The recent mandate to use tracking code and product ID for automotive spare parts has caused problems for manufacturers and sales representatives.
While the new plan is designed to regulate the market and benefit the consumer and producer, it has given rise to both supply and demand problems, such that lawsuits have been filed against manufacturers.
Experts believe that the software for this plan should have been tested and launched nationwide after the elimination of any problems for 57 car spare parts, Donyaye Khodro reported.
Issues related to taxation and profit sharing between the manufacturer and distributor have also disrupted the sales of component companies.
As per the law, the producer can earn up to 17% profit and the sales agents 3%. This low profit has caused sales agents to either avoid buying new products, or look for credit and long-term purchases.
Mohammad Reza Najafi-Manesh, a member of Tehran Chamber of Commerce, Industries, Mines and Agriculture and chairman of the Association of Homogeneous Propulsion Industries and Component Manufacturers, believes that profit for sales representatives should increase to 28% so that they have an incentive.
“Because of this issue, brokers might enter the market, which could increase the product’s price for customers,” he said.
According to the official, the component market currently faces two main problems: smuggled parts and counterfeit parts that are produced in unofficial workshops.
The worst case pertains to parts sold as imported brands, but they are made in Iran, lack standards and are ultimately detrimental to the consumer.
The Ministry of Industries, Mining and Trade’s new tracking code and product ID is aimed at identifying smuggled or counterfeit products, as the product ID identifies the manufacturer and the tracking code confirms the authenticity of the product. The price of the producer is also printed on the product.
However, other unanticipated problems have derailed this plan.
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.
Najafi-Manesh 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 problem with evaluating this volume of smuggling is that it is not clear how much of these goods were imported and how much was produced illegally. 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.
The official stressed 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 jointly 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 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.
