Baham Automotive Company Privatized

The main shares of Baham Automotive Company, previously held by semi-governmental sectors, have been transferred to Kruz Company, one of the largest automotive parts manufacturers in Iran and a private company. According to reports from news sources in Iran, 62% of the shares of Baham Automotive Group have been purchased by Kruz Industries. For years, the privatization of shares of state-owned and semi-state-owned automakers has been a topic of discussion in Iran, but until now, most share transfers have been effectively transfers from one state or semi-state company to another. Baham Automotive Group is considered one of the main players in Iran's automotive industry after Iran Khodro and Saipa, alongside Kerman Automotive Group. This company collaborates with Mazda of Japan and Chinese companies like FAW in the passenger car sector, and in the heavy vehicle sector, it produces products for Isuzu of Japan. For the transfer of Baham Group's shares, Kowsar Financial and Credit Institution has facilitated the transfer from three former shareholders to 'Wiseman Motor,' which is affiliated with Kruz Automotive Industries. In recent years, one of the significant discussions in Iran's automotive industry has been the privatization of these industries, but one of the challenges has been the high value of automaker shares and the lack of reliable and specialized investors for their privatization. After the revolution, Iran's automotive industries, which were private before 1979, were nationalized and confiscated, leading many industrialists and productive capitalists, such as the Khiyami brothers, to emigrate abroad. Some experts believe that even after several decades, there is still a shortage of such productive and specialized capitalists in Iran. However, in recent years, some private parts manufacturers in Iran, like Kruz Group, have grown, and some believe that new productive capitalists have emerged from these private parts manufacturers who can manage Iran's automotive industry. Bahram Shahriari, an automotive industry expert, discusses the entry of the private sector into the parts manufacturing industry for managing the automotive sector, stating: 'Because we do not have a powerful private automaker, the government mindset has always managed our automakers. Government managers have only thought about increasing production volume and have not considered the future. Another point is that we should not see parts manufacturers as separate from the automotive industry, as they are a significant part of a vehicle's production and are not outside the automotive industry.' He explains: 'The purchase of shares of a semi-governmental company by the private sector is not a wrong occurrence, as the private sector will be concerned about itself and the future of its productions. The private sector mindset knows well that if it delivers low-quality goods to the public, it will lose the market. A company that has been involved in the automotive industry understands the challenges of this sector well and will strive harder to eliminate competitors. It can even create a situation where a national car is produced with economic volume. Regardless of whether this purchase is right or wrong, the nature of this story is very positive because when the interests of a downstream company are tied to the interests of an upstream company, it will increase its oversight. Therefore, not only will there be no decrease in quality, but we will witness quality growth due to the preservation of these interests.' Contrary to this expert's opinion, some experts and parts manufacturing companies fear that the expansion of companies like Kruz and the acquisition of management shares of automakers will lead to lobbying by these companies over the automotive industry and create a parts purchasing mafia. Others believe that with the acquisition of management shares of large state automakers by private parts manufacturers, the oversight of engineering and quality sectors of the automotive industry over parts manufacturing industries that hold management shares of automakers may diminish. However, some other experts believe such occurrences have also happened in other parts of the world. Amir Hassan Kakayi, a professor at Iran University of Science and Technology, explains: 'There are examples of this happening in the world. For instance, a company like Continental, which is one of the large parts manufacturers, is gradually becoming a large automaker; Kruz has also shown that by acquiring shares of automakers, it wants to utilize its capabilities and capital in the development of the automotive industry. Logically, the situation of Baham Group will improve. If a real private sector takes over the management of state and semi-state companies and private sector laws are applied to them, we can hope for the empowerment of the private automotive sector. My prediction is that Baham Group can become the third automotive hub.' Previously, Kruz parts manufacturing company executed a scenario for acquiring automotive shares through Tadbir Sarmayeh Arad for Iran Khodro and managed to acquire about 16% of the total shares of Iran Khodro as the largest shareholder among the major shareholders of this company, and now it seems to be seeking to obtain the 46% block of shares of Saipa after acquiring management of Baham Group's shares. Meanwhile, Mohammad Reza Nematzadeh, the Minister of Industry, Mine and Trade, emphasized in an interview the necessity of settling the claims of parts manufacturers and paying their dues by automakers. Therefore, the speculation about settling claims through the transfer of shares of automotive giants to this parts manufacturer has been further strengthened. According to Fars, Kruz parts manufacturing group sells about 2 trillion tomans worth of various parts to Iran Khodro and about 1 trillion tomans to Saipa annually.