Due to a lack of authorized car tire import, the smuggling of tires is rampant, according to the secretary of Iran Tire Importers Association.
“If the government were to modify the current conditions and make it possible to import passenger car tires, it will be in the interest of both consumers and the government,” Mohammad Mir-Abedini was also quoted as saying by Khabar Khodro.
Currently, it is possible to import heavy vehicle tires, but due to foreign exchange obstacles, it is not possible to import car tires.
“The import of heavy vehicle tires is being carried out as per the needs, but the official import of passenger car tires is not possible due to fluctuations in the foreign exchange rate’s base price and the overall rise in the price of passenger tires,” he said.
The secretary of Iran Tire Importers Association noted that because of the reduction of customs duties and taxes, the import tariff for heavy and light tires has been reduced, and the tariff for passenger tires has decreased from 40% to 32%.
“However, due to the change in the exchange rate from subsidized currency [$1=42,000 rials] to Nima currency [$1=260,000 rials], and as a result of the 25-30% rise in the price of passenger tires, it is not possible to import from official sources,” he added.
In the Nima system, importers declare their currency needs, exporters register their currency proceeds, and banks and authorized moneychangers act as dealers. As per rules, non-oil exporters have to repatriate a portion of their foreign exchange earnings and sell it via Nima. They can also sell their currency to authorized exchange shops.
Referring to challenges facing tire importers, Mir-Abedini said, “The sample test by the Iranian National Standards Organization, the cost of tire clearance and value-added tax have imposed a heavy burden on traders.”
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 unofficial domestic units.
“In other words, if a product is found to be illegal, it may have been smuggled into the country, or illegally produced by unlicensed units inside the country,” he added.
Najafi-Manesh 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 survey the spare parts market and determine how much of it is domestic and what percentage comprises counterfeit production and smuggling,” he added.
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.
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 a part replacement 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 services 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 decline in both supply and demand. Unfortunately, the spare parts market is currently in complete recession.”
Uncertainty about the price of parts due to exchange rate volatility in the domestic market has led to a halt in the sale of parts.
