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  • The automotive sector is the second largest industry after oil and gas and with a turnover of about US$12 billion.

    The automotive sector is the second largest industry after oil and gas and with a turnover of about US$12 billion. | Photo: irangov.ir

Published 1 January 2020

The initiative comes after German’s company Mercedes-Benz, dropped plans to expand its business with the Persian nation, in reaction to renewed U.S. sanctions in August 2018.

Iran opened Wednesday a heavy-duty truck manufacturing plant that will employ 5,000 people at full production in Meshginshahr in northwest Iran, where the first phase for production of Chapar trucks began during a ceremony attended by President Hassan Rouhani.

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The plant will manufacture 50 trucks a day at full production. Currently, it operates with 400 workers, but another 800 people will be employed later on in the first phase which has been built at a cost of US$240 million. 

The Chapar model is powered by a 354 horsepower diesel engine, with a torque of 1,850 Newton meters. Media reports said the truck has been produced with the help of Germany's Mercedes-Benz and that many of its parts are identical to original parts.

Mercedes-Benz is part of German car and truck manufacturer Daimler which dropped plans to expand its Iran operation in reaction to renewed United States sanctions in August 2018. The company had established a joint venture with Iranian vehicle manufacturer and dealer Iran Khodro and Iran’s Mammut Group to make and distribute Mercedes-Benz trucks and powertrain components in the country. 

The automotive sector is the second largest industry after oil and gas and with a turnover of about US$12 billion, it plays an important role within Iran’s economy, making up for 10 percent of the country’s GDP and four percent of its workforce. Moreover, it supports about 60 other industries, such as glassmaking, aluminum, copper, steel, rubber, textiles, and paint.

Iran counts with a population of over 80 million people, therefore the demand for automobiles is huge. According to the Ministry of Industry, Mine and Trade, Iran produced more than 1.5 million cars in 2017. Washington sanctions have seriously disrupted the car market, causing prices to shoot through the roof as factories have failed to provide cars on time.

The economic measures imposed by the White House has also made other dealers like France's Renault and its competitor Peugeot-Citroën to put their development in Iran on hold after new U.S. sanctions went into effect.

Last month, Iran’s Rahmani mentioned that 20,000 unfinished cars gathering dust at the parking lots of Iran’s leading auto manufacturers because parts needed in their production could not be imported due to the sanctions.

“With the help of the defense industry and the private sector, we supplied most of the parts internally and completed and delivered about 10,000 vehicles,” said the minister.

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