IRGC Set To Enter Iran's Auto Industry As Economic Dominance Expands

Ali Fadavi, the deputy commander of the IRGC
Ali Fadavi, the deputy commander of the IRGC

The IRGC looks set to enter Iran's auto industry and is awaiting approval from the country's supreme leader as the state security forces expand its economic dominance in Iran.

Ali Fadavi, the deputy commander of the IRGC, made the announcement Thursday, set to anger many as the government's web of corruption continues to spread across the country's ailing economy. The IRGC is inextricably linked to fields unrelated to its remit, the country's de facto ruling body.

The IRGC’s engagement in economic activities in Iran is not unprecedented. In recent years, the government has started giving oil to the IRGC as a way to boost its budgets.

The notorious military organization involved in the brutal crackdowns on protesters in recent years, including killing over 500 in the wake of the 2022 uprising, has also been involved in trading some of the most important food items, including rice, sugar and tea. It has also been provided with exclusive access to several Iranian ports in order to carry out its undercover projects.

Iran’s auto industry is almost entirely dominated by the government which, following Khamenei’s orders, has imposed exorbitant taxes on the importation of quality foreign-made cars under the pretext of supporting domestic production. The controversial policy has made it impossible for the average pocket in Iran to buy foreign-made mid-priced cars.

There are about a dozen state-and quasi-state-owned automakers in Iran, of which two – Iran Khodro and Saipa - account for 94% of the total domestic production, with nearly 1,500,000 units of light and heavy vehicles produced annually, mostly sub-standard and older foreign models.

According to Farhad Ehteshamzad, the head of Iran Auto Importers Association, the country’s state-owned carmakers are incurring daily losses of $3.7 million, totaling over one billion dollars annually. Meanwhile, Umud Shokri, an energy geopolitics analyst, attributed the heavy losses of Iran’s carmakers to sanctions, technological gaps and mismanagement.