Blog: Dave LeggettRock and a hard place - Iranian CKD assembly

Dave Leggett | 1 July 2003

Visited one of Tehran's smaller assemblers this morning - Bahman, on the edge of town. These guys have a CKD assembly deal on the Mazda 323 (old model) and an ancient looking Mazda pick-up. Volume on the 323 is of the order of 4,000 units per annum. It struck me they're caught between a rock and a hard place. Mazda will sell them a Completely Built-up Unit (CBU) for less than the price of the Completely Knocked Down (CKD) unit - which has to be packaged and apparently that process is expensive. Other makers offer the same deal.

But these guys don't want to just import CBU and make big profits. They want to develop a manufacturing industry. So they take the more expensive route, have to add in their own assembly cost and overheads, and by the time the Mazda 323 reaches the market - after tariffs and taxes - it costs 30,000 US dollars. Yep, 30K for a Mazda 323 (old model remember)!

And in a developing market where you have to pay cash for your vehicle (no credit finance available here). No wonder that Paykan (retails at 10K US) option still gets takers.

It's effectively about job creation. I got the impression that there isn't a whole lot of technology transfer going on. They should be pushing through more volume to make the operation make some kind of commercial sense, but how keen is Mazda to let them do that? Also, Mazda is controlled by Ford which may be an issue. Must say the people at Bahman impressed me with their determination and professionalism, but it was a salutary lesson in the difficulties Iran faces in developing its industry.

Iran Khodro visit is scheduled for tomorrow - that's a bigger operation - involving PSA as technology provider.

Had an interesting ride around Tehran in a circa 1970s Chevrolet last night - US cars that were assembled here in the Shah's days are still on the road in sizeable numbers. Some look a little less than pristine - more like they've escaped from Mad Max. What do the locals here do to unwind after a hard day? Drive, that's what.

I'd better get a move on - there's an official opening ceremony for the Tehran Motor Show later today. That should provide an interesting snapshot on the state of the industry over here.


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