After the Majlis Joint Commission’s approval for importing 60,000 vehicles in the fiscal 2022-23 (starting March 21, 2022), media outlets are speculating about the models on the import list.
Cars worth $20,000-40,000 are more likely to be imported during the period.
Of the total number, the commission has approved the import of 50,000 passenger cars and 10,000 heavy mining and road construction machinery in the next fiscal year.
“Car imports will have the biggest impact on government revenue. People think that the government stopped imports for supporting the car industry, while the government has stopped importing many products, including foreign cars, to curb foreign exchange consumption,” Amir Hossein Kakaei, an automotive expert, told Car.ir that foreign exchange resources are expected to be released in a controlled manner, because if all foreign exchange resources are released, car imports will also become free and there is no reason to set a limit on car imports.
“In the years when car imports were completely free, we imported 70,000 cars at its peak. When car imports were free in the fiscal 2012-13 and fiscal 2013-14, very expensive cars worth $60,000-100,000 were imported. Due to the social tensions created by these imports, the Leader ordered that cars worth over $40,000 should not be imported and this restriction is still in place,” he said.
“Experience shows that cars are imported for the sake of profit, therefore, they will import cars worth $20,000-40,000 and will avoid importing cheap cars costing $10,000. Hence, the new imports will not affect cars valued below 10 billion rials in the market.”
Kakaei added that when the country's currency situation improves and nuclear talks in Vienna, Austria, reach a positive conclusion, the situation of assembly-based products will also improve.
A total of 28 automakers in the country assemble completely knock-down cars. In the last three years, their activities had gradually stopped, but recently they have resumed operations.
“Under these conditions, the assembly sector will improve and the number of cars worth 6-7 billion rials in the market will increase.”
At present, car sales have dropped sharply and a recession reigns in the market. Car sellers are waiting for the result of nuclear negotiations.
Majlis Approval
According to Jan. 19 approvals, the commission has agreed to allow car imports at a tariff approved by the Cabinet. Proceeds from this source will be spent on financing the rail network and establishing new railroads, including for regular and high-speed urban trains, and completing semi-finished rail and road construction projects in deprived areas and repairing accident-prone hotspots, ISNA reported.
These undertakings will be ceded to the private sector, including natural and legal persons.
As per the ratification, in addition to 60,000 vehicles, the import of trucks, urban and suburban buses, refrigerated trailers, wagons and refrigerated vans will be permitted.
Revenues amounting to 600 trillion rials ($2.17 billion) are expected from this source.
“In the commission’s meeting, car import proposal received six votes in favor, which allowed the government to import a limited number of cars with non-export foreign exchange revenues [exchanged at the Nima rate],” Mohammad Reza Mir-Tajeddini, a member of Majlis Joint Commission, was also quoted as saying by Car.ir.
Nima is a secondary market developed by the Central Bank of Iran for companies to sell their export earnings to importers at rates lower than the open market.
Until recently, the most important dispute between the parliament and the Ministry of Industries, Mining and Trade concerned the legal entry of foreign cars. While lawmakers consider the issue of imports as the only appropriate solution in the short run to end the domestic car market’s monopoly and create a balance in foreign car prices, the ministry does not endorse the issue by citing the scarce forex reserves.
The parliament passed a motion on Sept. 14 in favor of lifting car imports conditionally.
According to this decision, imports of gasoline, hybrid, electric and compressed natural gas-powered vehicles of specified emission and safety standards are allowed hereafter, with the stipulation that domestically-made vehicles or related parts are exported in return so that no foreign currency is spent on the purchases.
Also, the lawmakers decided to allow the import of used cars, as long as they are not older than three years (as of the date of production).
In the last five years, auto imports were banned, reinstated and banned again while a scandal unfolded, in which government officials were accused of facilitating the illicit import of luxury vehicles.
Auto imports have been barred in Iran since June 2018. However, prior to the introduction of the limit, companies had brought cars into Iran, which were in the middle of getting customs clearance when the ban was imposed. Those vehicles have been stuck in the warehouses of customs department, or other state agencies.
However, despite the ban, illegal car imports continued. Following a public outcry over the issue, the Iranian Parliament launched an inquiry, which showed that the automotive sector has been riddled with rent-seeking and lawlessness.
Ultimately, most of the smuggled foreign cars were presold even before entering the country.
