Automakers Allowed to Slightly Raise Prices

EghtesadOnline: The so-called Competition Council that keeps an eye on the pricing of local products, including vehicles, has given permission to some local carmakers to increase prices of several models.

News ID: ۷۷۷۴۶۱

08 July 2017

Iran Khodro and SAIPA, the two main automakers, are allowed to increase the prices of some models, namely Pride and Tiba (produced by SAIPA) in addition to Samand and several models of Peugeot (produced by IKCO), local auto website Persian Khodro reported.

The consent allows SAIPA to increase the prices of Pride and Tiba by up to 1.5%, and gives IKCO space to charge 2.5% more for its Samand and several Peugeots.

Based on the permit, about 1.5 million rials ($40) will be added to the price of Tiba and Pride which are currently sold for some 250 million rials ($6650); Peugeot and Samand models will get dearer by 4 million rials ($107), according to Financial Tribune.

In the latest round of auto-evaluations by Iran Standard and Quality Inspection company (ISQI) all the models that have been allowed to raise prices came in at bottom end of the quality ladder.

All of these models have never been able to win more than one star in ISQI’s five-star ranking system.

Vali Maleki, an MP who chairs the council said, “The Competition Council is in charge of setting car prices that have no rival in the market and are priced less than 450 million rials ($12,000).”

This is while in a press conference this week the Industries Minister Mohammad Reza Nematzadeh, has called for augmenting the role of the free market with respect to car prices.

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 and encourage competition in the interest of both car buyers and automakers.

Nematzadeh believes the main objective of the Competition Council is and must be to establish ‘pricing policy.’ But what the council has been long pushing for is the exclusive right to set car prices, something almost all car companies reject despite the fact that all the vehicles produced by local companies and their management is under a big question mark for decades.

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

It needs mention that the unending controversy over which authority can or should set car prices has been around as long as the industry has existed.