News / Economy

Chinese cars become Iran’s nightmare

Thursday, 05 March 2015 9:55 PM [ Last Update: Friday, 17 April 2015 5:45 AM ]

China’s Howo trucks in Iran have become synonymous with death.

Chinese automakers are revving up their clout in the Iranian market in what many in the country see a deja vu of a venture gone wrong.

Back in the 1960s, Iran started production of Paykan, a knockoff of the British Hillman Hunter, angling for a position no less than South Korea’s today in auto-making.

But the scheme fell flat and Iran had to retire the model in 2009, with its memory not cherished any longer.

While Paykan has become history, many see the inroads of Chinese automakers into the Iranian market a return to the bygone days.

The Chinese made their forays after the Europeans pulled out of Iran in the wake of intensified sanctions in 2011. They began with supplying semi-heavy and heavy trucks and passenger vehicles.

China’s Howo trucks in Iran have become synonymous with death and its mere sight on the road is enough to send shudders down the spine of travelers.

In recent years, small-size and compact Chinese cars have started flooding Iran’s markets in droves, courtesy of the private sector. They are reaping the windfall of a high demand in the face of limited options which Iranian buyers have.

Officials and industrialists are sounding alarm bells. For domestic car parts manufacturers, Chinese companies have become a nightmare.

Chery Automobile Co. was the first Chinese carmaker to set foot on Iran. Presently, eight Chinese automakers are supplying or assembling 27 models of cars which ply Iranian roads.

And while they started at knockdown prices, Chinese sellers are gradually inflating them.

Iran’s industrial development roadmap requires that any foreign automaker also brings in the latest technology and knowledge. Experts say China’s auto industry is a copy of second-hand outdated technology which offers little.

But did the Iranian companies benefit from what was on offer before the Chinese arrived? The aftermath of US and Europeans sanctions is a testimony that they didn’t.

Economists say when Iran’s state-owned and private companies had joint ventures with the French and Korean automakers, they opted for the easy money making and overlooked indigenizing technology.

For now, Iran’s state-owned automakers namely Iran Khodro and Saipa have limited ventures with the Chinese but the private sector is providing them enough space for maneuver.

HB/HB

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