Iran Khodro's Best Kept Secret – Concealing a Recall of its Vehicles

Insurance companies claiming compensation following the sharp increase of claims resulting from the spike in car accidents in Iran

The Iranian vehicle company Iran Khodro, which manufactures and assembles hundreds of thousands of vehicles a year, has been concealing from its clients for over a year an extensive recall caused by significant faults in the production lines of its vehicles. The information came up in the company's internal report written in the past few months. According to the report, data from insurance companies that corresponds to official figures indicates that over 20,000 people were killed and over 200,000 injured in 2009. In 2010, these figures increased by dozens of percent. According to the report, about 30% of the casualties were injured as a result of faults in the company's vehicles.
It also transpires that Iran Khodro's management is hiding the need for a recall for clearly economic reasons, and in so doing seeks to save enormous amounts of money by not improving or upgrading the vehicles it has assembled. According to the company's directors, an extensive recall may significantly undermine Iran Khodro's future.
In the past two years, insurance companies in Iran have been flooded by an unprecedented number of claims for damages filed by private motorists and transportation companies.
Accident investigators, quoted in the company's internal report, believe that the assembly of low-quality components in the vehicles, including motor, gear and breaks components (including not using ABS), and faulty safety assemblies, (safety assemblies are not installed regularly), are the main reasons for what they define "the plague of the country". The investigators advised the company's management to immediately recall hundreds of thousands of vehicles. They believed that this move would significantly contribute to reducing the incidence of traffic accidents.
Iran Khodro's management reiterated to both government elements checking the matter and to the insurance companies demanding enormous sums in compensation following the wave of claims, that it was mainly the drivers who were responsible for the situation.
Traffic accidents in Iran are causing significant damage to the country's economy. Insurance companies say that there has been an increase in both the number of claims by private drivers following the carnage on the road, and the scope of these
claims. According to estimations of insurance company directors interviewed by the Ilna news agency, every fatal accident costs the taxpayers billions of rials.
The commander of Iran's traffic police says that the rate of traffic accidents in the country is estimated to be seven times higher than any other developed country. He said that Iran's roads exact the highest price in human life in the world in proportion to its population. A former consultant to the Iranian Ministry of Roads and Transportation, Dr. Reza Qiasi, described the number of casualties as a 'national disaster' and he believes the government's measures to reduce the number of deaths is not evident nor sufficient.
At Iran Khodro, which is significantly in deficit, there are ongoing conflicts between the management and the staff. The report explicitly mentions that the frequent strikes, including hunger strikes, long delays in salary payments, unjustified layoffs and the constraining of employees' steps, are continuously undermining the quality of production, its scope and the functionality of the company's products.
Insurance experts in Tehran say that contrary to the managements of Toyota, Ford and other car producers in the world, who hurried to announce extensive recalls, Iran Khodro's management, supported by the government, is demonstrating scandalous disregard for Iran's motorists, which is costing a heavy price in human life.