A total of $2 billion worth of automotive spare parts and components are being smuggled into Iran annually, according to an estimate presented by the secretary of the Association of Homogeneous Propulsion Industries and Component Manufacturers.
Arash Mohebbinejad said the estimate is based on data furnished by Iran's Headquarters to Combat Smuggling of Goods and Foreign Exchange, IRNA reported.
A bulk of the auto spare parts and components pertain to luxury and expensive cars, which are smuggled along with low-quality and counterfeit parts, he added.
The official said the smuggling of low-quality parts leads to the outflow of foreign currency, poses risks to human lives and increases financial liability, as they are cheaper due to non-payment of customs duties and value-added tax.
While criticizing the lack of supervision over the quality of spare parts entering the country legally, he said, “Unfortunately, the importer can bring in low-quality Chinese and Indian goods simply by making a declaration, which people buy due to their lack of awareness.”
Referring to the launch of the plan to prevent the supply of goods lacking a product ID from June 6, Mohebbinejad noted that the implementation of this plan will not only help eliminate the supply of smuggled goods, but will also prevent its sale in the distribution network.
The Ministry of Industries, Mining and Trade’s new Product ID Registration Plan is aimed at identifying smuggled or counterfeit products, as the ID pinpoints the manufacturer.
He added that this plan will also help regulate the spare parts market in terms of product quality and authenticity.
While announcing the full cooperation of the association and related guilds with the plan's executives, the secretary said the plan has been criticized for not printing the factory price and the final price on auto parts, which was a hasty act.
“In such a situation, the distribution network puts pressure on the producer to get a reasonable profit, which only makes producers face losses and tax problems,” he said.
Mohebbinejad hoped that the use of product ID on all commodities will prevent the production of low-quality parts, curb the smuggling of counterfeit parts and make people further trust the domestic auto component market.
Call for Tackling Automotive Spare Parts Production Woes
Three major problems have reduced the domestic production of automotive spare parts in the current fiscal year (started March 21).
Delays in the payment of spare parts manufacturers’ dues, foreign currency allocation and price adjustment are the three main problems that have beleaguered the automotive component and spare parts industry, the secretary of the Iranian Association of Parts Manufacturers said.
“Unfair price adjustment delayed by several months is one of the major issues currently troubling parts producers,” Mansour Mansouri also told the Persian automotive daily Donyaye Khodro.
“The increase in the factory prices of cars is half the growth in the open market price. This is not considered price adjustment. Therefore, parts manufacturers have to receive half the increase in car prices,” he added.
The secretary noted that the lack of forex allocation for the import of raw materials is hindering production.
“We have deposited money in the bank for two months [to receive foreign exchange for imports], but the banks do not accept any responsibility and direct the currency applicants to foreign exchange offices,” he said.
“The foreign exchange is being supplied to parts manufacturers at a higher price, but these factors are taken into consideration by car manufacturers.”
According to Mansouri, the production of car parts declined last week mainly because manufacturers could not clear their goods from customs.
“Because we cannot provide the currency needed for imports, we cannot clear the needed materials. At present, we can neither get the SATA code, nor complete the customs clearance process” he said.
The SATA code is the goods’ customs declaration permit that is issued when the origin of the currency is approved by the Central Bank of Iran.
Referring to other challenges in the auto parts industry, Mansouri said the sale method of cars is another challenge impacting the spare parts industry.
“Nowhere in the world do we have a ministry that functions like the sales organization of automobile manufacturers. We are surprised that the sale is being handled by the Ministry of Industries, Mining and Trade,” he said.
“Even customers do not have sufficient information about the prices of the products that they are buying. Those who have registered for a car in the national online car ordering portal in the current fiscal year and are going to receive them next year are clueless about the prices.”
Mansouri said the two parameters of production and sale are determined by the ministry.
“Due to its unreasonable interference, the ministry has created problems for both car producers and parts manufacturers, and on the other hand, people are also dissatisfied with the current condition of the automotive market.”
