Taxi Renovation Policy Adrift

EghtesadOnline: Soaring car prices in Iran have put the brakes on the government’s decades-old taxi renovation policy.

News ID: ۷۸۴۶۱۹

27 April 2019

Over the past several months and following unprecedented hikes in car prices, the latest and frustratingly slow taxi renovation scheme announced in 2016 has been put on hold, Head of Iran Taxi Union Morteza Zameni told ISNA.

The government in collaboration with local banks and carmakers offered a taxi renovation plan three years ago dubbed ‘Nosazi’. Flawed in more ways than one, the scheme had some positive results for the men (and some women) in the hard and thankless profession, Financial Tribune reported.

Zameni says, “Local car companies now want to renegotiate prices. Talks have been held between the union and car companies. There will an agreement soon.”

The union has called on the Ministry of Industries to do its fair share and help renovate the ageing cabs. It has made clear that “Taxi drivers simply cannot afford to buy new vehicles at the current market prices.”

Soaring Prices

The sedan called Samand made by Iran Khodro -- one of the common cars in the local taxi fleet -- is now costs 900 million rials ($6,520) in the market. The same car would not fetch 370 million rials ($2,680) a year ago.

Another sedan popular with the permanently struggling taxi drivers is the Peugeot 405. Currently buying the CNG-hybrid 405 costs up to 780 million rials ($5,650). Last spring it could be bought for 330 million $2,390).

The cheapest vehicle in Iran today is SAIPA’s Pride at 510 million rials ($3,690), up from 220 million rials ($1,590) a year earlier.

Dilapidated Fleet

The taxi fleet has long been in dire need of renovation. There are 150,000 old and dilapidated taxis contributing terribly to the worsening air pollution in the major urban areas. The figure comprises nearly half the total 360,000 vehicles in the fleet.

If effective measures are not taken, Zameni says, the number of dilapidated cabs will jump to 245,000 by 2021.

Old taxis have been a serious concern adding to the deteriorating air pollution in most metropolises. To address the problem, the government introduced the latest  renovation scheme, which apparently is in trouble.

To be eligible, cabbies were required to register their clunkers on the website nosazi.org. After enrollment, each driver had to dispatch the old car to the scrap yard. Applicants were given 200 million rials ($1,440) in loan at 16%. The money was to be repaid in 48 monthly installments.

After the loan amount was reduced from the total price of the new vehicle, the driver paid the balance upfront. With car prices rising as never before, most drivers cannot afford to participate in the scheme. There have been reports that the loan amount is to be increased. Have this can, and will, help remains to be seen.

Those who engineered the 2016 taxi renovation scheme are often censured by taxi drivers. Besides complaining about annoying delays in delivery schedules, many at that time too said they could not afford the car prices despite the loan.