Car’s Price Drop? Maybe Later

According to Khodrocar report, since yesterday, annual and long term deposit interest rate decreased to 15 percent and it has been decided that the interest rate of participation would be 3 percent more. Iran’s central bank promised to drop the facility rate in six months for automakers if they obey the laws for the new interest rate of participation.

Decreasing at the facility rate would drop the product's final price.

It is important to mention that some automakers are creating an interesting opportunity for customers by increasing the interest rate of participation to 24 or 27 percent which will increase the liquidity for them. Now there is a question. Will the car’s final price drop duo to decreasing of interest rate of participation? What would automakers do to keep the market appealing?

"Decreasing of the deposit interest rate and automakers interest rate of participation won’t affect the car’s final price in short time, because, according to summer break, the market demand is at the peak.” Amir Hasan Kakaei said to Khodrocar reporter.

"Iranians are familiar with economic fluctuations” he mentioned. " 3 percent decrease in the deposit interest rate won’t change the customers' behavior and on the other hand, there is no alternative market for customers due to coordinate drop of interest rates. So costumers will buy their essential products anyway.”

The automotive industry expert said: "in order to feel the decreasing of car’s price, the facility rate should drop in the long term which will need 18 to 24 months at least.”

 "Automakers are purchasing raw material for the needs of six months or one year and this is the cause of stable price for that period of time. The final price will decrease after they purchase raw material for the next time.”

 "Money price for automakers is about 30 percent and the 3 percent drop won’t affect them much” he said. "Iranian automakers are making interests in market due to market and economic condition, however, banks and leasing are responsible for that in the international markets.”

"The main responsibility of an automaker is to increase the quality and variety of models. Right now, there is a good competitive market for cars which are more than 300 IRRs.”

"Increasing the variety of models is a little risky for Iranian automakers because it would have a negative effect on production rate. "Merging automakers is one of the international solutions in this situation.” Kakaei added.

This automotive industry expert thinks that decreasing of interest rate of participation will force the automakers to be careful about quality and have better after sales services. "Automotive industry will face better conditions in the next couple years.” He said.

Khodrocar Translator: Amin Zamani