The unprecedented rise in car prices has little if anything to do with the auto sales in the Iran Mercantile Exchange, a market observer says.
In his view, IME is the pitch where “supply and demand interact to determine [proper] prices”, and so the recent surge in auto prices has other reasons, Ali Seyyed Khosroshahi claimed.
“I believe that the jump in car prices, even if it is argued that the IME is responsible, is a good omen simply because the profit helps manufacturers who are saddled with financial and production challenges,”Seyyed Khosroshahi was quoted by SENA as saying.
Government-dictated prices, he added, has hurt the auto industry for ages and elimination of government-controlled pricing policy can and will boost this key sector.
However, he did not delve into the overriding objection by the vast majority of the people that why always should they be at the receiving end of such failed policies.
Car prices have shot up in the past several months as never before to the extent that owning a car for the average Iranian household has long been a dream not come true. Add to this the deplorable trend in that prices jump higher almost daily while the quality of vehicles continues to decline.
“The government(s) don’t want to surrender their authority over prices. Ostensibly they are on the side of end consumers claiming to fight for their cause. But price controls hurt the producer and consumer alike in the long term putting money in the pockets of selected dealers” and vested interests.
Auto sale via the IME was temporarily suspended by the Industries Ministry in late May. It argued that the practice was incompatible with market regulatory procedures and added to price volatility.
However, in July the ministry backtracked and the High Council of Securities and Exchange agreed to resume the sale of selected brands.
Some observers say selling cars in the stock market is a positive move that paves the way for transparency in the market, eliminates avaricious middlemen, reduces the harmful impact of government-imposed pricing and safeguards the interest of consumers, producers and shareholders.
Auto sale via the IME reached 4,080 units in the eight months to November 22, worth 33.61 trillion rials ($64 million). Peugeot 207s accounted for nearly a quarter of the new vehicles. During the period 742 Fidelity brands manufactured/assembled by Bahman Motor were sold, followed by 731 Haima S7s of Iran Khodro and 594 Dignity brands by Bahman Motor.
New Rules
IME recently announced new regulations for automakers to sell cars via this market. The two main companies, Iran Khodro and Saipa, are obliged to place at least 2,000 vehicles in every offer.
According to SENA, the limit is 500 units for private car producers.
The measure apparently is to improve the supply side as automakers henceforth cannot offer a limited number of vehicles at the IME. Officials say the move can also help reduce the final price of cars sold at the IME.
The new rules, among other things, say carmakers must submit the list of previous buyers over 48 months before each offer so that their names can be eliminated from the list of eligible new buyers. Each vehicle can be registered with one Iranian ID number. Those aged 18 and above can buy a car at the IME in a one-off deal.
