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Twists and Turns Continue Over Car Imports in Iran

Feb 13, 2018, 8:05 AM
News ID: 23585
Twists and Turns Continue Over Car Imports in Iran

EghtesadOnline: The Court of Administrative Justice has issued an order suspending the Rouhani administration’s latest amendments to auto import rules that have created chaos in the market and pushed up prices. As per the court ruling, import tariffs on vehicles should be rolled back to before the Dec. 30 amendment.

As 2017 was coming to a close the government of President Hassan Rouhani passed an amended version of auto import rules raising customs duty on cars by 15-65% depending on vehicle type and engine capacity.

In a talk with ISNA, the public relations manager of CAJ, Mohsen Ghaemi said, “This is a preliminary ruling. CAJ is yet to reach a final decision.”

After the court ruling was announced many observers questioned whether the matter falls under the purview of the CAJ. Ghaemi said, “As per law, the Court of Administrative Justice has the authority to rule over such legal cases.”

According to Financial Tribune, reportedly the order was issued on Feb. 7 and after a complaint was filed by an unnamed private entity censuring the higher tariffs for disrupting business and inflicting financial harm on car buyers.

>Government Response

Two days after the ruling made its way to news headlines, on Feb. 9 the Industries Minister Mohammad Shariatmadari told Tasnim news agency that “I have not yet seen the court order and obviously cannot comment on it.”

The head of the Trade Promotion Organization, Mojtaba Khosrotaj, a strong backer of pushing up the already high car import tariffs was quoted by Fars news agency as saying: TPO has not received such a court order yet. 

He added that the Islamic Republic of Iran Customs Administration is in charge of collecting import duties not the TPO and the court order has nothing to do with his organization. IRICA is yet to respond to the suspension.

“As soon as the government receives the court order the relevant legal department of the presidential office will respond,” Khosrotaj said. As of Monday (Feb. 12) the government was mum about this important foreign trade issue.

>Private Sector Stance

Head of Tehran Auto Dealers Association Saeed Motemani says, “Everyone is waiting to see the authorities’ reaction to the court ruling. No one is buying or selling imported cars. Everyone has opted for the usual wait and see approach.” 

If the court order comes into effect “importing companies must decrease the prices. When import tariffs are decreased, for instance, from 95% to 55% car buyers must also see the change in prices,” he said.

Negin Khodro, official importer of Renault cars in Iran, has released a statement on its website that reads as follows: “If and when the import tariffs are decreased, customers will be refunded.”

The company further said that at any given time car prices will be revised in subject to the prevailing import rules.

Head of the Iranian Automobile and Spare Parts Importers Association, Meysam Rezaei, says, “As per the court ruling, the government should have complied and rolled back the new import tariffs on February 10.”

At the time this article went to print, the Ministry of Industries had not announced its stance on the verdict.

Rezaei said the CAJ is expected to issue a final verdict on the latest controversy over imported cars at the latest by July.

The vice chairman of Iran Automobile Importers Association, Farhad Ehteshamzad, says that “the auto market is in a state of chaos” and his association is planning a meeting with policymakers.

>Hybrids Not Spared 

The government passed an amended version of auto import rules on Dec. 30, according to which, depending on engine capacity, import tariffs on gasoline-fueled vehicles increased 15-40%. Currently, auto import tariffs are between 55-95% -- among the highest in the world.

While most governments are offering incentives to promote the use of and cultivate interest in hybrids, the customs duty in Iran for hybrid gasoline-electric cars has also increased significantly from 5% to 45-65% depending on vehicle gasoline engine capacity.

According to the new government rules, import of vehicles costing more than $40,000 is banned. The cap includes the vehicle’s transportation cost.

The wrangling over tariffs has resulted in public outrage. The new customs duties, especially for hybrid vehicles, have been censured by environmentalists, the media and the public. The mounting pressure and strong opposition last week compelled the Ministry of Industries to issue a statement saying that the new import regulations on hybrids would be amended.