Iran

Last modification: 23 déc 19
Introduction: 

Iran has the world’s 18th-largest economy and is characterised by a high degree of central planning. With large reserves of oil and gas, it is an energy superpower. The country was hit hard by the reinstatement of US sanctions in mid-2018, which nearly halved its imports and exports.

 Iran’s automotive industry is the country’s third-largest, after oil and gas. The country produces passenger cars, four-wheel drives, vans, trucks, buses, minibuses and vans. The industry represents 10% of Iran’s GDP and employs 4% of its workforce (app. 700,000 persons). 

Iran’s vehicle market is expected to grow at a compounded annual rate of 4% through to 2024. 
 

Chapter 1: Economic and business environment

Demographics

 82.9 million (2019) 
Capital

Tehran (15.2 million inhabitants); largest city in the country, and in western Asia (i.e. between Cairo and Karachi). 
Major cities
  1. Tehran
  2. Mashhad (3.4 million inhabitants)
  3. Isfahan (2.1 million)
  4. Karaj (2 million)
  5. Shiraz (1.9 million)
  6. Tabriz (1.8 million)
  7. Ahvaz (1.4 million)
  8. Qom (1.3 million)
  9. Kermanshah (1 million)
  10. Urmia (760,000)

(Source: Statistical Center of Iran)
Languages
  • Persian (Farsi): 53%
  • Azeri (and other Turkic dialects): 18%
  • Kurdish: 10%
  • Gilak and Mazanderani: 7%
  • Luri: 6%
  • Arabic: 2%
  • Others: 4%
GDP
  • $484.7 billion (total)
  • $5,820.6 (per capita)

(Source: IMF)
Unemployment rate

12% (2018)

(Source: Statista) 
Main industries
  • Oil and Gas production (largest industry)
  • Petrochemicals
  • Fertilizers
  • Caustic soda
  • Car manufacturing
  • Pharmaceuticals
  • Telecom
  • Energy
  • Construction materials
  • Textiles
  • Cement
  • Metal fabrication
  • Food processing
Currency

Rial

50,000 IRR = 1.185 USD (17 December 2019)

(Source: XE)
Interest rate

18% (October 2019)

(Source: Trading Economics)
Fleet Maturity Index (scaling)

1/5
Political key info

Islamic republic
Inflation

27% (November 2019)

(Source: Trading Economics)

Chapter 2 : Automotive market, segments & sales

Total Car park

23 million (end of 2018)

Iran’s automotive industry is the third most active industry of the country, after its oil and gas industries. 

  • Iran is the 18th largest automaker in the world and one of the largest in Asia, with an annual production of more than 1.6 million.
  • Iran Khodro is the biggest automotive manufacturer in the Middle East.
  • Iran Khodro and Saipa account for 94% of the total domestic production.
Top 5 brands (total market)
  • Pride
  • Peugeot
  • Samand
Model preference top 5 (total market)
  • Pride
  • Peugeot 206
  • Tiba
  • Peugeot 405
  • Peugeot Pars

(Until 2018) 
Dealer network (including fleet dealer network)

 

Chapter 3: Company car market

Evolution fleet sales (last 5 years)
  • Saipa: 91,700 (2019), -15.7% compared to 2018.
  • Iran Khodro: 68,500 (-47.5%)
  • Pars Khodro: 24,500 (-50.2%)
  • Total: 184,900 (-36%)
Top 5 fleet brands (fleet market)
  • Mammut (representing Scania)
  • Isuzu
  • Saipa 
  • Iran Khodro
Fleet Model preference top 5 (fleet market)
  • Pride 111
  • Peugeot 206
  • Peugeot Pars TU5
  • Tiba 2
  • Samand LX

Chapter 4: Taxation & legislation

Income tax – Taxable persons

The standard corporate income tax rate in Iran is 25%. Companies that are quoted on the Stock Exchange and Commodity Exchange are eligible to a reduced corporate income tax rate of 22.5%.

(Source: NoMoreTax)

Annual Taxable Income (in IRR) Rate
Up to 500 million 15%
500 million to 1 billion 20%
Over 1 billion 25%

(Source: Iranian National Tax Administration)


 

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Chapter 5: Car policies

Which sectors provide the most fleet cars? 
transportation companies in Iran have the greatest number of fleets.

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Chapter 6: Funding methods

Full-service leasing
In recent years, condominiums and car leasing have expanded in Iran. In addition to importers and manufacturers offering special terms of sale, various companies have started selling car leases. 

Fleet management
At present, there are around 150 fleet management companies active in Iran. The number of companies developing fleet management software is very small. 
 

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Chapter 7: Fuel

Fuel type

  • Government figures from October 2018 state that Iranians use 91 million litres of petrol per day, which translates to almost 3.8 million litres per hour. On a per-capita basis, that is approximately six times the global average.
  • Diesel is relatively rare. Euro 4 diesel is distributed by 166 fuel stations across eight cities, plus 163 stations on highways. (Figures from February 2019).
  • Iran has the world’s largest CNG fleet, numbering 1.5 million. In May 2019, there were about 2,500 CNG fuel stations, with a joint capacity to supply 40 million cubic metres of CNG per day. The daily average is just under 21 million cubic metres.  
  • In Iran, installing and using LPG cylinders is illegal, due to the risk of explosion.
  • Hybrid cars are currently not available in Iran due to lack of infrastructure.

