Automotive Import Beneficial

EghtesadOnline: An official believes that car import is the only solution for streamlining the current unfavorable condition in the automotive market, as he warned about the consequences of prolonging the import ban.

News ID: ۷۸۷۷۵۷

13 March 2022

The previous government imposed a ban on car imports to prevent the outflow of foreign currency made scarce by sanctions and lower oil sales in the fiscal 2018-19. However, the incumbent government has placed the import of 70,000 cars on next year’s agenda to meet its financial needs.

Mehdi Dadfar, secretary of the Automobile Importers Association, also told Donyaye Khodro that the country's car market could be divided into three segments, namely imported cars with the highest quality, Chinese cars and domestic products.

“Prior to the import ban, Chinese SUVs were priced at 900 million rials and 50% of the price were covered by the seller's facility with a 7-9% interest rate,” he said.

“Now the same cars are being bought and sold as quality cars in the market for about 10 billion rials. These measures are only being taken to maintain the country's automotive status quo.”

Dadfar noted that if car imports are liberalized, cars between $30,000-40,000 will enter the country and although only 20% of the population will be able to buy them, it will have a huge impact on the market.

“Foreign car prices in the domestic market are priced at the rate of 600,000-700,000 rials per $1 [more than twice the current Iranian open market rate of foreign exchange],” he added.

The official noted that car import, although limited, is the only solution for stabilizing the volatile market conditions.

“First, the prices of foreign cars will become real, then the prices of older models will decrease and have a good effect on the market of assembled and domestic cars,” he said.

“Some special and expensive cars on the market today, such as BMW and Lexus, will see a price drop of up to 30%, but the reduction in the price of cheap foreign cars, which have a larger market share, will eventually be 10%.”

Dadfar said that in the best-case scenario, the share of imported cars in the country's market will be close to 5% because unfortunately, domestic automakers have absolute monopoly over the car market.

“In view of the volume of production and supply, they hold 95% of the market,” he said.

Experts believe support for domestic production should be in the form of tax exemptions and nothing should disrupt the market for at least the next four years.

“While we cannot meet domestic demand, we sharply increase the price of foreign cars and after four years, we come to the conclusion that we need to import 70,000 cars to regulate the market,” he said.

Vehicle Import Tariffs Unchanged

Vehicle import tariffs will remain unchanged in the next fiscal year (starting March 21), a deputy minister of industries, mining and trade said.

“The tariff of vehicles that are to be imported in the fiscal 2022-23 will not change and is based on the same previous tariffs,” Mohsen Salehinia was also quoted as saying by the news portal of Car.ir.

“In the past, when cars were imported, the customs tariff started from 40% and rose up to 75% based on the capacity of car engines. Next year, car import tariffs are expected to remain the same,” he added.

Salehinia noted that companies or individuals allowed by the government to import cars will be subjected to technical regulations pertaining to car imports, as the government is not undertaking car imports.

“Usually, companies that intend to import cars must have the prerequisites for providing sales and after-sales services, as well as supplying the parts needed. Therefore, companies that can meet these criteria will be allowed to import cars that are allowed,” he said.

Asked whether domestic automakers would be allowed to import, the deputy minister said, “Earlier, some domestic automakers in the private sector and the two major automakers were allowed to import a limited number of cars. Therefore, in the current situation, if they can also meet the above-mentioned criteria and seek to import, they can import passenger cars.”

Salehinia also said the value of imports in previous years averaged $20,000-22,000 per car, meaning about $1.4 million would be spent on car imports next year.

“There has never been a restriction on car imports to support domestic production. In recent years, we faced difficulties due to international restrictions on foreign exchange for the import of essential goods or other products,” he added.