The car market in Iran is heavily dependent on the exchange rate and the decisions of two domestic automakers to change prices. In other words, all changes in car prices are affected by these two factors. Therefore, in this memo, we will analyze the fate of car prices this year due to environmental and economic factors. Please be with Artan Press.
*** Revival of Barjam and the fate of the car market
Recently, talks and discussions related to the revival of Borjam have been discussed in analytical publications. In this note, we will examine the price of the car from the perspective of Borjam. Basically, the price of a car in Iran is estimated based on the dollar exchange rate. This decrease in the dollar exchange rate will directly affect the car exchange rate this year. It is thought that along with the possible reduction of the exchange rate due to the Barjami agreement, the market price of the car will also decrease. The revival of Borjam could take the fate of the car market into a new phase.
*** Exchange rates and the fate of car prices
In recent years, the exchange rate has been the most important factor in changes in car rates in Iran. As last year, with the dollar exchange rate approaching the range of 30,000 tomans, we witnessed strange recessions in the car exchange rate. This time, with the decrease in the price of the dollar, we have witnessed a decrease in the price of the car. The exchange rate is influential in the fate of car prices in this regard, which can affect the price of car spare parts in the short term.
*** Car market boom in March last year
In the days leading up to the new year, we saw a boom in the car market. With the lifting of provincial travel restrictions and the reduction of corona risks and the emergence of many cities, travel resumed, reviving the car market. But April 1400 is coming to an end in a situation where the Minister of Silence had promised to reduce the price of cars by May at the latest. This prediction is somewhat correct. Meanwhile, the fate of the car price is considered to be increasing. The secretary of the Auto Parts Manufacturers Association said that the cost of producing car parts has increased and the parts manufacturers will soon announce the new parts prices to the car manufacturers.
*** Rising prices for auto parts
The increase in the price of domestic parts in a situation where all auto parts are supplied domestically may be an excuse to increase prices at the moment, but it is not a logical reason. Manufacturers believe that in the new year, they will face an increase in the cost of producing parts, labor wages and rising energy costs, and for this reason, they have predicted a rise in car prices. However, car market participants say that the market is whistling and blind like in the last days of last year, and the possibility of price increases in the stagnant market is unlikely.
*** Car price growth in terms of urban tolls
Perhaps an indicator that has been less evaluated in the study of car price fate is the issue of car tolls based on pricing formulas. Usually, the municipal car toll rate is a function of the average car price this year. Surveys of car toll rates in 1400 show that toll rates have risen sharply this year. This indicates that car prices will grow significantly this year in the minds of policymakers.
*** ۵۰% growth in car prices in pricing formulas
In order to make the subject of car tolls more tangible, we must evaluate this issue by mentioning an example. The municipal car toll rate has increased by more than 50% this year compared to the previous two years. If your car had a value equivalent to 100 million Tomans before 1998, it had an annual toll equivalent to 100 thousand Tomans before 1998, and after 1998, it has an annual toll equivalent to 150 thousand Tomans, which nevertheless still has a large number of tendencies. They do not have to pay for it. This rate increase, which is calculated based on car prices, justifies the logic of increasing car rates this year. On this account, the fate of car prices this year will weigh heavily.
*** The whisper of Renault’s return to Iran
A promising scenario for the car market is the whispers of Renault’s return to the Iranian market. In addition to making the price of domestic products more competitive, this can help bring more quality cars to market. Regarding the return of Renault and cooperation with Pars Khodro Company, it should be said that Renault is subject to the conditions of the country and whenever the conditions are available, the necessary measures will be taken by both parties to start cooperation. But for now, car policymakers seem to be focusing on the domestic market and current projects. This issue could tie the fate of car prices in Iran to competitive markets.
*** Ambiguities about the fate of car prices
Despite a more than 40 percent drop in car prices since January last year, some believe that the car market is still accompanied by a price bubble, and if the exchange rate falls, car prices will fall. Of course, this will happen in a situation where the production of car companies is going through a good process and we will see an increase in production. On the other hand, some believe that the car market, like other commodity markets, has not progressed with inflation and will most likely be accompanied by price growth in the coming months. These certainties have confused the fate of car prices in Iran.
*** Significant downturn in car transactions
In the current situation, the car market is accompanied by a relatively deep recession. Price drop The dollar will be an excuse to be in a slump and free of any trades for at least the next week or so. Although the car market started the week with relative price stability, trading in this market is still slow and buyers are waiting for a further decline in the exchange rate and its impact on car market prices. At the same time, sellers are also looking to supply cars at prices affected by inflation.
*** The role of Corona in the car market downturn
There are issues that can slow down car trading. If the situation of Corona in the country becomes more worrying and causes closures and traffic jams, we will see that with the closure of license plate exchange centers, car transactions will be significantly reduced. Therefore, corona risks are a factor that can affect the car market situation until the end of the year.
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