Iran Vehicle Market - Growth, Trends, and Forecast (2020 - 2025)

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.

The passenger cars segment holds the largest market share in the Iranian automotive industry. The international sanctions have had a tremendous impact on the industrial development of many industries in the country. Iran, which is the largest automotive market in the Middle East with a market of nearly one-third of the German automotive market, has seen volatility in the automotive industry with the implementation of the sanctions.

Eventually, the Iranian automotive industry became self-reliant and self-sufficient to supply for the demand within the country. The country had reached the potential to roll out more than a million vehicles. Ever since the implementation of the sanctions, the demand for vehicles is being met by the vehicles manufactured in the country only.

The sanctions helped the domestic companies, such as IKCO and SAIPA, to emerge in the market, which have a major share of the passenger vehicle sales in the country. At the time of implementation of the sanctions, the percentage share of the indigenous companies of the overall vehicle production reached as high as 85%. However, if the sanctions are relaxed, more international companies are expected to introduce the latest vehicles in the country, which may further drive the market.