Recently, the Iranian car market has been marginalized due to rising prices amid falling dollar prices. Some have criticized the fact that the price of cars has risen with the rise of the dollar under the pretext of supplying spare parts. But in the current situation and with the fall in the price of the dollar, carmakers have announced that the final price of their products has nothing to do with the exchange rate.
Announcing a 10% increase in car prices
After the announcement of a 10% increase in car prices by the Competition Council, this issue was accompanied by the reaction of car manufacturers, consumers and the parliament. The automakers, who had expected prices to rise further, did not see the price increase as a response to their losses, and said it was not enough to offset their costs. Consumers, on the other hand, opposed the plan. Consumers’ opposition was due to the fact that the growth of prices in the car market is not in line with the trend of currency prices in Iran. On the other hand, the parliament’s opposition to increasing car prices until the task of organizing the market was determined was an issue that has shifted the car pricing process in a complicated direction.
Parliament opposes expensive car plan
The head of the parliamentary commission for industries and mines is opposed to any increase in prices by increasing car prices until the task is determined and the plan to organize the car market is approved by the parliament. This is a statement made by the head of the Parliamentary Committee on Industries and Mines in public in response to the increase in car prices. Ezatullah Akbari has stated that in the current situation and in the plan of the parliament to verify the cost price of the car, the mechanism of disclosing the total price of items and parts used to build the car has been foreseen. Therefore, until this task is determined and a clear picture of the cost of each car is provided to the people by the car manufacturers, the Industries and Mines Commission is opposed to increasing the prices of domestically produced cars.
Automakers’ dissatisfaction with insufficient price increases
On the other hand, carmakers produce their cars at higher than average prices due to sanctions and high production costs and the lack of new technologies in manufacturing. This has become an excuse for carmakers to take every opportunity to increase car prices. The situation is such that car manufacturers are not satisfied even with a 9% increase in car prices. But the question is whether the price of traditional production and outside the world conventional technologies should be paid from the pocket of the consumer? In a free market, can manufacturers such as domestic Iranian automakers be able to compete with up-to-date car offerings in the world? In the current situation, it seems that the consultation to liberalize car prices will be a crucial decision in this market that the government can implement in its last days.
Falling prices in the car market
Despite the growth of prices in the car market due to the announcement of the Competition Council to increase car prices by 9% since last Wednesday, prices in the car market have experienced a significant decline, so that during this period Peugeot 207 automatic has become 4 million tomans cheaper and This car has reached the price of 375 million Tomans. This issue stems from the fact that the market in the current situation does not have the traction of further price increases and there is no liquidity to enter the car market in society.
Price growth of some assembled car in the market
At first glance, it may seem that the price increase is only in the domestic car group. But due to the fall in the price of the dollar, the falls are felt more in the assembled and foreign car market. Of course, there are exceptions. Among the assembled cars of Suzuki Grand Vitara, gas is still advancing and this car has increased in price by another 10 million Tomans in yesterday’s transactions and has now reached the price of 980 million Tomans.
Production statistics of two major domestic automakers
Statistics provided by two major domestic automakers show that car production in the first month of this year, with a growth of 140% compared to their total production in April last year, reached more than 55,000 units. One of the approaches of domestic automakers to get out of the loss crisis is to use maximum production for mass production of cars. This is true not only in the passenger car market but also in heavy vehicles. For example, Iran Khodro Diesel Company, with the production of 253 vehicles in April of this year, was able to gain more than 62% of the production of commercial automakers.
Falling prices of imported cars
In addition to domestic cars, imports also experienced price declines to affect the entire car market from what happened in the foreign exchange market. During the past weeks and simultaneously with the decrease in the exchange rate, the price curve in the country’s car market also decreased, to the point that domestically produced cars fell by at least five million tomans. It is now reported that the import market has also been on a downward trend following the fall in currency prices. Accordingly, foreign cars are said to have experienced a 10 to 15 percent drop in prices due to the recent fall in currency prices.
Rising prices for auto parts
Along with the drop in car prices, the price of car spare parts has increased. This shows that despite the resistance to the growth of car prices, but the medium and even short-term outlook for car prices will be up. Definitely, the parliament will show the green light to increase the price of cars after the discovery of prices, and this will be a great favor to the domestic car companies. On the other hand, with the reduction of sanctions and the strengthening of Borjami possibilities, we will see the entry of large foreign automakers into the Iranian market.
Pricing strategy in the current car market
Renault recently Had announced its readiness to return to the Iranian market if sanctions were lifted. This will make Irankhodro’s current products have less bargaining power. Therefore, in the current situation, the pricing strategy in the automotive market is a cowboy strategy for automakers. Therefore, it is natural that market trends move towards increasing car prices. We have to wait and see where these predictions will go.
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