Sanctions-hit Iran posts 42 pct fall in car production

Iran's state-owned car manufacturer Iran Khodro unveils in Tehran on February 20, 2010 for the home market the Peugeot 207i, a locally built version of the French automobile firm's 207 model. AFP PHOTO/ATTA KENARE

TEHRAN: Auto production in sanctions-hit Iran nosedived by more than 42 percent in the past six months, media reports said on Thursday, citing industry ministry figures.

Some 459,440 vehicles were produced from March 21 to September 20, according to the figures, while production stood at 792,286 in the same period in 2011, ISNA news agency reported.

The drop accelerated in the month from August 21 to September 20, with the ministry recording a 66-percent fall compared with the same period last year. Iran built more than 1.5 million vehicles last year.

The report did not provide any explanation for the drastic drop.

However, the decline coincides with a strengthening of Western economic sanctions against Tehran, and the halting of parts deliveries by French manufacturer Peugeot because of the punitive measures.

Peugeot is a partner of top automaker Iran Khodro (IKCO), which manufactures the 405 and 206 models and whose output accounts for about 40 percent of Iranian automobile production.

Peugeot announced in February it had stopped shipping to Iran and repatriated most of its staff.

It cited difficulties created by the Western banking embargo against Tehran, which has complicated trade and caused a shortage of foreign currency.

The Iranian Association of Automobile Manufacturers said in July the drop in production is due to the "lack of money available to the manufacturers" given by the state, which caused a "cash crisis."

Citing executives, business daily Donaye Eghtesad said the decline was "unprecedented for the past 20 years" and could create difficulties for the whole industry, including subcontractors, with plant closures and layoffs, if the government does not come forward with $1 billion in aid.

The sector generates about 500,000 direct and indirect jobs in Iran, according to official estimates.





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