Carmakers Special Sales Trigger Car Buying Frenzy in Iran

EghtesadOnline: As car prices keep rising as never before, the two main Iranian auto companies, Iran Khodro and SAIPA, launched what they call are ‘special sales’, selling their cars like hotcakes.

News ID: ۷۴۶۷۵۷

23 February 2019

Offering a limited, albeit undisclosed, number of cars via their sales website, the two firms announced the special sales on Tuesday morning. The cars are to be delivered within 10 days.

Less than 45 minutes after the offer, both carmakers announced that they had sold all the vehicles, automotive website Asbe Bokhar reported. SAIPA said just in 45 minutes 23,000 plus people visited its sales website.

During the past month, with car prices increasing on a near hourly basis, many people have become desperate and there has been a mad rush for buying new vehicles. On average car prices have shot up by 30% compared to a month earlier, Financial Tribune reported.

People have said on social media platforms that they try to purchase a car through the websites; however, due to website crashes and online disruptions, they have not been able to register. Similar malfunctions have been reported often times over the past years always to the detriment of ordinary folks wanting to buy a car without lining the pockets of the army of middlemen.

Some market analysts say IKCO and SAIPA have no vehicles to offer through the special sales calling the entire process a fiasco.

Both carmakers have presold tens of thousands of vehicles since the current fiscal that ends in March. As per signed contracts most cars were to be delivered to buyers months ago. However, due to the sharp decline in the production of cars the firms have been unable to deliver the cars.

As per rules of the Industries Ministry, carmakers can only offer 20% of their monthly production through the special sales schemes.

According to data released by the ministry, IKCO and SAIPA respectively made 22,186 and 21,011 cars during the Iranian month that ended on Jan. 20. That means each carmaker is permitted to offer 5,000 cars through such sales schemes.

SAIPA, IKCO Offerings

SAIPA was offering its Pride and Tiba models through the sale. The two small city cars were respectively priced 371 million rials ($2,850) and 404 million rials ($3,100). IKCO offered six models, including four Peugeot models  (405, 206, 207 and Pars)  along with Samand and Runna. Peugeot Pars is a face-lifted version of the 405.

IKCO offered the cars at prices slightly lower than in the market. For instance, the popular Peugeot 206 was offered for 855 million rials ($6,577). The same car is sold for 960 million rials ($7,385) in the market.

The locally-designed Samand was sold for 819 million rials ($6,300) by IKCO while avaricious dealers charge 880 million rials ($6,769) for the same sedan.

With IKCO and SAIPA jacking up prices on a regular basis, all car prices have more than doubled over the past year.

The small city car Pride, which is now sold for 490 million rials ($3,770) by dealers, hardly fetched 220 million rials a year earlier while the Peugeot 405 was tagged at 410 million rials last summer.

Outraged MPs

In face of the rising prices, several lawmakers censured the carmakers for mismanagement, calling on authorities to address the issue.

Gonbad-e-Kavus MP Gharje Tayyar told ISNA, “These outrageous car prices are not acceptable. The Majlis will certainly launch a probe about the rising prices and crackdown against those responsible.”

He called on the Industries Ministry and relevant authorities to investigate the matter. “For years car companies have enjoyed government backing but have not been able to produce the desired results.”

He singled out the semi-state-owned carmakers long-standing and bizarre monopoly as one of the key factors contributing to the worsening and unacceptable situation.

In a talk with Mehr News Agency, another MP, Davoud Mohammadi form Qazvin said the general public say if the recent past is anything to go by, conditions in the messy auto market will only get much worse. Implying that he too agrees with the people’s assessment, he said, “Car industry managers have no operational plan.”

In his opinion, “Iranian automotive companies for decades have enjoyed state support. In return, we obviously demand carmakers come up with a workable plan of action to address these issues.”

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 the chaotic market] are the direct outcome of the support of the Ministry of Industries and some MPs for the carmakers and their monopoly. The ministry and lawmakers are hiding behind the false notion of supporting domestic manufactures and workers rights.”