Irtoya Anxious About New Import Regulations

EghtesadOnline: At a press conference called by Irtoya on January 30 in Tehran, company officials voiced concern over the future of auto imports.

News ID: ۷۷۳۶۸۴

04 February 2017

IrToya is the legal importer of Toyota in Iran.

Asked about Toyota’s plans to invest in Iran, Irtoya CEO Abdolreza Fahimi said “there are no legal restrictions” for the giant carmaker to invest and expand in Iran, Mizan Online reported.

However, since Donald Trump’s inauguration last month and in light of his attitude and unpredictability, the risks of closer cooperation have increased, he said, adding that Toyota is closely monitoring the situation, according to Financial Tribune.

“Operational risks are extremely high in Iran and that is why investing and manufacturing is not economically feasible,” Fahimi was quoted as saying.

He also took stock of the latest government regulations on auto imports which, among other things, seek to boost local industries and curb large imports of fully-finished vehicles.

“It is obvious that through the new regulations lawmakers want to protect national interests and create jobs in the auto sector. However, in order for such goals to be realized, better solutions should be put forward.”

The government is reviewing the guidelines, which if ratified could shake the market. One article stipulates that if a certain brand is manufactured inside Iran, that brand cannot be imported by any other independent vehicle importer. In other words, only the company manufacturing the particular car is allowed to import from the parent company.

Moreover, another article notes that companies can continue to import under the condition that they commit to manufacturing some models inside Iran or export cars and spare parts manufactured inside the country.

Fahimi noted that with the current regulations and factoring in the extra amount buyers will have to pay in taxes “the price of imported cars is already 100% more than their actual prices overseas. With the new regulations it will obviously increase further.”

Not all companies that import cars can set up manufacturing business  in Iran and the new regulations could well result in major brands leaving the country altogether.

Short-Lived Rules

One main reason why Iran’s imported auto market is in jeopardy is not the fluctuation of currency rates or high customs tariffs, he noted. What indeed is and has often been is “the oft changing rules and regulations” related to the overall industries, manufactures and commerce.

Despite uncertainty about what the future holds, IrToya will be taking part in the upcoming Tehran auto show and will unveil Toyota’s latest models, he told the reporters.

Officially called the Iran International Auto Show, the event will be held for the first time at the newly-opened exhibition center south of the city, February 14-18.

Kourosh Morshed Solook deputy head of Iran’s Auto Importers Association and member of IrToya board of directors said that a new holding company known as Naseh will soon start operating as an auto manufacturer. Irtoya is a subsidiary of the holding.

“The procedures for signing the contract with a foreign partner are ready, land is being purchased and production lines will be set up.”

He did not provide details regarding the name of the foreign partner or the models to be produced.

He too commented on the latest government rules on car imports.

With the establishment of the auto importers association, affairs of the auto firms were better organized and fake trade cards were revoked, he said.

Almost 96% of imports are undertaken by the association. This has helped improve transparency, diversity of models available has increased, business is not monopolized and competition is tight.”

He warned that the new regulations will “harm auto imports and the country.”

Such stringent regulations will neither help imports nor add to the earnings of the treasury, he was quoted as saying.

“The market will be monopolized, car imports will be limited and prices will rise.”

Morshed Solook said in meetings held with the Competition Council and the Industries Ministry “we cautioned them about the negative consequences of such regulations.”

In March 2014 Toyota sold 104,ooo units in Iran and in the last fiscal year that ended in March 2016, it sold only 60,0000 vehicles.

The company’s hybrid Prius has led the sales in Iran in the current  year. Sales for the current year are expected to improve.