Car prices in Iran continue to soar: Imports are restricted, production is falling, and buying a car is becoming a "luxury"

Recently, Iran has relaxed the registration of automobile import applications. If subsequent import approvals continue to expand, coupled with progress in diplomatic channels and the gradual release of frozen overseas funds, automobile supply is expected to improve...

According to Al Jazeera, although the domestic situation in Iran has eased compared with previous times, the auto market has not cooled down. On the contrary, due to multiple factors such as exchange rate fluctuations, import restrictions, declining supply and inflation expectations, Iranian car prices are stillrising, and the threshold for ordinary families to own a car is getting higher and higher.

The report quoted the experience of consumers in a car showroom in Tehran as saying that many families who originally planned to buy cars had to give up their plans to buy cars due to the continuous rise in car prices in a short period of time. Consumers surveyed said that the purchasing power of the car purchase funds accumulated last winter has now almost halved. It is now difficult to find new cars on the market that sell forless than 10 billion rials (about 10,500 US dollars), even the cheapest in Iran. The model has exceeded this level.

Market participants said that the past six months have been one of the fastest price increases in recent years, with some assembled vehicles and imported models rising even more than 150%. At the same time, consumer dissatisfaction with product quality and after-sales service has not been alleviated by the increase in prices. Low quality, high fuel consumption and insufficient maintenance guarantees are still the issues most reported by local consumers.

Industry insiders believe that the current problems in the Iranian automobile market are not only caused by rising costs, but also related to the long-term lack of competition. A car dealer told the media that in an environment oflong-term restrictions on imports and lack of sufficient competition from local brands, consumers have limited choices and manufacturers have relatively insufficient motivation to improve their products and services. With the recent increase in official selling prices by Iran's two major local car companies, Saipa and Iran Khodro, coupled with the rise in the US dollar exchange rate, the market generally expects prices to continue to rise in the future.

At the same time, the supply side is also under pressure. Saeed Lilaz Mehrabadi, CEO of Iranian automobile manufacturer Kermania, said that in the first three months of Iran's calendar this year (March 21 to June 20), domestic automobile supply fell year-on-year by about 20% to 30%. The main reason was that the government reduced foreign exchange quotas for the automobile industry, which affected imported parts and vehicle procurement. He predicts that Iran's total automobile production this year will be about 1 million to 1.1 million units, significantly lower than the all-time high of about 1.7 million units in 2012.

However, the company leader also revealed a change worthy of attention. He said that Iran has recentlyrelaxed the registration of automobile import applications. If subsequent import approvals continue to expand, coupled with progress in diplomatic channels and the gradual release of frozen overseas funds, automobile supply is expected to improve and market prices may gradually stabilize.

 written in the end 

The Iranian automobile market is still in a typical state of "high demand, low supply". The price increase is more the result of the joint drive of insufficient supply and inflation expectations, rather than the overall improvement in consumption power. For China's used car exporters, there are indeed opportunities in the Iranian market, but they need to pay more attention to foreign exchange settlement, import approval and logistics risks. If Iran further expands automobile imports and improves foreign exchange supply in the future, China brands and China automobile sources are still expected to benefit. However, before the policy is truly stable, careful assessment of transaction risks remains a prerequisite for conducting business.

Source: Guangdong Good Car

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