Strong Upsurge in Domestic Production of Home Appliances

EghtesadOnline: The domestic production of home appliances during the first four months of the current Iranian year (March 20-July 21) has increased significantly year-on-year, latest statistics released by the Ministry of Industries, Mining and Trade show.

News ID: ۷۵۰۷۵۵

20 August 2020

About 289,500 washing machines were produced during the period, which indicate a 69.9% growth compared with the similar period of last year, IRNA reported.

A total of 341,500 televisions were manufactured from March 20 to July 21, to register a 61.2% year-on-year rise. Some 341,500 refrigerators and freezers were produced during the same period, up 12% YOY.

“Last year, the production of small appliances, refrigerators and television sets posted a year-on-year growth of 12%, 12% and 3%, respectively. The industry experienced a 10% growth last year, despite the restriction imposed by sanctions,” Mehdi Sadeqi Niyaraki, deputy industries minister, was quoted as saying by IRIB News.

Kayvan Gordan, another senior official with the ministry, said nearly nine million devices were produced in the country last year, indicating a 10% year-on-year growth which, however, is barely 50% of the industry’s potential.

“There is no shortage of home appliances, though a ban is placed on their imports since two years ago. Some smuggled goods in the market have seen price increases recently,” he added.

Price Hike

Consumers and Producers Protection Organization of Iran recently issued a permit allowing producers of home appliances to raise their prices once again.

It allowed prices of audiovisual products to go up by 20% and other home appliances by 25% compared with prices registered in the Iranian month ending Feb. 19.

The organization set June 16 as the deadline for producers to log the new prices on 124.ir, otherwise they will be subjected to regulations pertaining to supplying goods outside the network.

A day later, CPPO said more than 30 producers had registered more than 1,000 items on the database. The new official price increases have come within six months of the previous announcement.

Producers of home appliances blame the 50% rise in prices of steel sheets and the metal’s shortage, ban on imports, the coronavirus outbreak and the depreciation of national currency against foreign currencies in the first quarter of the current Iranian year (started March 20) for the skyrocketing prices.

Unofficial reports say presently prices are 30-60% higher than at the beginning of the current Iranian year and producers have reduced their market supply. Salespeople say companies are making considerable delays before making deliveries to distributors.

Thriving Black Market

Price hikes of home appliances and problems related to the decline in supply have prompted customers to approach unofficial markets that have cropped up across the country’s borders to the west and south, the Persian-language daily Etemad reported.

In fact, the gap between supply and demand is filled by contraband home appliances, as smugglers have overtaken licensed importers.

Baneh in the western province of Kurdestan is a well-known gateway for smuggled products for 15 years now.

“Buying from Baneh” is one of the main Google trends now. There are more than 50 websites dedicated to selling home appliances from Baneh. These websites are not filtered; various methods of purchasing and long-term warranty and after-sales services have been posted on these websites to assure customers that they are in the right place.

By and large, the prices of products on these websites indicate a wide gap with those in official markets. The products are all available and sometimes offered on discount.

Bandar Genaveh in the southern province of Bushehr is another gateway to smuggled home appliances. Close to 30 channels on Telegram messaging app encourage customers to buy cheaper, high-quality home appliances. For example, a washing machine of an international brand is valued 70-100 million rials cheaper in Genaveh compared with Tehran’s online or bricks-and-mortar shops. You can find a variety of such offers in Qeshm and Dargahan in Hormozgan Province.

Rising Demand for Repair

Demand for home appliance repair has increased by 90% on the back of price hikes, the secretary of Tehran Home Appliance Sellers Association said.

“The rise in prices and decline in people’s buying power have pushed the market into recession. There are practically no customers in the store, except for dowry purchases,” Akbar Pazouki added.

Noting that the provision of working capital is the only way to help manufacturers boost their production, Pazouki said local producers have managed to increase their output by 30-100% in recent years, but their supply has yet to meet the total market demand.

“Offering loans to producers rather than customers would lead to higher production and consequently lower prices,” he added.

Statistics released by the Ministry of Industries, Mining and Trade show Iranian companies manufactured 210,200 TV sets over the first quarter of the current year (March 20-June 20), registering a 49.4% growth year-on-year.

Refrigerator and freezer production increased by 7.9% to reach 328,500 and a total of 207,400 washing machines were manufactured in Q1 to post a 115.1% rise YOY, IRNA reported.