Talks Underway to Tame Iran’s Unruly Car Market

EghtesadOnline: Tehran Auto Dealers Association has been holding talks with authorities and carmakers offering proposals on market management so as to rein in the auto sector's chaotic conditions and control the skyrocketing prices which have stunned the public.

News ID: ۷۸۳۲۷۰

14 July 2018

The association's director is of the opinion that if carmakers were to refrain from offering vehicles through wholesales to unofficial distributors and increase supply, the market would recover, IRIB News reported.

Iranians in recent months have seen car prices shoot up as US President Donald Trump's opt-out from the historic nuclear deal hit Iranian markets hard, initiating sharp hikes in foreign exchange rates in local currency markets and consecutively wreaking havoc on the key automotive sector.

Head of the Tehran Auto Dealers Association Saeed Motemanni says they have submitted proposals to the Consumers and Producers Protection Organization (CPPO), according to Financial Tribune.

During recent months, avaricious dealers have been purchasing cars in unprecedented numbers which, according to Motemanni, by bottlenecking supply, will give them leeway to later sell the vehicle at higher prices.

>Chaotic Market

Motemanni provided details of the process whereby distributors and some carmakers alike take advantage of the existing chaotic state of affairs.

"Some representative offices are in on this. There were instances when a vehicle was in the possession of 30 different people, one dealer even purchased 500 vehicles without their name being registered or without having to pay taxes for the purchases."

In order to curb profiteers' influence on the market, Motemanni says carmakers must eschew wholesales, deliver vehicles on a short-term basis and raise output.

According to the head of the association, the car market is currently stagnant. "Imported vehicles are not traded at all, and as for local cars, distributors purchase vehicles through wholesales and then upset the market by selling them at higher prices."

CPPO is yet to issue a response on the suggestions made by the Tehran Auto Dealers Association but observers are downbeat about the outcome, given the handsome profit the process yields for both makers and distributors.