The import of new and used cars could help end the monopoly of domestic automakers and eliminate the government’s command pricing, according to the head of the Boards of Directors of Cooperative Company of Car Component Manufacturers.
“If the import of cars is handled correctly, the domestic market will no longer remain a monopoly, but this will only be possible if 40 to 50 public and private carmakers concurrently produce and import cars,” Ali Yekehfallah was also quoted as saying as IRNA.
Domestic carmakers have been selling their substandard cars at exorbitant rates because of the monopoly created by the imposition of hefty customs tariffs on imported cars.
He added that command pricing has created numerous problems and prevented the auto component sector from using its full capacity by reducing investments.
According to the official, many auto parts production lines are not being used, or some of them are operating at one-fifth of their capacity.
“If auto parts and manufacturing companies continue to operate this way, Iran will become an assembler of foreign models and the domestic auto industry will be destroyed,” he said.
The official noted that private and public automakers could meet the needs of the domestic market, provided that the automobile industry is not controlled by the National Competition Council’s command pricing mechanism.
“Iran Mercantile Exchange helped the auto market come out of the shadow of command pricing to some extent, but this is not the final solution. This wrong pricing mechanism, in addition to turning the automobile into a capital good, has created a rent in the car market, which only benefits brokers,” he said.
Yekehfallah stressed that this rent also fuels artificial demand in the domestic market that annually requires 1.5 million vehicles, although it is not clear whether this demand is real or speculative.
He maintained that car imports will be beneficial for those who can afford to spend $15,000 or more for purchasing an automobile.
“While the ban on car import has been lifted, it will not eliminate the monopoly of domestic automakers. The number of cars that will be imported is very important, and we should see if they can meet the domestic market’s need for foreign cars,” he said.
According to Yekehfallah, if the government’s interference in the domestic auto market is reduced or stopped, carmakers can increase their production capacity by up to 2 million vehicles annually.
“The rise in production and car imports can help end the monopoly in the automotive industry. And when the monopoly ends, the government and the National Competition Council should no longer control the car industry and market with command pricing, because one of the reasons for command pricing is the monopoly over car market. Then, like any other market, supply and demand will determine pricing and there will be no need for any organization to set car prices,” he said.
Nat’l Car Portal Faulted for Creating Monopolistic Market
The national online car ordering portal, Esalecar.ir, has created a monopolistic market, according to an automotive expert.
While a debate is raging among market players about the benefit of supplying cars through the Iran Mercantile Exchange or the national online car ordering portal, experts and economists warn about the negative impact of restricting car manufacturers' pre-sale until the end of next year through Esalecar.ir system.
In an interview with the Persian automobile daily Donyaye Khodro, Masoud Daneshmand, a member of the Iran Chamber of Commerce, Industries, Mines and Agriculture, pointed to the trial and error approach of the automotive industry and the consequences of pre-sales, which have placed the car manufacturers’ output in reserve until the end of next year.
"The national online car ordering portal did not benefit buyers and manufacturers, and has become a tool for applying trial and error policies inherited from the previous government," he said.
"One of the biggest challenges of the domestic auto industry is that the portal has monopolized demand. In the registrations made in the portal based on current conditions, few applicants can buy their cars from the factory. While we can safely say that more than 80% of real car buyers do not manage to enter the final waiting list."
Commenting on the supply of cars on IME, the automotive expert said, "Although car supply in the transparent and competitive environment of the commodity exchange is one of the ways of keeping the automobile industry away from command pricing, this move is inconsistent with the plans of car policymakers."
Asked what measures are considered necessary for balancing car supply and demand, he said the country's political environment should be assessed.
“If international relations are improving, the plan to increase car production will have a single format. Accordingly, we should consider elements such as product development, use of global capacity, export, etc.,” he said.
“Since the country has the automotive infrastructure, global automobile manufacturers are willing to cooperate with Iranian carmakers. But if the opposite is the case and Iran does not reach an agreement, naturally we’ll have to stand on our own feet and rely on the existing capabilities.”
Daneshmand stated that an increase in production can definitely be achieved, but it is necessary to eliminate command pricing to register production growth and prevent losses, while developing the automobile industry.
