Iran begins exporting cars to Bahrain

The Iranian-made car Saipa has been launched in Bahrain with A.A. Bin Hindi as its local dealership. The 1.3-litre model comes in two versions - the Saba, a four-door hatchback, and the five-door Nasim, also a hatchback.

Saipa Corp has a manufacturing arrangement with South Korea's Kia Motors. In Iran the models are sold under the Kia brand name. Current production capacity is 150,000 a year. Our reporter adds from Dubai: the Saipa has been available in the UAE since 1996 and is represented by Belhasa Motors.

Priced between Dh19,000 and Dh21,000, average annual sales are about 700, mostly to Iranian expatriates. Iranian expatriates are not liable for import duty when taking the cars back to Iran if they are more than two years old.

In the UAE, saloon and hatchback versions are available. Saipa is also sold in Saudi Arabia. Saipa Corp, which has been in manufacturing since 1966 in collaboration with France's Citroen and Renault, currently has arrangements with Volvo.

Meanwhile, our Iran correspondent Ali Rezvani reports that Iran has become a significant automobile manufacturer, producing over 300,000 cars (of which 73 per cent are passenger cars) per year.

But they can only meet 60 per cent of demand, a government official told Gulf News. "Iran Khodro and five other big car manufacturers are producing over 300,000 cars annually. We plan to increase the production to 500,000 in two years to fulfil our domestic demand," said Mohammad Turkan, head of Iran's Industrial Promotion Organisation (IDRO).

To close a big gap between supply and demand, Iranian carmakers have been injecting variety into their production lines since 1989, mainly by signing assembly contracts with foreign companies. The most popular locally assembled foreign cars are the Peugeot 405, Renault 5, Nissan Patrol and Kia Pride.

There are six different automobile types produced in Iran. In 1999 Iran produced 221,000 passenger cars, 44,000 pick-up trucks, 3,400 minibuses, 5,182 buses, 8,500 four wheel drives and 7,380 trucks. Therefore, Iran's total car production in 1999 was 289,462.

To buy an Iranian car you should pay half of the price one year in advance and wait for the auto company to make your favourite car. Of course you will receive 18 per cent interest during this one-year wait, which is almost equal to the inflation rate in Iran.

Iran Khodro auto company was set up 33 years ago to assemble Hillman Hunters under the Iranian brand name Paykan (meaning arrow), which has gained the status of Iran's national car. The Paykan has changed little in design over the years and there is no basic difference between the first and latest models.

That is why Iranians have always liked modern cars, a demand which was not fulfilled perfectly by domestic producers. "Iranians love modern cars and try to have the best when it is possible," said Kafafi, an official in Iran's Industrial Promotion and Renovation Organisation.

To meet domestic demand, car imports can be considered the second solution. On imports, the Iranian cabinet is studying a bill to allow 30,000 foreign cars annually. If the parliament ratifies the bill, a 20-year ban on car imports would be lifted and as consequentially prices would come down.

But imports are a matter of dispute. On the one side are the people and tradesmen, and on the other are the officials who consider imports as damaging to the car industry. "Our oil revenue surplus (which stands at $10 billion this year) should be invested in industrial projects to create new jobs and lead to an economic boom, not to be consumed by importing luxury products," Turkan said.

The auto industry has already created over 400,000 jobs. Imports would reduce jobs, he added. The Commerce Ministry believes that years of import restrictions have left the automakers inefficient. The government has decided to allow a small number of imports in the hope that the competition will encourage local manufacturers to increase quality and cut prices.

But Turkan said Iran imported many cars at the beginning of revolution, but it did not affect the quality of domestic products. "If we want to refer to quality as a justification for imports, there are many other goods like TV sets, foodstuffs...which are being produced in Iran with lower quality than foreign ones, but we should not close our factories and import only foreign products," Turkan said.

A few days after the cabinet began studying the direct import of foreign cars, the price of Iranian cars fell a bit. For instance the price of a Paykan moved down $500 and stood at $7,000. Turkan said, "The import of a small amount of automobiles annually cannot have major effect on prices.

"Foreign cars cannot compete with us in Iran. For instance the Peugeot 406 is $19,000 in France. We have the same product here called the Peugeot Persia which costs 130 million rials ($16,250)."

After the revolution, the government forbade car imports, but there were some state foundations which could import a small number of cars for special purposes. Foreign embassies also could do so.

In the category of passenger cars, 35 per cent of foreign cars are imported through Dubai (mainly South Korean, Japanese and some European cars) and 15 per cent through Sharjah.

Customs duties are 250 per cent, but importers can pay the taxes in rials at the government hard currency rate which is 1,500 rials per dollar. One dollar is now 8,000 rials on the black market.

But when Iran meets its demand, one more problem will remain and that is the high prices. Now the price of a Paykan is about $7,000. "The cheaper the fuel, the more expensive the car - it is a rule in Iran," Kafafi said. Now fuel is very cheap, but the price is due to increase gradually. The price of petrol is 37.5 rials per litre and is due to reach to 1,000 rials in a few years."