Gov’t Wants No Role in Deciding Car Prices

EghtesadOnline: The Minister of Industries, Mining and Trade, Mohammad Reza Nematzadeh, has called for promoting the role of the free market in determining auto prices.

News ID: ۷۷۷۳۹۵

04 July 2017

Addressing a press conference this week, the minister said the Rouhani administration is opposed to government interference in the huge auto industry, noting that the  Competition Council’s role is not to set or dictate prices, but to oversee fair play, local auto website Asre Khodro reported.

The Competition Council is an officially ordained organization which keeps an eye on many domestically produced items, including the auto sector.

Nematzadeh says the main objective of the Competition Council is to establish ‘pricing policies’ while what the council is in fact doing is to determine car prices, according to Financial Tribune.

“The auto sector should not be monopolistic and does not need any outside role to determine prices,” he said, adding “the market should decide car prices.”

The unending controversy over which authority should set car prices has been around as long as the industry has existed. Many car buyers and dealers, alike, believe justice would be done if the free market is in charge without direct interference from the state and its army of affiliates.

Peugeot 2008 Riddle

Nematzadeh also touched on the price of Peugeot 2008, saying “the ministry is not involved in pricing cars (including the Peugeot 2008),” however, he rejected the rumored 1.2 billion rials ($32,000) price for the car.

The compact SUV Peugeot 2008 is known as the first post-sanctions vehicle produced under a joint venture between Iran Khodro, the largest automaker, and the French giant Peugeot, called IKAP.

Nematzadeh says despite recent statements by media outlets suggesting the maximum down payment of a car is 50% of its total value, “there is no such rule on the so-called 50% down payment.”

According to laws governing auto presales, carmakers should not demand more than 50% of the total price as deposit.

The minister’s comments come after several weeks of outrage by car buyers, who have seen the price of the new locally-built Peugeot crossover increase at terrific speed. Initially, the car was to be sold for around 700 million rials ($18,750), but recently the new down payment announcement has doubled the total amount payable.