitable for export. The production of exportable cars is our priority. We are aiming to gradually raise the share of exported cars to 40% of the total production. Production is important for the export and this culture must be internalized in the Iranian industrial society. One important point here is the fact that the statements made in this regard must be based on realities. And we must prevent exaggeration. Of course, it does not mean that we want to underestimate our abilities and capacities.

What do you think is the reason for the Iranian sensitivity towards cars?
The car industry needs a constant attempt to create a positive atmosphere. There has been so much sensitivity on this industry so far. The resentments towards the car industry are rather high. But this is not a problem. We must focus on producing exportable products based on the taste of a wide range of customers from different countries. In this way, it is rewarding if the automobile industries collaborate with universities of fine arts hence benefitting from their potentials. Talking about export, we must produce cars that are exportable even to America. The Asian car producers have research centers enabling them to design according to the taste of their customers. And in this way they could penetrate into the American and European markets.