Iran’s Government Tries Once Again To Offload Shares In Local Automakers

The Iranian government has revived plans to sell its shares in the country’s two largest auto makers, Iran Khodro and Saipa.

Both companies were set up in the 1960s. Iran Khodro – also known as IKCO – is the larger of the two and accounts for more than half of all domestic vehicles made in Iran. Saipa has a market share of around 35%.

Iran has a substantial car manufacturing industry, larger than that of Italy and not far behind the UK. However, the sector has seen wild swings in its fortunes in recent years, as international sanctions have been eased and then reimposed and international competitors have entered and then withdrawn from the market.

Overall output has ranged from more than 1.4 million units in 2011 and 2017 to around 900,000 units in more recent years. In the most recent annual figures, covering the latest Iranian year which ended in March 2022, Iran’s three largest carmakers – IKCO, Saipa and the smaller Pars Khodro – between them manufactured 867,363 vehicles.

The government is thought to own at least 14% of IKCO and 23% of Saipa, although additional shares may be held indirectly.

According to local media reports, deputy industries minister Manuchehr Manteghi has set a deadline of six months’ time for his ministry to sell its holdings. “We have taken the initial steps and all obstacles have been identified and we are moving to remove them,” he said.

However, there have been warnings from the Iranian Privatization Organization that the two companies’ large debts could complicate matters. Between them IKCO and Saipa had debts of almost $9 billion in 2019, according to media reports at the time. It is not clear what the current levels of debt are.

It is not the first time the government has tried to offload its shares in the two companies. Three years ago, the then industries minister Reza Rahmani said the government would sell its holdings in the two companies by March 2021. However, the deals never went ahead.