Rehashed Plan to Renovate Old Cabs

EghtesadOnline: Tehran Municipality plans to renovate 15,000 decrepit taxis in the current fiscal year (ending March 2022) in coordination with the Plan and Budget Organization.

News ID: ۷۸۶۴۷۶

23 May 2021

According to Manaf Hashemi, Tehran Municipality’s deputy for traffic and transportation affairs, PBO has allocated 200 billion rials ($870,000) to the plan, Tejarat News reported.

Based on the plan, drivers of old taxis will be given low-interest loans totaling 900 million rials [$3,900], he added.

The endeavor is a rehashed version of the government's taxi renovation program, which was proposed four years ago in collaboration with Iran Taxi Union, local banks and automakers.

Hashemi said over 40,000 extremely old cabs, forming almost half of the fleet, are ready to head for the junkyard.

“The addition of new cars to the capital's transportation fleet should happen more swiftly this year to compensate for last year's sluggishness. The plan last year envisaged the renewal of 15,000 dilapidated taxis operating in Iranian megacities. Tehran’s share of the plan was 4,431 old cabs,” he said.

“However, due to mismanagement and rising car prices, the target did not materialize and only 9,000 old taxis were renovated nationwide, including 3,250 in Tehran.”

According to the plan’s financial record, 1,806 Tehrani drivers applied for loans to replace their vehicles, but only 1,277 received them. The rest were paid for by cab owners.

Morteza Zameni, the head of Iran Taxi Union, told media outlets that since the scheme was announced in 2016, car prices surged by 150% through a periodical increase, which has slowed the renovation process.

He said the union has called on the Ministry of Industries, Mining and Trade to do its fair share and help renovate the aging cabs.

Zameni urged the government to allocate loans to taxi owners keen on renovating their vehicles, as taxi drivers cannot afford to buy new vehicles at the current market price.

The sedan called Samand made by Iran Khodro – one of the popular cars in the local taxi fleet – now costs 1.16 billion rials ($5,000). The same car would not fetch 370 million rials ($1,600) a couple of years ago.

Another sedan favored by taxi drivers is Peugeot 405. Currently, the CNG-hybrid 405 costs up to 1.07 billion rials ($4,650). In 2018, it could be bought for 330 million ($1,430).

The cheapest vehicle in Iran today is SAIPA’s Tiba at 870 million rials ($3,780), up from 220 million rials ($956) some three years ago.

Dilapidated Fleet

The taxi fleet has long been in dire need of renovation. There are 150,000 old and dilapidated taxis worsening air pollution in major urban areas from a total of 360,000 vehicles in the taxi fleet.

If effective measures are not taken, Zameni said, the number of dilapidated cabs will annually jump to 245,000.

To address the problem of deteriorating air pollution in most metropolises, the government introduced the latest renovation scheme.

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 junkyard.

Applicants were loaned 200 million rials ($870) at an interest rate of 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, at present most drivers cannot afford to participate in the scheme. There have been reports that the loan amount is to be increased. How this will help remains to be seen.

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

Previous Efforts

Designing plans for scrappage and replacement of old taxis also involves other state institutions.

Following the Oil Ministry’s request last year in March, a nationwide scheme was set up to phase out 130,000 dilapidated taxis and replace them with LPG- and CNG-hybrid vehicles.

The plan aimed to curb the worrying air pollution in Iranian metropolises while reducing gasoline consumption.

Reportedly, the scheme comes with financial assistance for taxi drivers and special subsidies on fuel price.

Last summer, Iran's major carmaker Iran Khodro (IKCO) and Iran Taxi Union signed a deal to upgrade the capital's aging public transportation fleet, in a push to combat air pollution in the city.

Accordingly, IKCO agreed to renovate 10,000 cabs operating in taxi fleets over a yearlong period.

IKCO's Sales Manager Alireza Oskouei said at the time that the number of new vehicles earmarked for renovating the fleet can increase, depending on demand and drivers' inclination to participate in the renovation scheme.

Reportedly, the scheme’s executors agreed with local banks to offer low-interest loans to cabbies, in order to speedily implement the plan.

According to Zameni, loans worth 400 million rials ($1,740) are offered to drivers of old taxis to motivate them to let go of their dilapidated cars.

However, experts believe such renovation plans cannot succeed unless domestic car prices decline because most taxi drivers cannot afford them.

This plan has met with poor response, as domestic automakers are chronically in debt and urging the government to allow them to raise the already high prices of their costly and substandard cars.