Product Development with 40% of Sales Revenue Dedicated to Research and Development

Allocating 3 to 5 percent of car sales revenue to research anddevelopment in is planned in "Iran 2020 Vision" document while theindustry is currently suffering from a lack of product design and developmentand the only way to improve this situation is to pay particular attention toresearch and development.

A look at the parts import statistics shows that the bulk of theseimports are now raw materials, and in such circumstances the result of usingR&D units, especially for raw material producers, would be to findeffective raw materials.


There exists a negligence in research and development in the automotiveindustry, especially in the part industry; according to industry activists, theworld now spends $114 billion annually on research and development in theautomotive industry, while the ratio of research and development to added-valuein Iran automotive industry reaches to only 1.2%. In the meantime, the questionis: What is the reason for this neglect?


Mohammad Reza Dehghan, director of the Crouse Manufacturing Research andInnovation Center, emphasizing that the automaker does not allocate funds toresearch and development of part makers says: "In fact, the part makerwill produce on the basis of the component that must be supplied and allocatefrom the sales profit to research and development."

He adds: " Part of the research and development budget goes to the manpowerand space allocated to him/her, and part of it goes to R&D equipment, whichis expensive and if we want to have progress we need to have these equipment inorder to be able to move forward."

The director of the Crouse Manufacturing Research and Innovation Center,mentioned that the amount of funding depends on the amount of production, andsaid: "If production is increased, the percentage of budget allocationwill also increase, and vice versa. Because the cost is a certain amount."

Dehghan pointed out to the actions taken by the center in previous yearsand said: "Since the 2010s the research center was set up in the [Crouse] company,and a year and a half later the products were ready to be marketed, but itnevertheless took time to be prepared to produce all the products and offerdifferent generations of products which took 4 years to complete.


"What is on the market is policy defined by the automakersand the design of the parts is based on the needs of the automaker," hesays. "A look at the activities of major companies such as Bosch, Siemensand Continental also shows that these companies do not produce small parts butthat specific companies are required to produce these parts and well-known companiesonly put together these small parts to produce the final product."

Emphasizing the fact that by relying on research and development we arecapable of producing all the modern parts of the world, the director of the CrouseManufacturing Research and Innovation Center said: " The design andproduction of the parts are based on the needs of the automaker; lack ofattention to research and development in the part industry also has manyreasons, one of which is the lack of funding by the part makers as well as theautomakers."