Supply and demand are the main issues in car imports and should be considered in import regulations that are being compiled by the Ministry of Industries, Mining and Trade, according to a member of the Board of Directors of the Association of Homogeneous Propulsion Industries and Component Manufacturers of Iran.
“To encourage buyers to use low emission cars such as hybrid and electric vehicles, governments enact laws for reducing toll fees and taxes to solve environmental and gasoline issues,” Yousef Haqiqi was also quoted as saying by Khabar Khodro.
The official noted that if the purpose of car import is to reduce the price of domestically produced cars, this may not materialize as high customs duties and tariffs make imported cars attractive only for customers of high-end cars.
“Globally, a car with a price tag of $20,000 is not a car with high tech and the latest features,” he added.
Giving examples of foreign economy cars in Iran, Haqiqi said, “Some Hyundai and Toyota models with full options and a price range of $16,000 to $23,000 are considered economy cars.”
He stressed that the government should not allow everyone to import cars, as this will give rise to corruption.
“The decision to allow car import by any natural and legal person is incorrect since it will cause car import to lose its true purpose [of importing cars with affordable prices to balance the market] and this will give rise to corrupt golden signatures,” he said.
Haqiqi said after-sale services should be one of the requisites of car imports.
“Nissan Maxima was one of the cars imported by Pars Khodro as semi knocked-down kits. Later, other high-quality cars such as Nissan’s Qashqai, Teana and Murano were imported nearly a decade ago by this car manufacturer that offered after-sale services in Iran. Also, Mazda 3 was one of the cars imported by Bahman Automobile Group, which was very well received in the Iranian market,” he said.
Domestic Production Best Supplier of Economy Cars
Domestic production is one of the best options from among the three considered by the Ministry of Industries, Mining and Trade for supplying economy cars, according to a faculty member of Iran University of Science and Technology.
“The three options were production with domestic design, production with foreign design and import,” Javad Marzban-Rad also told Khabar Khodro.
Economy cars possess basic technology and simpler parts compared to luxury and high-tech cars, and have high demand mainly because of their low price.
“Economy cars cost under 3.5 billion rials [$11,006] that a majority could afford. The higher the features, engine power and technology a car has, the higher its price will be, which will also take it out of the economy car category,” the faculty member said.
Marzban-Rad, who is also an automotive expert, noted that considering their low-level technology, simple parts, high production volume, low price and rising demand, economy cars could be easily supplied by domestic automakers.
He explained that at the beginning, completely knocked-down (CKD) kits could be used for the production and assembly of economy cars, but later, the focus should be on domestic design and production, such that at least 80% of these cars are produced domestically.
CKD is a common practice in the car, bus, heavy truck and railcar manufacturing industries, as well as electronics, furniture and other products.
If Iranian automakers produce a large number of economy cars, they will create jobs and increase the share of parts manufacturers in the domestic production sector.
The automotive expert further said that if economy car production were to employ modern technology and acquire Euro 5 standards, those cars could also be exported to neighboring countries.
Commenting on rumors about importing economy cars worth $5,000-10,000 by the Industries Ministry, he said, “Economy cars worth $5,000 do not have high standards and will be of low quality. Importing a $10,000 car will cost about 7 billion rials [$22,012] after calculating the cost of transportation and customs duty, which will take it out of the realm of economy cars.”
Marzban-Rad concluded that an economy car produced domestically will be priced lower compared to imported cars because it won’t have to pay the customs duty, or use foreign currency to import parts.
