50% of Taxis Should Be in the Junkyard

EghtesadOnline: There are 150,000 dilapidated taxis in the country terribly contributing to the worsening air pollution. The figure comprises nearly half the total 360,000 vehicles in the taxi fleet, the head of Islamic Republic of Iran Taxi Union said.

News ID: ۷۸۴۴۸۸

19 January 2019

Morteza Zameni said the number of older cabs will reach 245,000 by 2021 if effective measures are not taken, IRNA reported.

Old taxis have been a serious concern adding to the deteriorating air pollution in most metropolises for years. To address the problem, the government in collaboration with local banks and carmakers introduced a taxi renovation scheme, dubbed ‘Nosazi’ (renovation in Persian) in 2016.

To be eligible, cabbies are required to register their clunkers on the website Nosazi.org. After enrollment, each driver must dispatch his old car to the scrap yard. Through the scheme, applicants are given 200 million rials ($1,750) in loan at 16%. They should repay the amount in 48 monthly installments of 5.7 million rials ($50), Financial Tribune reported.

Drivers have four options when deciding the new vehicle:  Iran Khodro’s Samand or Peugeot 405,  SAIPA’s Ario (Zotye Z300) or Pars Khodro’s Chinese-derived Brilliance H230.

After the loan amount is reduced from the total price of the new vehicle, the driver must pay the balance upfront. The company price of Samand is $3,800, $3,600 for the Peugeot 405, Ario costs $8,200 and Brilliance goes for $5,600.

However, according to Zameni, things did not proceed as planned. “The renovation scheme is moving at a snail’s pace and taxi owners are no longer interested in the scheme,” he said.

“After introduction of the scheme until the end of the last fiscal (March 2018), about 68,000 cabbies filled applications. Barely 3,000 ended up with new car deliveries and the rest are still waiting.”

Prices Unaffordable

Those who engineered the scheme are often censured by the taxi drivers. Besides complaining about annoying delays in delivery schedules, many say they simply cannot afford the new car prices despite the bank loan.

There is a more fundamental issue impeding the scheme. According to Zameni, the recent economic problems Iran is facing has resulted in a sharp fall in domestic car production. “There is a shortage of new vehicles that should be delivered to buyers.”

According to the Ministry of Industries’ data, during the nine months to December 2018, annual domestic auto production plunged to 763,000 vehicles. The figure is  31.2% down year on year compared to the one million plus units made during the corresponding period last year.

Experts have been struggling to find ways to handle the issue afflicting the key auto sector albeit to no effect. The new US economic sanctions and mounting pressure from President Donald Trump is seen as the main reason behind the aversion of major foreign car companies to work with their Iranian peers.