MPs Go Ballistic Against Dysfunctional Automakers

EghtesadOnline: With the car market getting out of its Norouz Holiday hiatus, vehicle prices have once again started their rally. Irked by the latest price hikes, the Majlis has gone ballistic against the dented auto industry.

News ID: ۷۴۷۰۷۳

16 April 2019

Bahram Parsaei, a pro-reform lawmaker from Shiraz, says “I personally have lost hope that car prices will decline. Carmakers are roaming the market unbridled with no consideration for people’s complaints and demands.”

“What’s more is that the firms simply brush off rules and regulations and ignore the demands of relevant authorities,” he was quoted as saying by ICANA.

Car prices have seen steep rises since last summer. For instance, the cheapest vehicle in the market, the Pride — a small city car made by SAIPA — is now sold for 480 million rials ($3,500). The same car hardly fetched 220 million rials ($1,600) a year ago, according to Financial Tribune.

Pointing out that carmakers have often been accused of hoarding by the public and the mass media, Parsaei says, “Members of the Majlis Article 90 Commission [which handles complaints] will  inspect warehouses of car companies in the coming days.”

He urged the people to report cases of hoarding.

Impeachment Threat

The MP from Hamadan Amir Khojasteh says, “In a meeting with lawmakers last week the Industries Minister [Reza Rahmani] promised to propose measures for curbing car prices. If he fails to deliver he will be impeached.”

Talking to ICANA, Khojasteh said “The Industries Ministry is hand in gloves with car companies and dealers. It should take action and control both the market and prices. The government has indeed created an environment in which dealers and profiteers are thriving.”

In the coming days the minister is to meet with members of the Majlis Article 90 Commission to find ways for regulating the unending chaos in the domestic auto market .

Another Price Hike

Saveh representative in the parliament, Mohammad Reza Mansouri, says that while the media and public were preoccupied with reports on the recent floods, auto dealers had a field day and again jacked up car prices. He accused the authorities of “negligence and inaction”.

Echoing the stance of most people and independent car market observes, he said, “Dealers and middlemen are ruling the market.  They demand whatever price they see fit,” adding that officialdom is unable or unveiling to crackdown on racketeers.

Seemingly giving up hope on authorities to make a decisive move, the MP is of the opinion that the unruly car market can only be tamed by “people boycotting domestic car companies.”

While Khojasteh says the government has promised to devise new plans to curb prices, Mansouri said another price hike has been proposed by the ministry.

Mansouri says, “In the new fiscal year that started in March, the government has said carmakers should be allowed to increase prices by 9.6%. The proposed price increase will be discussed in the  Majlis Industries Commission. The commission will insist on a price hike not above 5%.”

The government has linked the proposed price rise to the recent rise in currency rates. He did not elaborate, but added, “Many MPs are of the opinion that the auto sector is not as dependent on imports and forex rates as car companies claim. Prices should not increase with the slightest fluctuation in currency rates.”

Over the past week, the USD soared to 145,000 rials in Tehran’s market. On Monday the greenback was traded at 137,000 rials. After the US imposed new sanctions last year the Iranian national currency has lost more than 70% of its value.

“Hostage Situation”

Visibly vexed by state authorities’ indifference in the face of soaring prices on a daily basis, the MP from Shiraz, Parsaei, took to Twitter in February to lambast the arrogant carmakers and those in charge.

“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 market monopoly. The ministry and lawmakers are hiding behind the façade of supporting the domestic industry 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 Iran’s wasteful and loss-making auto industry, and in response to critics, car companies and their lobbyists never fail to highlight the employment side of the problem they are largely responsible for.

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. As usual law-abiding folks (the majority of the population) keep asking: Until when should we dig deeper into our pockets to pay for the failings of imprudent policymakers and meritless auto industry managers.