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Analysis of the Automobile Industry in Iran - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

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  • 76 Pages
  • August 2022
  • Region: Iran
  • Mordor Intelligence
  • ID: 5318409
The Iranian automobile market was valued at USD 28.85 billion in 2021, and it is expected to reach USD 49.92 billion by 2027, registering a CAGR of 9.57% during the forecast period (2022 - 2027).

The automobile industry in Iran witnessed a decline in growth due to the COVID-19 pandemic and sanctions imposed by countries like the United States on Iran. However, as the government in the country is taking the necessary actions to boost the production of vehicles and parts locally to meet the demand for vehicles and reduce its import cost at the same time, the market is expected to witness steady and consistent growth during the forecast period. The major car manufacturers in the country are increasing their production with locally manufactured parts and components. Apart from these factors, ongoing projects and rising e-commerce activities further propel the demand in the market.

In addition, local OEMs are also entering into agreements and associations with the university and research institutes to upgrade the manufacturing technology related to auto parts and components, which is expected to boost the market during the forecast period further.

Key Market Trends

Passenger Car Sales are Expected to Dominate the Iranian Automobile Industry

Iran, being the largest automotive market in the Middle-East with a market of nearly one-third of German automotive players, has seen fluctuations in the automotive industry since 2012 due to the implementation of the sanctions. The international sanctions have had a tremendous impact on the development of many industries in the country, including the automotive industry.

Despite the stringent lockdown and social distancing norms in the global scenario and the disturbing political geographies nearby the country, Iran showed good numbers in automotive sales and production.
  • In 2020, the passenger cars production in Iran registered 826,210 units, with a rise of 7% compared to the previous year. Full-year sales for passenger cars in 2020 have been recorded at 816,497 units, reporting an 8.7% increase in sales compared to 2019.
Moreover, with increasing demand for passenger cars in the country, the major OEMs are planning to launch the latest models.
  • In February 2020, Iran Khodro made an announcement that the company was going to launch nine new vehicles in the country in the coming three years. The company announced that Rana Plus, Soren Plus, Samand Optimal, Automatic Dana Plus, and Peugeot Panorama are the five models that will be developed in the upcoming years, while K132s, Crossover K125s, and Hatchback K121s, as well as a Hybrid Dena, will also be launched by January 2023.
With an improving economy, the country is expected to experience a sales boom for medium-priced cars (such as sedans), and the emergence of local automotive component hubs is expected to further contribute to the overall development of the passenger car segment of the market during the forecast period.

Latest Developments to Encourage Engine Manufacturers in the Iranian Automobile Industry

Iran's automotive engine and engine components market considerably grew during the past several years with fast growth in population and the need for vehicles. In its 2025 grand economic plan, Iran aims to become the number one automotive industry in the Middle Eastern region, aiming to rank fifth in Asia and eleventh globally.

Primary factors contributing toward the increase in production activity in auto parts and components are the government’s support plans for the auto sector, increasing skilled and educated workforce, and huge potential for private sector investments.

The home-grown car industry in Iran has pushed manufacturers to invest and develop their own engines without any partnership with foreign players. As EV adoption still being in its early stages, the market is expected to grow positively during the forecast period.
  • In January 2021, Iran’s largest automotive firm, the Iran Khodro Company (IKCO), unveiled a domestically-made three-cylinder engine EC5.
  • Renault set up a local engine manufacturing plant in Iran in 2017 with a joint venture with Parto Negin Naseh (Negin Holdings) and the Industrial Development & Renovation Organization of Iran (IDRO).
Therefore, owing to the above-mentioned factors, the engine segment is expected to witness positive growth over the forecast period.

Competitive Landscape

Iran's automobile industry is a moderately consolidated market. There are many major local players in the country, such as IKCO, SAIPA, Pars Khodro, Kerman, and Bahman, who manufacture a variety of different models (such as Samand, Tiba, Dena, etc.). IKCO and SAIPA are the biggest automotive manufacturers. Many players are in planning to ramp up production output in the coming years.
  • In June 2020, to boost local manufacturing, IKCO launched 175 projects to strengthen auto part localization and cut down the import expenses by EUR 246 million.
  • In January 2020, the Iranian government announced it had launched a heavy-duty truck manufacturing plant. The first phase of the plant for the production of Chapar (Carrier) trucks, which started operation in Meshginshahr in Northwest Iran. The plant will produce 50 trucks a day at full production.
  • In October 2019, Sazehgostar SAIPA signed an agreement worth IRR 180 billion (USD 1.6 million) with a local knowledge-based firm Pars Iranian Saman, for the domestic production of car lamps.

Additional Benefits:

  • The market estimate (ME) sheet in Excel format
  • 3 months of analyst support

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Table of Contents

1.1 Study Assumptions
1.2 Scope of the Study
4.1 Market Drivers
4.2 Market Restraints
4.3 Industry Attractiveness - Porter's Five Forces Analysis
4.3.1 Threat of New Entrants
4.3.2 Bargaining Power of Buyers/Consumers
4.3.3 Bargaining Power of Suppliers
4.3.4 Threat of Substitute Products
4.3.5 Intensity of Competitive Rivalry
5.1 By Vehicle Type
5.1.1 Passenger Cars
5.1.2 Commercial Vehicles
5.1.3 Motor Cycles
5.2 By Manufacturer Type
5.2.1 Auto Ancillaries
5.2.2 Engine
5.2.3 Other Components
6.1 Vendor Market Share
6.2 Company Profiles
6.2.1 Automobile Manufacturers Iran Khodro (IKCO) Pars Khodro SAIPA Corporation Renault Pars Volkswagen Group Hyundai Motor Company Kia Motors Corporation
6.2.2 Auto Component Manufacturers Sazeh Gostar Bahman Group Monavari Brothers Industrial Group SAPCO IPMC

Companies Mentioned

A selection of companies mentioned in this report includes:

  • Iran Khodro (IKCO)
  • Pars Khodro
  • SAIPA Corporation
  • Renault Pars
  • Volkswagen Group
  • Hyundai Motor Company
  • Kia Motors Corporation
  • Sazeh Gostar
  • Bahman Group
  • Monavari Brothers Industrial Group
  • IPMC