The Ministry of Industries, Mining and Trade has devised strategies for the automotive industry in the new Iranian year (started March 21) to set production records and regulate the market.
“The first step of the car reform plan is to boost the production of Iran’s major carmakers, which is possible by adjusting [read increasing] the prices of domestic products,” Abdollah Tavakkoli Lahijani, the head of the Industries Ministry’s Automotive Industry Office, told IRNA.
“Car production exceeded 1.3 million units in the fiscal 2022-23 after four years, wherein production was around 800,000 cars per annum and incomplete cars had piled up in parking lots,” he said.
“We plan to break the country’s car production record this year and reach the production of more than 1.6 million units.”
The official noted that after the implementation of the first step, which was aimed at increasing production, in the second step, the focus will be on the development of nine high-quality domestic products this year.
“Along with the resumption of imports and the clarification of supply status in the national online car ordering portal, the country's car market is expected to become more competitive,” he said.
“Expanding car supply and making prices real by increasing the factory price will eliminate false demand in the car market and boost car delivery.”
Lahijani stated that paying attention to the design of new domestic products is among the ministry’s development plans.
“The root cause of inefficiency in the country's automotive industry should be addressed, which is the lack of attention to the design and development of local products in the value chain of domestic car manufacturers,” he added.
The official explained that due to the low presence of knowledge-based companies in this industry, domestic car manufacturers do not have full control over car production that constantly experiences disruptions.
Lahijani stated that the main goal is to make this industry knowledge-based through the development of local platforms and new products with a national brand.
Increase in Factory Prices of Domestic Cars Averages 29%
The factory prices of cars produced by major domestic automakers Iran Khodro and SAIPA have increased by 29% on average, according to the CEO of SAIPA Automotive Group.
“A price increase for domestic cars was last announced in the ninth month of the fiscal 2021-22 [Nov. 22-Dec. 21, 2021],” Mohammad Ali Teymouri was also quoted as saying by IRNA.
“The National Competition Council and the Consumers and Producers Protection Organization determine the prices of cars, which process was launched about five months before the beginning of the current fiscal year [March 21],” he added.
The SAIPA chief noted that the two organizations based the new price changes on the first six-month audit reports of Iran Khodro and SAIPA.
“While the average price hike is 29%, the prices of some products such as SAIPA’s Shahin and QUIK [with automatic transmission] only increased by 18% and 17%, respectively. The price increase of Iran Khodro’s Samand, The prices of all domestic cars considered non-competitive by the National Competition Council have increased, which could be seen on the websites of the two domestic automakers.
“A car like Shahin, which has a factory price of 3.04 billion rials [$5,960] and taxes worth 400 million rials ($784), was sold for 3.44 billion rials [$6,744] by the company. Now it faces an 18% increase and its factory price reaches over 540 million rials [$1,058]. This still shows a significant gap compared to the market price of about 6.7 billion rials [$13,135],” he said.
According to contracts concluded between car manufacturers and customers, the delivery of cars will be based on the new factory prices.
Teymouri pointed out that the average price increase initially suggested by the council was more than 40%, but after the intervention of First Vice President Mohammad Mokhber, the rate was revised lower.
“With the new prices of domestic cars, we hope to achieve a good production this year. We have currently achieved 32% growth in production compared to last year,” he said.
