Currency Pack: A Double-Edged Sword for Auto Part Manufacturers

Khodrocar – After the raise of exchange rates since few days ago, the prices of some imported goods tripled. Items that were somewhat raw materials and this led to the increase in the final cost of products. Meanwhile, part manufacturing industry was not an exception. The prices of auto parts increased every day and led to the increase of cars’ final prices.

On the other hand, car import ban, limitations for the clearance of auto parts from customs and creating broker’s market and finally the government’s decision made auto parts’ prices increase.

In addition, after the raise of exchange rates, the government announced that governmental exchange (42000 Rial per Dollar) will not be allocated to car market and auto part market, which the carmakers expected this issue earlier.

Last year their exchangeable currency have been cut suddenly.

Now, after it is determined that governmental exchange will not be allocated to the car and auto part makers, what are opportunities and threats for them?

Arash MohebiNejad, secretary of Iranian Specialized Manufactures of Auto Parts tells Khodrocar regarding the issue: "If this currency pack is limited to the government, the automotive and auto part industry will be destroyed but if this pack belongs to a major pack, the purchasing power of customers will be increased and these two industries will grow simultaneously.”

He says: "If this currency package provides a possibility to buy Iranian durable goods such as home appliances and cars and causes the sudden price corrections of cars, parts and supply working capital, we can be hopeful.”

According to MohebiNejad, in recent years the exchange rate has increased to 89000 IRRs per dollar for the purchase of vehicle parts from 42000 IRRs.

He emphasizes: "We are not optimistic about this currency pack but as a part of major economic plan, we are going to welcome it.”

According to him, executing such a plan is like a double-edge sword for automotive and auto part industry because implementing it generally leads to a recession for these two industries but on the other hand it leads to the successful export.

Khodrocar – Last week, new currency pack was unveiled officially. According to it, governmental exchange will not be allocated to the automotive and auto part industry.

Khodrocar Reporter: Negar MirKarimi

Khodrocar Translator: Maziyar Jafarieh