Iran Automotive Market

- Background note

OCTOBER 2016

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An economy severely impacted by sanctions

The situation in the past few years has created a huge revival headroom to the economy
GDP - composition by sector:
agriculture: 10.6%
industry: 44.9%
services: 44.5% (2013 est.)
Labor force - by occupation:
agriculture: 16.9%
industry: 34.4%
services: 48.7% (2012 est.)
Inflation rate (consumer prices):
42.3% (2013 est.)
30.5% (2012 est.)
(Note: official Iranian estimate)

Electricity
production: 239.7 billion kWh (2011 est.)
consumption: 199.8 billion kWh (2011 est.)

Source: World Bank, CIA World Fact Book

A Young, Educated Population

Iran is the largest consumer market with population at three times Saudi Arabia
Total Population: 78 mn
Median age: 28.3 years

Literacy (definition: age 15 and over can read and

write): 85%
male: 89.3%
female: 80.7% (2008 est.)

Languages: Persian (official) 53%, Azeri Turkic

and Turkic dialects 18%, Kurdish 10%, Gilaki and
Mazandarani 7%, Luri 6%, Balochi 2%, Arabic
2%, other 2%

Religions: Muslim (official) 99.4% (Shia 90-95%, Sunni 510%), other (includes Zoroastrian, Jewish, and Christian)
0.3%, unspecified 0.4% (2011 est.)

Source: CIA World Fact Book

A rapidly urbanizing market

Population concentrated on the west / north west
Urbanization: urban population: 69.1% of total population
(2011)
Rate of urbanization: 1.25% annual rate of change (2010-15
est.)
Number of Households: 20,703,953
Household size average: 3.6

Major cities - population:

TEHRAN (capital) 7.304 million;
Mashhad 2.713 million;
Esfahan 1.781 million;
Karaj 1.635 million;
Tabriz 1.509 million;
Shiraz 1.321 million (2011)

Source: CIA World Fact Book

With a thriving local automotive industry

The automotive industry, with a turnover of approximately 12 billion USD, is one of the key
industries after oil and gas.
There is a total production capacity around 2 million(PV &CV) of which 1.1 million is being utilized.
The industry employs around 1.5 million directly and indirectly and the industry contributes to around 3% of
Irans GDP
There are national brands such as IKCO, SAIPA, Pars Khodro, Kerman Khodro, and Bahman. They have models
such as Samand, Tiba, Dena.
IKCO and SAIPA are the largest manufacturers and control around 80% of the market share

Source: Secondary Research, ILIA Corp, Knowledge Database

And both import and export of models

Both export and import have been impacted by the sanctions

From a peak of around US$ 500 mn in 2012, the exports of car and components from Iran have fallen to less
than half in 2014
In the last decade, import of cars were dominated by Hyundai, Kia, Toyota which contributed to over 75% of
the total imports. Chinese OEMs like Geely have also made inroads. Lexus, BMW and Benz are the major
premium players having a presence in Iran.
The sanctions had a crippling effect with production dropping post 2012 to almost 0.7 million and has also
impacted the quality of the cars

Source: Secondary Research, ILIA, IPIS, Knowledge Database

With an optimistic post-sanctions future

The Iran 2025 vision has a special focus on the automotive industry

The 2025 vision for the automotive industry is to reach number one ranking in region, 5th in Asia and 11th
in the world by focusing on competitive development based on technological advancement.
The vision aims for a production of 3 million units 2 mn for domestic and 1 mn for export. As part of this
vision, the Iranian Ministry of Industry has developed a strategic plan for the automotive sector consisting of
nine key strategies as under,

Source: Secondary Research, ILIA, IPIS, Knowledge Database

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