Some officials at Iran Khodro had in recent months expressed opposition to the closure of the Paykan production line.

The Paykan is hopefully set to be phased out of production some time next month.
The Iranian version of the British Hillman Hunter has been produced for almost 40 years in Iran. It is expected to be replaced with Renault’s budget sedan, L90, as of 2006.
The Paykan is of conventional design, a square four-door sedan with a live rear axle and OHV (overhead valve) engine (initially 1725cc with a 1496cc in 1970 and 1600cc in recent years).
The Hunter was produced until 1979 and was then sold off in its entirety to Iran where it was produced under the Paykan name.
Following heated discussions in recent months about whether production of the Paykan would finally be phased out, a senior industrial official said last month the car would certainly not be produced after March 21, the starting of the new Iranian year.
“The production line (of the Paykan) would surely come to an end on the first day of the new Iranian year,“ said the deputy head of Industrial Development and Renovation Organization (IDRO) Reza Danesh Fahim. He added that it would be immediately replaced by the L90 assembly line.
But the date of the Paykan’s demise was later changed to April 16 The car is still being produced.

Resistance
Some officials of the auto giant Iran Khodro, which produces the Paykan, the national car Samand and several Peugeot models, had expressed opposition to the closure of the Paykan production line in recent months.
On June 20 last year, the Oil Ministry had agreed to grant $310 million to the auto industry in return for the giant automaker Iran Khodro stopping Pakyan production after nearly four decades.
Paykan production had earlier been planned to be phased out in 1978, and replaced with the Peugeot 305 assembly line. The project however came to a halt with the triumph of the 1979 Islamic Revolution.
In 1989 again the car’s production line was planned to be replaced with Peugeot 405, but the project failed to become operational.
Asked why the main Paykan production line, which was supposed to cease operation by December 20, would be stopped after a three-month delay, Danesh-Fahim had said earlier that the company would not be able to stop production until March.
“We will start production of L90 cars in April 2006, which is why we have to end the Paykan production in late March,“ he said, adding that Iranian carmakers would produce 50 percent of the main components of the new car.

No Difference
Yousef Hojjat, deputy head of the Department of Environment, is of the opinion that it did not matter prolonging the life of Paykan for 20 more days since anyhow it had been manufactured for four decades now.
“We can turn a blind eye to the Paykan being produced for a few more weeks,“ he said, stressing that the last Paykan coming out of Iran Khodro would be sent to the company’s museum.
Danesh Fahim says Iran Khodro is setting up a new car painting facility in the northern part of its huge west Tehran complex as part of preparations for the production of Logan budget cars. He says this means the Paykan is certainly nearing its final days.
The old-fashioned sedan will, as mentioned above, be replaced with L90.
Capital investment in the L90 project totals 1.5 billion euros and production will start next year.
The Logan agreement between Iranian carmakers Iran Khodro and Saipa and the French giant Renault-Nissan stipulates that 50 percent of production will be carried out domestically, ’to be gradually increased to 80 percent’.
Over, 20 percent of domestically manufactured L90 automobiles are slated for export to 20 countries, which have been identified, while talks are underway with six more nations.
The price is estimated to be around 8,000 euros for full option models. The Paykan now sells for 6,000 euros.
Production of Logan will depend on market conditions.
L-90 cars will be produced using the design provided by Renault in initial stages.

Iran is planning to rid itself of its oil revenues by the end of the Fifth Economic Development Plan (2010-2015).

More often than not, most oil exporting countries, because of international crises, regional conflicts and the consequences of global policies of super powers such as the United States and Europe on crude oil prices, employ certain mechanisms to protect themselves and secure their economy against any challenges.
Similarly, the Islamic Republic, which largely depends on oil revenues, falls under the purview of the above rule. Therefore, like Norway, Kuwait, Mexico and East Azerbaijan, it established a foreign exchange reserve fund to stash away any excess revenue from oil exports. In this respect, the country is planning to rid itself of its oil budget by the end of the Fifth Development Plan.
Iran–s economic strategy as regards investment, production and non-oil exports, which are the main denominators for achieving economic development, needs to be defined and implemented exclusive of oil revenues such as non-oil exports (products, services, tourism). Either way, the country needs widespread reforms in its economic and social structure.
Development of tourism industry, because of fundamental social and cultural setbacks on one side and political and security issues on the other, has not been promoted in a positive manner.
Therefore, attention has to be shifted toward non-oil exports. Of course, because of the following reasons it is impossible to expect reforms in a short period of time, which could tide over the deficit in hard currency revenues from oil.
Bank profit rates in Iran, compared to international standards, are unconventionally high. This has increased investment costs almost four times than that of other nations. It has also augmented the deficit of productive investment volume, and if not dealt with on time, the continuation of investment deficit would result in production decline and subsequently, non-oil exports.
Likewise, the hike in foreign exchange rates, apart from being an incentive for non-oil exports, will lead to the reduction of exports. This is because of improper grounds for exports as well as higher costs of investment deals, which effectively determine the closing prices of export products.
Iran has been unable to join the World Trade organization (WTO). This has deprived the country from international economic privileges, tariffs and psychological facilitations for its goods transit and investments. It has also been a huge obstruction for domestic economic development in terms of global competition and growth.
The inability to gain access to modern technology on one hand and the existence of outdated production facilities and equipment on the other, are other obstacles for production and non-oil exports development.
Since the increase in oil revenues, particularly during the Third Development Plan, the country has been trying hard to give the much-needed attention to modernization, but it is still far from international standards.
Shortfalls in labor productivity, as compared to international standards and increased production costs make the country–s non-oil exports uncompetitive. For instance, in Pakistan, India and Malaysia, the workforce productivity rate saw a 25-percent increase during 1985-1995. They even reported some 50-percent increase by 1995, whereas such productivity rate in Iran was just 3 percent during the same period.
However, every year, without any attention to the productivity rate of the workforce, salaries are officially raised even though there is no logical relation between the increase in the rate of salaries and that of labor productivity. This undermines the validity of cheap labor claims in Iran, which, if true, can be an advantage in any economy. Regardless of that, in the Fourth Development Plan, in order to reach an 8-percent growth in GDP, some 3.5-percent workforce productivity growth rate has also been predicted. But there have been no fundamental reforms in the production industry and hence it would be impossible to create any kind of motivation in the workplace in order to boost productivity.
Nevertheless, keeping in mind the above-mentioned shortfalls and the murky international oil market, the establishment of foreign exchange reserve fund will reveal its true value and benefits in due course. Any irregular spending from this fund, which is against its very creation, would be indeed unfortunate, because it will have serious consequences, create new challenges for the economy and even influence all levels of socio-political activities.