Analysis of the Automobile Industry in Iran - Growth, Trends, COVID-19 Impact, and Forecast (2022 - 2027)
The Iranian automobile market was valued at USD 26.43 billion in 2020, and it is expected to reach USD 45.56 billion by 2026 by registering a CAGR of about 9.57% during the forecast period (2021 - 2026).
The automobile industry in Iran witnessed a decline in growth due to the covid-19 pandemic and Sanctions imposed by countries like United States on Iran. However, as government in the country is taking the necessary actions to boost the productions of vehicles and parts locally to meet the demand for vehicles and reduce its import cost at the same time, market to witness steady and consistent growth during the forecast period.
Moreover, major car manufacturers in the country are also increasing their production with locally manufactured parts and components. Apart from these factors, ongoing projects, and rising e-commerce activities to further propel demand in the market. In addition, Iran's auto sector has also become self-sufficient in the production of some parts to some extent after which foreign companies stopped supplying car kits to Iran when the United States reimposedsanctions on the Islamic Republic in 2018.
Apart from government, local OEMs are also entering into agreements and associations with the university, research institutes to upgrade the manufacturing technology related to auto parts and components which further expected to boost demand in the market during the forecast period.
Key Market TrendsPassenger Car Sales Expected to Dominate the Iranian Automobile IndustryIran is one of the largest automotive markets in the Middle East owing to growing domestic production of auto components and rising consumer demand. However, the impact of sanctions and geopolitical turbulence is inevitable on the market. The international sanctions have had a tremendous impact on the industrial development of many industries in the country. Iran, which is the largest automotive market in the Middle East with a market of nearly one-third of the German automotive market, has seen a drop in the automotive industry with the implementation of the sanctions.
Despite the stringent lockdown and social distancing norms in the global scenario and the disturbing political geographies nearby the country, Iran showed good numbers in automotive sales and production. For instance,
Moreover, with increasing demand for passenger cars in the country, the major OEMs are planning to launch latest models. For instance,
Iran's automotive engine and engine components have considerably increased during the past several years with fast growth in population and need for vehicles. In its 2025 grand economic plan, Iran aims to become the number one automotive industry of the Middle East region, aiming to rank fifth in Asia and eleventh globally.
Primary factors contributing towards the increase in production activity in auto parts and components are the government’s support plans for the auto sector, increasing skilled and educated workforce, and huge potential for private sector investments.
With homegrown engine manufacturing established to meet the growing demand of vehicles in the country, and EV adoption still being in early stages, the market is expected to grow positively during the forecast period. For instance,
Therefore, in light of above-mentioned instances, engine segment of Iran automobile industry expected to witness positive growth over the forecast period.
Competitive LandscapeIran's Automobile Industry is fairly consolidated market. There are many major local players in the country, such as IKCO, SAIPA, Pars Khodro, Kerman, and Bahman, who manufacture a variety of different models (such as Samand, Tiba, Dena, etc.). IKCO and SAIPA are the biggest automotive manufacturers. Many players are in planning to ramp up production output in the coming years. For instance,
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