Car Prices Shot Up Again in Iran

EghtesadOnline: After few weeks of relative stability in the chaotic car market, prices have shot up again reaching unprecedented highs leaving the people more perplexed than ever.

News ID: ۷۴۶۷۴۰

20 February 2019

The cheapest car in the local market, SAIPA’s Pride 131, is being sold for 480 million rials ($3,700). Less than a month before it was available for 350 million rials ($2,700).

At this time a year ago this small vehicle changed hands for 223 million rials – up a solid 115%.

The price of SAIPA’s other small city car Tiba2 has risen by 22% over the past month, reaching 550 million rials ($4,230) from 450 million rials ($3,460). The same model hardly fetched 290 million rials ($2,230) a year ago — 89.6% YoY jump, according to Financial Tribune.

Automobiles made by SAIPA’s archrival, Iran Khodro, have also become costlier over the past few weeks. The company’s Dena+ is sold for 1.41 billion rials ($10,840), up 22.6% from last month’s 1.15 billion rials ($8,840).

Peugeot Pars made by IKCO is sold for 1.1 billion rials ($8,460) in the market. The same model hardly had buyers a month ago when the price tag was 770 million rials ($5,920).

Another Peugeot model, the popular hatchback 206 is selling for 930 million rials ($7,150), up 31% from 710 million rials ($5,460) a month earlier.

Supply Crunch

Market observers say the systemic decline in supply has triggered the steep increase in car prices. They say over the past several months local carmakers supplied much less and because there was no visible decline in demand prices shot up as never before.

Following the chronic shortage in supply, middlemen, car dealers of all stripes and their army of minions are indeed having a heyday. They are everywhere and all over the merciless and chaotic car market.

In ten months to Jan. 20 auto production in Iran plunged by 35% compared to the year earlier. Data published by the Industries Ministry show that during the period 812,979 cars and commercial vehicles were made – down  35.4% compared to 1,257,676 units made in the same period a year earlier.

Furthermore, 758,128 passenger cars were manufactured in the 10 months, a 35.7% year-on-year decline. In the same period a year ago 1,179,186 cars were made and sold.

A Hostage Situation!

Seeing the skyrocketing prices and apparently vexed by state authorities indifference and inaction, parliament member Bahram Parsaei took to Twitter to castigate the arrogant carmakers and those in charge.

Parsaei, a pro-reform lawmaker from Shiraz, wrote, “SAIPA’s Pride at 470 million rials is outrageous! The  people [and economy] have been taken hostage by [semi-state owned] carmakers. The prohibitive prices [and this chaotic market] are the direct outcome of the support of the Ministry of Industries and some MPs for the carmakers and their monopoly over the market. The ministry and lawmakers are hiding behind the false pretext of supporting domestic and workers rights.”

Many observers have censured the state’s decades-old harmful backing for the dysfunctional auto industry that simply cannot compete in the regional car market, let alone the international and hugely competitive international marketplace.

With nearly 1 million jobs tied to the auto industry, and in response to critics, car companies and officialdom never fail to highlight the employment side of the deepening problem.

As a matter of policy, they love to claim that if automotive companies close down and walk away, hundreds of thousands of people would rush to the dole queues.

Many have likened such inept arguments as something very close to gibberish. And as usual ordinary and law-abiding folks (the majority of the population) keep on asking one question: Until when should we dig deeper into our pockets to pay for the failings of imprudent policymakers and meritless industry managers.