Car Importers in Iran Have a Field Day

EghtesadOnline: What could best be described as a chaotic market, the prices of imported cars in Iran have been rising almost on a daily basis and in some cases by up to 280 million rials ($7,000) increase.

News ID: ۷۴۴۵۱۵

28 November 2017

The rumor mill has it that the erratic situation is because of unconfirmed reports suggesting that the Ministry of Industries is planning to increase auto import tariffs by up to 100%, local automotive website Asbe Bokhar reported.

The minister, Mohammad Shariatmadari, has often been quoted by local media as saying that “auto import rules will change soon.”

Earlier in November, he said, “The ministry has proposed to the government new guidelines for importing cars.”

However, according to Financial Tribune, since his appointment three months ago he has not shared anything with the public nor has said what actually his ministry’s action plan is about returning stability to the imported car market.

Over the weeks, mass media and automotive websites have published several supposedly ‘leaked’ proposals, none of which can be confirmed by Financial Tribune. Almost all of the reports suggest that the import tariffs are to observe whooping increases.

As things stand now, importers pay over 100% of the value of the vehicles to the government and affiliated bodies. Import costs are not limited to tariffs because several government bodies have a share of the lucrative business, in that the importing company or car buyer must pay a variety of extra charges, taxes and other overheads before the vehicle is ready for the road!

For instance, the local Traffic Police department charges importers 10% of the car value when issuing number plates. Furthermore, dealers are required to pay 1% tax to the local Red Crescent -- the money reportedly is used for buying ambulances.

Raw Deal

Avaricious dealers have fleeced Iranian car buyers forever. Imported cars almost always cost twice over and above the prices in international markets. Why? The interpretation is wide open from protecting the dysfunctional local auto industry to running the country on tax revenues instead of oil.

With officialdom keeping the public in the dark, middlemen and greedy brokers have a field day and the people get a raw deal.

The price of the hybrid Hyundai Sonata has risen 210 million rials ($5,250) since August, 10% just in the last week. The car is sold for 1.86 billion rials ($46,500) in Iran. The same South Korean vehicle is offered at less than half this price in the international market, but has few buyers.

Hyundai Tucson has also had a huge jump from 1.86 to 2.1 billion rials ($46,500 to $52,500) in the past three months. Elantra’s price also rose from 1.6 to 1.63 billion rials ($40,000 to $40,750) last week. The model is available in foreign markets for anything between $26,500 to $28,500.

KIA is another popular brand. The Cerato sold for 1.43 billion rials ($35,750) back in August but is now priced at 1.6 billion rials ($40,000).

The price of this car shot up 30 million rials ($750) in less than a week.

The KIA Optima, one of the beautiful luxury sedans, is dearer by 70 million rials ($1,750) and is offered at 2.1 billion rials ($52,500). The same company’s Sportage SUV has also had a huge jump rising from 1.75 to 2 billion rials ($43,750 to $50,000). Both models start at $25,000 in the international market.

Hyundai’s Santa Fe, which is popular with people who can afford expensive cars, has registered the biggest increase in price. It is currently sold for 2.7 billion rials ($67,500) -- up 280 million rials ($7,000) over the past 90 days.