Only an insignificant number of cars have been imported since the launch of the car import plan, which process has further slowed down.
An automotive expert believes challenges posed by currency depreciation and sanctions against the domestic automotive industry are the main reasons behind the snail-paced movement of new car imports.
A large portion of the promised imported cars have not arrived yet and both experts and applicants are worried that the wrong decisions of the Ministry of Industries, Mining and Trade in the last four years regarding the import of passenger and heavy vehicles will also affect the latest plan, Donyaye Khodro reported.
Automotive experts suspect the import of 142 cars as a pilot for the government's avowed goal of importing 200,000 cars will be the same pattern imports will follow in the next fiscal year (March 2023-24), which implies a slow and protracted process.
Some market players believe that car companies imported this small number of cars to see how the cars are going to be supplied to the market and gauge the Industries Ministry’s approach.
“The Industries Ministry has not give any explanation for the slow pace of car imports and why they cannot fulfill their promises. But it seems that problems regarding foreign currency supply and the intensification of targeted sanctions on the car industry are among the main problems facing car imports and the main reasons behind this slow import process,” said Sajjad Hemmati, an automotive expert.
"Unless the roots of the automobile industry’s problems are identified and dealt with, the Industries Ministry’s promise of importing 200,000 automobiles will not be fulfilled at least until the touted timeframe, i.e., the end of the first quarter of the fiscal 2023-24 [June 21]."
Asked to what extent the methods announced for the supply of imported cars will be effective in identifying the real consumer and eliminating brokers, Hemmati said, “Unfortunately, the car import situation is ambiguous and moving at a very slow speed. The same number of imported cars [142 units] have not been supplied to the market yet. This shows that the method [of selling cars through the Iran Mercantile Exchange] is still unclear and one cannot be sure about its effectiveness.”
Import of Used Vehicles Next Year
The Majlis Joint Commission has approved the import of used vehicles, including passenger cars, tractors, trucks, vans, buses and minibuses, under 5-8 years in the next fiscal year (starting March 21, 2023).
The proposal, incorporated in the section on automotive development in Note 6 of the budget bill, was earlier approved by the Majlis Industries and Mines Commission.
This issue will be officially approved when the articles of the budget bill for the fiscal 2023-24 are presented in an open session of the parliament, Donyaye Khodro reported.
Some experts claim that the import of used vehicles can help regulate the market while others oppose this plan and believe that used cars are not economically viable, because the country of origin wants to export them for the same reason.
According to Hassan Qazian, an automotive expert who supports the plan, the import of used cars can help reduce prices only if brokers and profiteers are eliminated.
“The domestic car market has been awaiting the arrival of newer models of foreign cars for several years. But since the USD rate has exceeded 400,000 rials and the amount of taxes, customs duties, etc. have increased, imported new foreign cars cannot cost less than 10 billion rials [$25,000] under the current conditions. This figure has been estimated by considering the lowest possible prices and costs; therefore, new cars with higher prices will cost more in the domestic market,” he said.
“This is while used cars in a good condition can be bought at lower prices. Based on this, the import of foreign used cars in good condition can greatly reduce the price range of imported cars.”
The expert noted that brand new cars cost upwards of $20,000, but can be imported for under $10,000 as used vehicles.
“The import of these vehicles can help reduce prices in the domestic market only when the import of passenger cars is not handled in the same way as the import of used trucks, which was supposed to facilitate the purchase of a used truck for people who had a dilapidated truck and could not afford a new truck. But due to the presence of brokers and profiteers, and the lack of proper planning and management, imported used trucks are currently priced higher than new domestic vehicles,” he said.
Qazian said in the absence of proper management, the import of used passenger cars is pointless.
“If we are going to import used cars without a plan and without a law or legal framework, the import will not affect the market and importers may simply waste their money,” he said.
“However, if the rules and regulations for the import of used cars are clear from the beginning and there is coordination between all related organizations, the car market will definitely benefit from it and we will witness a decline in prices.”
