Auto Price Hike Illegal, Unjustified

EghtesadOnline: The Competition Council has permitted domestic automakers to raise the prices of some cars, while there is no logical explanation behind such a decision, a council member said.

News ID: ۷۷۷۵۹۰

11 July 2017

“While the domestic cars’ qualities have not seen any positive change,the Competition Council has agreed to the domestic automakers’ request for raising the prices of some cars,” Albert Boghosian was also quoted as saying by the local auto website, Asbe Bokhar.

He noted that the price increase follows an “incorrect tradition”, whereby auto prices are hiked annually without any justifiable reason, while the main policy defined for the council is to oversee products’ quality and efficiency improvements.

Iran Khodro and SAIPA, the two main automakers, have been 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), another local auto website, Persian Khodro, reported.

According to Financial Tribune, the consent allows SAIPA to increase the prices of Pride and Tiba by up to 1.5%, and authorizes IKCO to charge 2.5% more for Samand and several Peugeot models.

Based on the permit, about 1.5 million rials ($40) will be added to the prices of Tiba and Pride, which are currently sold for 250 million rials ($6,650) while Peugeot and Samand models will get dearer by 4 million rials ($107).

In the latest round of auto evaluations by Iran Standard and Quality Inspection Company, all the models that have been allowed to raise prices were at the bottom of the quality ladder.

In fact, these models never received more than one star in ISQI’s five-star ranking system.

Pricing Quandary

The pricing of cars has turned into a conundrum in the past couple of years, as experts and officials argue over the pros and cons of setting vehicle prices, and question the authority of the price-setting body.

Many experts believe the prices should be determined by the free market while the government has reinforced the monopoly of state-affiliated automakers by allowing them to sell substandard cars at exorbitant prices by maintaining high tariffs on imported cars.

The pricing responsibility has shifted in the past few years. Before the Competition Council entered the abyss of auto pricing,the Consumer and Producer Protection Organization was in charge.

In 2013, when the incumbent government allowed the market to determine auto prices, the automakers had a field day and caused a huge leap in prices.

To clean up the mess, the Competition Council was formed under the supervision of the government with the aim of monitoring the domestic cars’ pricing process.

According to related regulations, the council must not meddle in car pricing, but it has ignored the regulations by openly supporting the automakers in fleecing the customers.

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

This shows total disregard to consumers’ rights while the government continues to look the other way and automakers run laughing to the bank.