Iran Vehicle Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

Market Overview

The Iran vehicle market is expected to grow at a CAGR of nearly 4% during the forecasted period (2020 - 2025)

• Iran faced economic difficulties, due to the sanctions imposed upon it, but still, the country has maintained a per capita income of USD 16,463, which puts it into the category of upper-middle-income nations and favourable nations for the automobile industry. The country also has a favourable demographic structure needed for its fast-paced growth.
• The automobile industry contributes around 10% to the GDP of Iran. The total domestic production in Iran is dominated by two manufacturers, namely Iran Khodro and SAIPA, which account for more than 90% of the total domestic production. Iran's automobile industry is dominated by the passenger car segment, and it accounts for roughly three-fourths of the total market.
• The massive currency depreciation experienced in 2012-2013, had a huge impact on the local automobile industry. As a result, production fell under 1 million units for the first time since 2007. However, the market recovered considerably since then, and it is expected to show modest growth. With the opening up of the markets, the government may be forced to remove the subsidies given to manufacturers, and that may affect the profitability of the local manufacturers. Despite sanctions, Iran has become a powerhouse in automobile manufacturing and represents one of the best markets to invest in for global players, as it has the potential to grow massively once the sanctions are lifted. In 2019, Iran has produced 821,060 automobile units which is decline from 2018 wherein Iran produced 1,095,526. Sharp devaluation of currency followed by sanctions has significantly increased priced of imported cars, which has led to increase in sales of domestic car manufacturers. Increasing disposable income and growing middle class is expected to create demand for new cars in Iran during the forecasted period.

Scope of the Report

The Iran Vehicle market report covers the latest trends and technological developments in the market. Demand by vehicle type, and share of major players in this region.

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Key Market Trends

Growing Demand for Automobiles

In 2016, the Iranian car manufacturers alone accounted for around 2.2% of the country’s overall economic growth. The automotive industry is projected to form at least 4% of Iran’s economic growth by 2025, if no sanctions are imposed on the country. In 2018, Iran produced more than 1.09 million cars.

The Iranian car manufacturers have re-established their cooperation with European companies, such as Peugeot, Citroen, and Renault. As a result, the automotive industry has grown by nearly 151%. Additionally, a couple of years back, the country presented certificates to foreign car manufacturers willing to open sales branches in Iran. Around 40 foreign automotive manufacturers have already obtained the certificates, and the number is projected to grow over the forecast period. Peugeot partnered with the local leading company, Iran Khodro, to manufacture passenger vehicles. Through this partnership, 200,000 cars are expected to be manufactured in Iran by 2018.

The automotive industry in the country is expected to grow over the forecast period, as foreign manufacturers are striking partnership deals with the local carmakers. In February 2018, Renault sold nearly 15,200 cars in Iran, which is an increase by 175% from the fiscal year 2017.

On an average domestic manufactured car costs USD 2500 whereas imported car is being sold for almost 8000 USD, which is giving competitive advantage to domestic market. Iranian government is considering increasing import taxes to 70% from already high 40% to encourage domestic production.

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