Industry Spotlight: Automobiles

By Ariane Gottlieb, Research Associate  

After oil and gas, the automobile industry is Iran’s third largest, accounting for approximately 10% of the country’s GDP and employing about four percent of the country’s workforce.  Despite setbacks from sanctions, which saw Iran pull back as the number one automobile developer in the Middle East to second place behind Turkey, the auto industry has been growing.  The past decade has shown a six fold increase in production, fueled by both domestic and foreign demand.  Today, the industry produces around 1 million cars each year.

Comprising 94% of the domestic market, companies such as Iran Khodro and SAIPA have emerged as leaders in the automotive industry of Iran and the Middle East more broadly. Founded in 1962 and 1966 respectively, both are subsidiaries of the government-controlled Industrial Development and Renovation Organization, which encourages development by aiding in foreign and domestic investment, overseeing restructuring and contracting, consulting, and providing key industrial and management resources.

Beyond Iran, the Iranian automobile industry has also emerged as a strong global force, with significant market penetration in nearby countries such as Azerbaijan, Pakistan, and Egypt and reach as far as Algeria, Cameroon, and Venezuela.  Foreign investment is also increasing as Iranian car manufacturers are partnering with international manufacturers like Volvo, Citroen, and Daimler.

While sanctions had a negative effect on the industry overall, they did cause a shift in resource allocation towards research and development. For example, in 2009, the government invested $3 billion in technology that allows automobiles to operate on compressed natural gas. Some of the country’s nanotechnology companies have also partnered with the auto industry in developing features that would enhance the more visible consumer experience, such as anti-stain dashboards, hydrophobic glass panes, and anti-scratch panes.

Though they have yet to be mass produced, Iran is also making headway in electric cars and motorbikes. Iran celebrated National Clean Air Day on January 18th with the Yooz, a battery-powered compact car that drives up to speeds of 100 kilometers per hour. It was unveiled before President Rouhani, who took it out for a test drive. Electric motorbikes developed at the Sharif Research Center were presented as well. The Rouhani administration has incentivized clean-air practices by removing import tariffs on hybrid cars, exempted hybrid car owners from fees to access traffic-heavy areas, and encouraged taxi owners to trade gas-powered cars for new hybrid cars.

Below is information about an upcoming exhibition in Isfahan, Iran that will showcase automotive components, production facilities and the latest technology.  It boasts to be the largest professional automotive trade show in Asia where exhibitors can promote their business in international markets.    More information is available here and below:


International Exhibition of Automotive Spare Parts 2017

Isfahan Fairground – Isfahan, Iran
April 25-28, 2017