Fuel price

The price of petrol is affected greatly by the exchange rate of the Iranian rial to the US dollar.

Current price of one litre of petrol: 15,000 IRR ($0.115, €0.104) (16 December 2019)

Fuel infrastructure

3,800 Fuel stations (2018)

Fuel rationing

In November 15th, 2019, the gasoline rationing plan was reimplemented, with a different gasoline subsidy.

Government-allocated amounts of petrol:

 

Vehicle category

Fuel type

Litres/month

1

Solo car

Bi-fuel

30

gasoline

60

2

Taxi

Bi-fuel

200

gasoline

400

3

Fuel- efficient Pickup

Bi-fuel

60

gasoline

200

4

High consumption Pickup

Bi-fuel

120

gasoline

300

5

ambulance

-

500

Smuggling and illegal trading of fuel is a decades-old problem, said to constitute about 20 million litres per day.

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Chapter 8 : TCO components

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Chapter 9: Safety, insurance and telematics

Safety

Unfortunately, Iran is not a very safe country in terms of traffic. Domestic car makers don't pay much attention to safety. Due to lack of competition in Iran's automobile market as well as outdated products, a report by the Iran Research Center shows that locally produced cars are unsafe.
In all, 37 domestic and imported cars have been evaluated qualitatively, including Pride and Tiba (two stars), Peugeot 206 (three stars) and the 90-degree Thunder 90 with very low safety ratings. Peugeot Pars and Samand barely earn three stars.

Accident rate

The rate or road accidents in Iran is about 20 times higher than the world’s average.

(Source: Unicef)

In 2018, 17,183 Iranian died in traffic accidents, a 1.2% increase over the previous year. The number of injured amounted to 335,995, a 9.4% increase. The figures show a remarkable gender imbalance, with just 3,725 women killed (vs. 13,458 men) and 104,794 women injured (vs. 262,657 men).

(Source: Iranian Legal Medicine Organization)

Safety measures

Speed cameras are a regular feature on Iranian roads, and most drivers stick to the speed limit. Speed bumps – some unmarked – also force drivers to slow down to 15-20 km/h, or risk wrecking their car.

Insurance

Under the Sixth Development Plan Act in Iran, third-party insurance will be given to the driver instead of the car. Not only will this benefit low-risk drivers, it will punish high-risk drivers. Drivers with better driving behaviour will pay less for the insurance.
 

Telematics

Telematics is a growing industry in Iran. There are many knowledge-based companies working for the local IoT and fleet management industries.

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Chapter 10: Environment

According to government regulations, these are the ages at which cars are considered outdated (and must be replaced):
•    Taxis, Intercity Buses, Buses, Motorcycles: 10 years
•    Governmental cars, Minibuses, Trucks and Trailers, Pickups: 15 years
•    Personal cars, other vehicles: 25 years

Considering the lack of infrastructure, self-recharging hybrid cars would be the best green option for the Iranian market. 
 

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Chapter 11: Mobility

Traffic conditions in Tehran

According to the Tehran Traffic Control Company, congestion in the Iranian capital had declined by 52% in the summer of 2019, compared to the previous year.

(Source: Tehran Times)

Traffic conditions in Isfahan

Over the past two years, city authorities have been developing public transport options, including extra bus and urban train lines. Additional measures in the Isfahan Strategic Plan 5 are aimed at reducing the problem of urban congestion in the centre.

Isfahan is one of the cities (others include Hamadan and Mashhad) that take part in the ‘Tuesday without vehicle’ scheme, which bans cars on that day of the week from city centres.

Mobility solutions

Public transportation in iran is cheap and efficient. All cities have bus services. Some have metros. Taxis are common and frequently used.

Smart mobility

There are several initiatives under way in Iran in terms of smart mobility.

  • One project involves taxis, and aims to reduce waiting times, make it easier for drivers to find passengers and calculate their income. 
  • Another is focused on the Vehicle Routing Problem, and aims to reduce waiting time for buses and other means of transportation. 
  • Startups like Snapp, Tap30 and Maxim offer smart taxi access, allowing users to request a ride via an app. 
     

Smart cities

The Iranian government has launched various initiatives on mobile government, e-government and has launched a National Information Network. However, these projects are poorly implemented.

(Source:  https://mob.gov.ir)

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Chapter 12: Key trends to watch

Electric vehicles 

Currently, EVs and fuel-cell vehicles are not available because there is no infrastructure in the country. 

As the global automotive industry moves toward hybrid and electric vehicles, Iran may have to consider importing or producing EVs in the next few years. That problem has not been addressed so far and this is not high on the agenda.

 

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