Renovation of Tehran Old Cabs Needs $181m

EghtesadOnline: The complete dilapidated taxi fleet in the capital city of Tehran can be renovated in 18 months, if 50 trillion rials ($181.8 million) are allocated to the project, Tehran Municipality’s deputy for traffic and transportation affairs said.

News ID: ۷۸۷۰۱۹

15 September 2021

Manaf Hashemi added that the municipality is committed to renovate 10,000 cabs by the end of the current Iranian year (March 2022), which might cost 10 trillion rials ($36.3 million), IMNA reported.

“The budget is planned to be funded through a variety of sources, including the state coffers, Iran's Municipalities and Village Administrators, TM, Tehran’s traffic scheme revenue and savings from fuel price,” he added.

The official emphasized that Tehran City Council members are displeased with the plan's timeline and feel that all of the city's decrepit taxis could be replaced with brand new models in 18 months.

Hashemi stated that TCC's expectation is somewhat unrealistic given the available resources, and that the highest yearly renovation record is now 2,000.

“TM's 10,000-cab plan is already five times greater than prior efforts. The council's suggestion can only be implemented if the authorized budget is increased,” he added.

Hashemi pointed out that in the first five months of the current Iranian year (March 21-Aug. 22), due to the automobile company's periodic shutdown induced by Covid-19 peaks and soaring auto prices, just 2,200 cabs have been renovated, accounting for less than half of the project.

The official hoped that the plan can progress well by March 2022.

The current year’s renovation plan is being implemented in coordination with the Plan and Budget Organization, which has allocated 200 billion rials ($727,000) to the plan.

According to Hashemi, each driver of an old taxi will be given a low-interest loan totaling 900 million rials ($3,300).

Based on the plan’s financial record, 1,806 Tehrani drivers have so far applied for loans to replace their vehicles, but only 1,277 have received them. The rest have been paid for by cab owners.

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 40,000 extremely old cabs, which constitute almost half of the fleet in Iran, are ready to head for the junkyard.

Financial Challenges

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 ($4,200). The same car would not fetch 370 million rials ($1,300) a couple of years ago.

Another sedan favored by taxi drivers is Peugeot 405. Currently, the CNG-hybrid 405 costs up to 2.3 billion rials ($8,500). In 2018, it could be bought for 330 million ($1,200).

The cheapest vehicle in Iran today is SAIPA’s Tiba at 1 billion rials ($3,630), up from 220 million rials ($800) some three years ago.

Dilapidated Fleet

The taxi fleet has long been in dire need of renovation. About 150,000 old and dilapidated taxis are 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 ($727) 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, 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 taxi renovation schemes are often censured by taxi drivers, mainly because of unaffordable car prices, late extension of loans and annoying delays in new car delivery.