Khodrocar – Iran’s auto industry has different problems and the officials are talking about merging the local automakers to solve these problems. This action has a lot of supporters and opponents and while experts are talking about the benefits of merging like reducing the costs or developing and renovating the design, but this action is not helpful for our industry in the current situation. Some experts believe that Iran’s auto industry is not ready to experience a new action and merging major companies like SAIPA and IKCO will end in monopoly.
Major auto makers tried to compete with other companies and reduced the selling price by decreasing the profit margins. By this action they faced new challenges and forced to merge with other companies to have more share of the market and gain more profits. Merging would reduce their final price and guarantee the profit. Right now, 14 automakers are ruling the whole industry and six of them like GM, Toyota, Ford, Renault, Nissan, Volkswagen and Daimler Chrysler, have 70 percent share of global sell and spare part market.
Totally, there are 6 points for merging automakers in the world:
1-reducing the final price
2-reducing the design costs
3-reducing the competitors
4-increasing the sale’s profit
5-reaching new and potential markets
6-reducing the marketing costs
Merging has become one of the hottest topics during the past 10 years since Mehrdad Bazrpash, CEO of Pars Khodro at the time said. Now, it’s been said that Mohammad Shariatmadari, minister of Industry, Mine and Trade is about to have a plan for this action. The ministry of Industry, Mine and Trade has not said anything about this, but members of the auto part manufacturer association are talking about it.
According to the president of the chamber of commerce, there are 81 active automakers in Iran that 30 of them are more famous than others and the real competition is between SAIPA and IKCO.
In this situation, production rate of little companies is very low and it will increase their production costs so they are not able to develop or cover the design costs, so merging with big companies is the only solution. Most experts think that merging in Iran’s auto industry should happen to small companies at first because merging SAIPA and IKCO which are governmental won’t solve any problems. Governmental and merging are opposite and it will increase the monopoly of the market. Right now, more than 90 percent of the market belongs to these major automakers.
Now we have to wait and see what will the 12th government decide about merge automakers and make the market more competitive and would Iran use the benefits of this action or not?
Khodrocar Reporter: Fazel Suri
Khodrocar Translator: Amin Zamani