Impact of Instant Decisions on Iran's Auto Industry Prestige

Khodrocar – Exactly 1 year ago SABTARESH website shut down against vehicle importers and Mojtaba Khosro Taj, president of trade promotion organization announced this website would be shut down till the second announcement. This shut down continued till 6 months with an unknown reason.

These 6 months was enough to disturbed the market of imported vehicles. Price increment from a side and delay in announcing importation tariffs make different challenges for importers. After that the website opened again for specific cars with under 2500 cc engine displacement and below 40 thousand dollar value. It was promised that the website won’t shut down again but after 2 months the government closed it for a few days. After reopening it was announced that 6 thousand cars illegally registered.

This story continued since the ministry of Industry, Mine and Trade announced that luxury and none- necessary products importation has been banned and easily car importation banned for an unknown period.

If we don’t consider the impacts of car importation ban on local market and worn-out car plan, the real question is why importation of a product that just have 5 percent of the country’s importation should face these kinds of challenges? Does this decision have bad effects on foreign investments in Iran’s market?

"Several changes in law in any field will make investors to leave. When the government can’t make a stable law and doesn’t have a futuristic vision then investors will leave the country as soon as they could. It isn’t the only reason for foreigners’ hesitation to invest in Iran and it has other reasons too. Vehicle importation ban has different impacts on auto industry because competition atmosphere decrease and customers should buy cars with unreal prices. People should pay for sudden decisions of the government’s costs.” Farbod Zaveh, an expert of auto industry told Khodrocar reporter.

"Iran’s imported cars market is not that big to make problem for foreign companies and they have several other countries to export. Total vehicle importation into Iran was 50 to 60 thousand units. The most important points are lack of transparency and unstable condition.” He added.

"Some foreign political issues are covering the entire economy of Iran and it isn’t especially for auto industry. There are several other issues which make problem for foreign investors, one of them is some political sides believe that foreign investment is opposite of independence. This kind of problems will tell investors that Iran’s financial market is not a safe place for investing and it isn’t transparent.” He continued.

"Foreign companies are not trusting Iran but they didn’t fulfill their promises before and after the JCPOA and in this situation we have to trust them not they trusting us. USA increased importation tariffs for European buy they fear from America and continue their activity there.” Vali Maleki, member of industry commission of the parliament.

"Vehicle importation doesn’t have positive impact on Iran’s trade balance and contain 5 percent of the importation annually. Part of these cars aren’t produce in Iran but they are reducing the local market share. The only positive point of vehicle importation was worn out cars and unfortunately more than 200 scrapping centers are working with 10 percent of their capacity.” He added.

It is right that share of vehicle importation was just 5 percent but importation would help the competition atmosphere in the country. Sudden decisions are making the business unsafe for investors and make us an alone island. Also, we will miss the chance to update our technology.

Khodrocar Reporter: Sepideh Ghazi Nejad

Khodrocar Translator: Amin Zamani