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Date: 2/12/2017      Time: 21:50
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Iran, Middle East’s Largest Hub for After-Sales Service

In 2016, the value of vehicle market and the value of relevant after-sales service in Iran stood respectively at $20 bn and $14 bn.

The figures put Iran at the top of the list of Middle East’s largest after-sales service providers, says Iran Khodro President & CEO Hashem Yekehzare.

According to IKCO Press, in an address to the Fourth Iran Automotive Industry International Conference (IAIIC), Yekehzare added that the growing age of driving vehicles on the streets provide after-sales service providers with further opportunities to offer their services.

"In 2016, there were nearly 9 million vehicles driving on the Iran streets with an age of at least 10 years. This is a considerable potential for car manufacturers in the country to replace the current second hand vehicles with their vehicles, he noted.

Yekehzare said 16% of the second hand vehicles with an age of at least 10 years are outdated and added the number of driving vehicles increased from 10 million units in 2007 to about 19 million units in 2016.

The CEO went further saying that IKCO has 14 affiliates in sales sector and 12 other affiliates in after-sales service. "With 11 regional offices, 779 authorized outlets, repair shops on 1300 thousand square meter spaces and 1122 authorized sale offices across the country, IKCO has been ranked as the top service provider over the past years," he added.

Elsewhere in his address, Yekehzare said Iran's automotive industry is expected to reach 5th rank in Asia and 11th rank in the World by 2025. To this end, the company has developed a plan to preserve its stance as Iran’s leading car manufacturer and one of the main brands of the Middle East and North Africa.

According to Yekehzare, the value of Iran’s car market in 2016 amounted to over $34 bn, of which $20 bn fell on produced vehicles in Iran and $14 bn on after-sales service.” He estimated that in 2025, Iran’s after-sales service value will reach $39 bn with a 176% growth.

He cited the importance of creating "customers’ loyalty model" and added, "In our company, we believe that the sale of the first product is made through marketing measures, however customers’ loyalty and repeated purchase is usually handled by after-sales service sector."

Yekehzare reminded his audience of IAIIC 2016 event and said, "Along with four members of BRIC (Brazil, Russia, India and China) there are already 15 developing countries in the world (also known as 15 Rising Economies) which are getting closer to the developed countries in terms of car sales and production."

"These 19 countries will take over half of the world’s car sales and production in near future," he noted. He also cited the growing number of driving vehicles across the globe, adding the revenue of after-sales service is directly connected with the number of driving vehicles on the streets.

"At present, there are about 1.3 bn driving vehicles in the world. It is estimated that in 2025, the number will reach 1.8 bn. Meanwhile, the 19 countries' share of markets is set to increase from 35% to 52%," he said.

According to Iran's Automotive Industry Outlook 2025, Iran is set to become the largest regional hub and IKCO as the country's largest car manufacturer has a high potential to attract foreign partners for cooperation.

He also touched on the overall sale of vehicles in the world and said since 1990, there has been a continuous growth in and car production and sale in developed countries and added, "In 2015, about 90 million vehicles were sold in the world and it is estimated the figure will reach 120 million in 2025,” he added.

He predicted that the largest growth is expected to fall on the rising economies and said the economies will produce over half of the overall vehicles to be produced in the world in 2025.

Iran Khodro President & CEO also talked about the world automotive industry prospect and said the automotive industry gained about $3500 bn in 2015 but it is expected to make a 90% growth reaching $6700 bn by 2030.

“An interesting point is that according to the predictions made so far, the overall revenue of vehicles sales and after-sales service will experience a 45% and 260% increase respectively by 2030, while the establishment of the new sectors including new services through communication technologies will significantly contribute to the growth," Yekehzare noted.

He went on saying that estimations said more than $5 bn of the $39 bn revenue of Iran car industry's after-sales service in 2025 will fall on the new services and the development of this sector requires cooperation of all domestic and international companies involved in technology sector.

The President of Iran Khodro also said the car manufacturer is set to sign a consortium agreement with a European company in less than a month to produce engine, axle and gearbox. "An agreement has already been signed between the two sides to design and produce a local platform, transferring the whole technology in the future," he added.

According to Yekehzare, in the first stage of the agreement, the European company is expected to produce an engine, involving IKCO engineers and experts. Then, in the second stage, the engine will be produced with the cooperation of Iranian engineers and in the third and final stage; the Iranian engineers are set to produce the engine themselves.

The Fourth Iran Automotive Industry International Conference is held in Tehran on February 12-13. The conference in Milad Tower is attended by automotive industry's top management from Iran and other leading countries in this sector.




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