Iran Gov’t Stops Issuing Auto Import Permits

EghtesadOnline: Ministry of Industries, Mining and Trade has stopped issuing auto import permits for all cars.

News ID: ۷۷۸۶۲۲

20 August 2017

Without the documents, local businesses and importers cannot register new orders with foreign carmakers.

As per law, for importing each car, local companies must make an online registration with the ministry. Usually, importing companies register in bulk. After being issued, the permits are valid for six months.

Each permit costs the importer 2 to 3 million rials ($52 to $78). The government shut down the online register a month ago and importers have not been able to make new requests, according to Financial Tribune.

Director of Trade Promotion Organization (TPO) of Iran Mojtaba Khosrotaj told Financial Tribune’s sister newspaper Donya-e-Eqtesad “The online application system will not function until the Cabinet issues new guidelines for auto imports.”

The draft of the new rules has been published on the official website of the Cabinet, (www.cabinetoffice.ir).

Its initial clauses are in line with previous guidelines, requiring importers to offer at least the bare minimum after sales services, have a representation deal with the foreign carmaker or one of its official distributors.

However, a new clause has been added that is likely to have a significant impact on auto imports. It obliges auto importers to also invest in local car manufacturing.

The clause reads as follows, “Auto importers have two options, start local production or get into production joint ventures with Iranian carmakers. The total value of imports should not exceed half the value of the importers’ domestic production.”

While Khosrotaj says that the new permits cannot be issued before ratification of the new guideline, the head of Iran Auto Importers Association, Farhad Ehteshamzad disagrees. “Law stipulates that the ministry is obliged to issue permits to anyone who meets the existing legal requirements.”

Ehteshamzad says “Shutting down the online registration system has no legal justification. If the ministry wants to change the guidelines it must follow legal protocols.”

According to rules, before introduction of a new directive, the government cannot and should not change already existing procedures.

This is not the first time authorities in Tehran have imposed draconian laws on car imports wwthout prior notice. Neither will it be the last. In the winter of last year  the government introduced a rule banning gray car importers, a ruling which came into effect two weeks ago.

The move put an end to gray imports of vehicles depriving the sector of almost half the resources and channels used for imports.

Gray imports of vehicles are new or used motor vehicles and motorcycles legally imported from another country through channels other than the manufacturer’s official distribution system.

If the Rouhani administration insists on the new schemes and force importers to invest in local auto manufacturing, the imported car market will see another jump  in prices.