If the prices of imported cars are lower than those of Iranian cars, the domestic car and component industries will face problems, according to a member of the board of directors of the Association of Homogeneous Propulsion Industries and Component Manufacturers.
“In the field of imported car, the government is considering a special mechanism that sets higher or lower tariffs for cars with different engine power. Such a mechanism, while creating competition and improving the technical knowhow of car and parts makers, will not harm domestic production,” Alireza Khalili was quoted as saying by Khabar Khodro.
“Cars that enter Iran must be at a price level that helps create balance in the domestic market, and achieves the equilibrium in comparison with the prices of imported cars in the international market,” he added.
Noting that tariffs determine the price, the official said, “The prices of imported cars are naturally lower than the prices of domestic cars, and what increases the final price is the [customs] tariff rate. Therefore, the establishment of balance in this field can prevent any harm to the domestic cars and parts manufacturing industries.”
Khalili stressed that the tariff rate should not interfere with the import of parts and raw materials.
Asked whether the priority is importing cars or parts, raw materials, technology, machinery and equipment, he said the ban on imports in the last few years deprived Iran of the latest technology.
“The current quality problem of domestic cars is due to the lack of access to machinery, state-of-the-art knowhow and good quality raw materials. If access to these resources is provided, many problems in the car industry will be solved,” he added.
In other words, the import of machinery and technology must be prioritized over car imports.
“There is a history of producing cars such as Jeep, Benz and Fiat in Iran, but problems in political relations have impacted the car industry’s condition. It is not possible to be content with just producing domestically. We should use the technological knowledge of foreign automakers to eventually increase the quality of domestic cars,” the official said.
Referring to Turkey as a manufacturer of cars and parts, as well as an automotive importer and exporter, he noted that studying and following the example of other countries' policies in the field of automobile manufacturing, in the long run, will turn Iran into an automobile manufacturing country with competitive products.
Khalili stressed that the government should ease car imports and currency transfer because the current unreasonable methods are associated with high risk and very low reliability, so the government’s flexibility can improve the situation.
High Car Imports to Impact Domestic Spare Parts Market
A spokesman of the Tehran Auto and Machinery Parts Dealers Association explained the impact of car imports on the spare parts market.
“New cars do not need replacement of parts when they hit the market, and typically incur costs, including replacement or repair, after one to two years. At present, sellers and importers, and members of the guild, supply and import the parts needed by these cars,” Mehdi Kazemi was also quoted as saying by Khabar Khodro.
He noted that the domestic spare parts market will benefit from car imports, but will be disadvantaged by the exit of worn-out cars.
Asked whether the priority of spare parts producers is to make parts for domestic or imported cars, Kazemi said, “This depends on the number of imported cars because if, for example, they are fewer than 500, due to the high cost of production, parts manufacturers will not supply parts for these cars. Instead, importing companies are obliged to provide parts and after-sales service for imported cars through dealerships.”
The official underlined that parts supplied by dealerships must be 100% original and standard, but when suppliers do not have access to the original parts, they order parts, for example, from Chinese factories.
Referring to the 20% price increase in the spare parts market, Kazemi said, “The sharp rise in the US dollar has led to a sharp decline in supply and lowered demand. Unfortunately, the spare parts market is currently in a complete recession.”
Uncertainty about the price of parts due to exchange rate volatility in the domestic market has halted the sale of parts.
Auto Spare Parts Top Contraband
Automotive spare parts topped the list of smuggled goods in the fiscal 2021-22 (ended March 20), according to Spokesman of the Headquarters to Combat Smuggling of Goods and Foreign Exchange Hamid Reza Dehqani-Nia.
He announced that $17.1 billion worth of smuggled goods entered the country in the fiscal 2020-21.
The spokesman noted that after car spare parts, food was the second largest category of contraband last year, while computer equipment and home appliances respectively ranked third and fourth in the fiscal 2021-22, the news portal of Iran’s Chamber of Commerce, Industries, Mines and Agriculture reported.
According to Dehqani-Nia, many household appliances in the Iranian market are counterfeit.
"These products are Iranian goods fabricated or repaired in unofficial workshops and sold in the domestic market as foreign and banned brands," he said, without mentioning the value of smuggled car spare parts.
Mohammad Reza Najafi-Manesh, a member of the Tehran Chamber of Commerce, Industries, Mines and Agriculture and chairman of the Association of Homogeneous Propulsion Industries and Component Manufacturers, said although car spare parts topped the list of smuggled goods, it is not clear how much was smuggled into the country and how many were produced by underground and unofficial domestic units.
The official noted that another problem is that the size of the spare parts market in Iran is not known.
“Therefore, it was decided that ISACO, SAIPA Yadak and the Association of Homogeneous Propulsion Industries and Component Manufacturers cooperate to examine the volume of the spare parts market and determine how much of it is domestic and what percentage comprises counterfeit production and smuggling,” he said.
In the field of auto parts, domestic car batteries and tires were obliged to have ID and tracking codes, and it was decided that 55 other commodities produced by 173 domestic companies would receive ID and tracking codes.
Najafi-Manesh noted that Iran has 1,500 car component and spare parts producers.
