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Boston, MA -- (SBWire) -- 11/29/2013 --BMI believes there are still too many risks to manufacturing - not least the shortage of capital and Western sanctions - to expect a full recovery in the current year. Indeed, output for the first four months of the Iranian year, which coincides with the four months ending July 2013, was down a further 47.0% year-onyear (y-o-y), according to data from the Iran Vehicle Manufacturers Association. Although production of the Peugeot 206 recommenced in December 2012, which was heralded as the beginning of an upturn for the more self-sufficient industry, output of the model is down 67.0% y-o-y for the four-month period to July.

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With this performance for the year so far in mind, we are revising our production forecast down further to a decline of 49.3%. There is reasonable upside potential for the remainder of the year, after Iran's Minister and Trade for Economic and Industrial Affairs, Mohsen Salehinia, announced in July 2013 that the country will produce 3,000 cars every day from August, despite international sanctions placed on the industry. Iranian carmakers Iran Khodro (IIKCO) and Saipa are set to produce 1,500 cars a day each under the renewed push.

How successful this will be without backing from former foreign partners remains to be seen and even if achieved, it would leave output down on the previous year. However, new opportunities have arisen in the form of agreements reportedly reached in July between major Iranian manufacturers and Chinese carmakers. There are few details about the scale of the projects and we believe that the time required to start such projects would mean that any new models would not be contributing significantly to total industry output growth within the current year. Therefore, we retain our view that production will remain far below previous levels.

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