Liberating Car Price Awaiting for the President’s Command

Khodrocar – Major local automakers has sent a letter to the president and asked to liberate car prices. However, the president was against this law but counselor of Industry, Mine and Trade ministry said that the ministry is okay with liberating car price and they will announce it in the next two weeks to reduce part makers and auto makers mess.

According to a member of parliament the national competition council is not allowed to interfere directly in pricing due to the new approved laws. If there is a discrepancy in the body of regulation, such as the car or industry sector, the national competition council will be the reference authority for resolving this disagreement.

"Car’s price should increase or otherwise all automakers will definitely bankrupt after a while. When the national competition council agreed with price increment, the agreement was to supply first materials and imported parts with 42000 IRRs currency rate but two things have been changed since then. The first materials which made in Iran sold by international price in dollar and now all prices doubled. " Amir Hosein Kakaei, an expert of auto industry told khodrocar reporter.  

"If we compere the prices to last year we would see that are prices are doubled and since 70 percent of auto industry depends on the first materials then they will have great impact on the final price. People understand that if they buy a 350 million IRRs car, its true value is 700 million IRRs” he added.

"It’s right that part of these tensions are because of the market but it is obvious that the current price of cars is too low and it should increase. It should be analyzed that each car is in which level to get price increment.” He continued.

"The biggest share of our market belongs to cars which are under 450 million IRRs. Recently, the government forced the automakers to presell their cars but according to experts it is a bad idea because when they sell 1000 units with a unchangeable price but it get 50 percent higher in the delivery time they are losing 50 percent of their money which no body will recover.” Kakaei said.

"The shareholder will suffer loss in this condition but the jobbers in the market will take the profit. When demand rises, demand will fall for some time, and automakers that target one and a half million vehicles a year will naturally reduce their production, leaving them scarce. Although the price of a car should be proportional to the increase in the price of raw materials, the automaker will not necessarily benefit from it, but it can only control its losses.” He said.

"In the first 4 years of the presidential period, he tried hard to control the inflation. He believed that it could bring the economy improvement and we saw it results. The president put some effort to control the prices in the markets such as car and cellphone but prices can’t be control by force.” He added. "Some officials believe that if the price is kept, then automakers may be temporarily down, but the market will slowly reach the desired result, but the expert's prediction is no longer feasible.”

As it was said before, according to the law, the competition council is no longer entitled to pricing, and it seems that the president and the minister of Industry, Mine and Trade will soon come to an end and will decide on new pricing, but what is the shock of the new prices Will enter the market and when the market will see the tranquility is not clear. What is clear is that the Competition Council's rule on the automotive industry needs to be completed and that fundamental changes are made in this area and that, if problems are not resolved, their shape will change.

Khodrocar Reporter: Sepideh Ghazi Nejad

Khodrocar Translator: Amin Zamani