Soaring auto prices in Iran

Iran Materials 9 October 2012 14:40 (UTC +04:00)
Iran Khodro and Saipa have respectively raised the price of their products by 10 per cent and 18-20 per cent on average

Dalga Khatinoglu, Trend Agency's Iran Service Department Chief /

Iran Khodro and Saipa have respectively raised the price of their products by 10 per cent and 18-20 per cent on average.

According to the Mehr News Agency, the organisation for supporting consumers and producers has issued permission to increase the prices of Iran Khodro and Saipa products. Based on this permission, Iran Khodro and Saipa are allowed respectively to raise the aforementioned prices.

On August 28, the vice chairman of the Majlis industry committee, Aziz Akbarian, told Mehr that the two car manufacturers were laying off their workforce due to heavy debts to hundreds of parts-making companies.

According to him, the Money and Credit Council is planning to pay each of the two companies five trillion rials (some 400 million) in loans in order to prevent from sacking two million labourers.

The price of products of the two Iranian giant carmakers grew to the extent that the Peugeot 207i, for example, was sold at 380 million rials (around $31,000) in Tehran on September 24, while the price was 360 million rials the day before.

Meanwhile, the Khabar website wrote on September 24 that the price of the Peugeot 207i sedan has increased by 100 million rials (some $8,000) during six months of the Iranian solar year (began on March 19, 2012.

The former director of the association of Iranian car sellers and showroom owners, Jalal Rikhtegar Qadimi, told the ILNA News Agency on September 14 that the price of various models have risen by around 35 per cent between March 2011 and September 2012. "Limitations in imports, growth of the dollar price and reduction in domestic production are among the main reasons for the price rise," he said.

The sharp rise of the dollar price from 13,000 rials in the beginning of the current year to 36,000 rials in the past week, the non-delivery of spare parts by some foreign companies as a result of international sanctions and the non-allocation of subsidies and financial facilities to the industry sector led to the closing down of a number of production units related to the automotive sector and a subsequent significant decline in products.

The Association of Iranian Carmakers announced in August that car output fell by 36 per cent during the first quarter of the current calendar year (began on March 20) compared to the same period last year.

The reduction in domestic production happened as 16,756 cars, valued at $341 million, have been imported during the first five months of the current (calendar) year, according to reports and comments of the Majlis members.

In this line, the ISNA News Agency cited the Customs Administrations' data on October 8 that 7351 passenger cars, worth around $162.7 million, have been imported during the past two calendar months (July 22-September 21).

'"It is interesting to note that 78 per cent of the imports have been carried out using the official dollar rate' according to ISNA.

The official USD rate in Iran is 12, 260 rials, while this figure is about 30, 000 on the open currency market.

Super luxury cars, such as the Maserati and Porsche have been imported during the aforementioned period using the official dollar rate. This is while less than five per cent of individuals can afford to buy such expensive cars.

Some speculations indicate that the importers of such cars bag 30-40 per cent profit from selling specific models of cars.