The turnover of Iran's auto industry in 2015 was recorded as $23 billion, according to the chief executive officer of Iran's leading carmaker Iran Khodro.

Speaking at the First International Conference on Industrial Engineering held in Tehran on Tuesday, Hashem Yekezare said it is predicted that the figure will reach $50 million by 2025, Eghtesad News reported.

Experts estimate there will be seven million cars on Iranian roads by 2026, four million of which will be new cars.

"The Ministry of Industries, Mining and Trade has set the target of producing three million cars and export a third of that number by 2026," he said.

"The population of Iran and its regional neighbors has reached 575 million. Iran currently produces 2.7 million units of cars annually."

Yekezare said it is feasible for Iran to target a plan for providing at least a fourth of the cars needed in the region.

"However, this cannot be achieved by the carmakers alone and all relevant organizations in the industry must play a part," he said.

The official noted that after the Joint Comprehensive Plan of Action came into effect, the business environment opened up to international cooperation and many productive developments have taken place in this sector.

The July 2015 nuclear deal with P5+1 (the United States, Britain, France, China and Russia plus Germany), formally referred to as the JCPOA, went into effect in January 2016 and removed international sanctions against Iran in exchange for temporary curbs on its nuclear program.

Yekezare further said IKCO has finalized deals with Peugeot and Mercedes-Benz, and another major deal with a foreign business partner will be finalized soon. He did not name the company.

The IKCO chief, however, stressed that forging new deals with foreign business partners alone will not save Iran's auto industry.

"Developing manufacturing under Iranian brands and improvement of research and development in this field must be addressed," he said.

Yekezare added that Iran ranks 13th globally in auto manufacturing, which rank can improve if the industry becomes more dynamic.

"Iran's infrastructure is outdated, new cars and platforms need to be manufactured and this requires nearly $1 billion in direct investment," he said.
"Foreign business partners have agreed to invest in this field and will receive a profit of up to 3% in return for the money invested. The profits will be returned after the new cars they produce enter Iran's market."

Yekezare noted that auto firms cannot easily receive loans from banks in Iran and even if they do, they are required to repay the loans with interest rates of up to 30%.

By Financial Tribune