Home Appliance Industry Turnover Reaches $7 Billion

EghtesadOnline: Home appliance industry turnover, including chinaware and crystal glassware, amounts to a maximum $7 billion, of which $2 billion are attributed to smuggling, says Abbas Hashemi, secretary of the Association of the Industries of Household Appliances of Iran.

News ID: ۷۸۶۱۷۴

05 March 2021

“During the 10 months to Jan. 19, Iran manufactured 1.7 million refrigerators, which indicate a 30% increase year-on-year. Washing machine production grew 53% to reach 880,000 and evaporative cooler production jumped 11.9% to hit 854,000 during the period. A total of 995,000 television sets were also produced during the 10-month period, registering a 44% rise compared with the corresponding period of last year. The growth in production of home appliances during the current Iranian year has been unprecedented in the past decade,” he was quoted as saying by IRIB News.

Noting that the main challenge facing the industry is the lack of raw materials, the official said, “For instance, manufacturers of refrigerators and freezers need a thermoplastic polymer called ABS [Acrylonitrile Butadiene Styrene]. The Industries Ministry should provide raw materials in cooperation with petrochemical industry. Home appliance producer refused to sign an export contract because they were not confident that there would be sufficient inventory of petrochemical raw materials. The supply of steel sheets, copper and aluminum parts as well as the allocation of foreign currency for the purchase of essential imported parts are also challenging for the industry.”

“Nearly nine million devices were produced in the country last year. However, that is barely 50% of the industry’s potential,” Kayvan Gordan, another senior official of the ministry, said.

“There is no shortage of supply of home appliances, though a ban has been placed on their imports since two years ago. Some smuggled goods in the market have recently experienced price increases.”

Domestic demand for home appliances was around 13.6 million in the year ending March 2018, but has now reduced to 12 million given the rise in the value of foreign currencies and prices.

“Last year, production of small appliances, refrigerators and television sets posted a year-on-year growth of 12%, 12% and 3%, respectively. The industry experienced a 10% growth last year, despite all restrictions imposed by sanctions,” Mehdi Sadeqi-Niyaraki, deputy industries minister, was quoted as saying by IRIB.

“Plans are to boost production by 34% in the current year for production to hit 11.6 million home appliances," Mohammad Reza Kalami, another deputy industries minister, has been quoted as saying by Tasnim News Agency, adding that by March 2022, production will meet total domestic demand.

Kayvan Gordan, director general of Industries Ministry’s Electronic, Metal and Home Appliances Industries Bureau, says production of household appliances will break an all-time record this year.

“Home appliances’ market in our neighboring countries is as big as $37 billion per year. If the supply of raw materials and production procedures are facilitated and regulations are modified in favor of exports, we can significantly increase our share of the regional market,” he said.

Latest statistics show Iran exported 99,000 tons of home appliances worth $139 million during the five months to Aug. 21.

According to Mohsen Montazeri, an official with Trade Promotion Organization of Iran, refrigerators, freezers, evaporative coolers, washing machines, water heaters, stove, television sets, blenders, electric fans for oven, furniture and ceramic dishware were Iran’s mains exported products.

Iraq, Afghanistan, Oman, Turkey, Azerbaijan and Italy were among the main destinations.

“A total of $243 million worth of household goods, mostly intermediate goods, were also imported during the period,” the official was quoted as saying by ILNA.

Rising Costs

The average price of steel increased by 212% from March to October, Abbas Hashemi, secretary of the Association of Household Appliance Industries of Iran, said, adding that copper and aluminum prices have also risen by 150% during the period.

“Raw materials of home appliance industry are calculated based on global prices and foreign exchange rate. Therefore, how can you expect the 25% rise in the price of appliances approved by Iran Consumers and Producers Protection Organization earlier this year to be enough to meet production cost?” he said.

In June, CPPO issued a permit allowing producers of home appliances to raise prices. Prices of audiovisual products are allowed to go up by 20% and other home appliances can have up to 25% increase compared with prices registered in the Iranian month ending Feb. 19, it said.

Up until last year, which ended on March 19, imports accounted for 60% of household appliance market, Hamidreza Ghaznavi, spokesman of Home Appliances Manufacturers Union, said.

“The sudden departure of international companies from Iran’s market due to US sanctions and problems regarding the supply of raw materials are to blame for the lack of balance between supply and demand, and the price hike.”