A total of $25 million worth of brake pads were imported since the beginning of the current fiscal year (March 21), as domestic producers struggle to import raw materials, according to a member of Iran's Brake and Clutch Manufacturers Association.
“While raw materials for the production of brake pads trickle into the country with difficulty, brake pads are imported easily. This is while Iranian producers can meet the domestic demand for brake pads both in terms of quantity and quality,” Mohammad Taqi Qashqaei was also quoted as saying by the Persian automotive daily Donyaye Khodro.
“It is a misfortune that despite prioritizing production growth, licenses are issued for importing brake pads worth $25 million. The country's production capacity for this product is more than the country's needs,” he added.
While stating that about 60% of the raw materials for brake pad production are imported, the official said the time-consuming raw material import process has created serious challenges for producers.
“It takes about six months from the time an order is placed for the supply of raw materials to the time the goods are cleared from customs and enter the production line. This increases manufacturing costs and encourages smuggled goods to enter the country,” he said.
Qashqaei noted that the long and complicated administrative process is one of the most important problems imposed on producers not only by the Ministry of Industries, Mining and Trade but also by the government.
In an interview with Khabar Khodro (a Persian website covering automotive news), the head of Iran's Brake and Clutch Manufacturers Association stated that the prices of domestic brake pads are set to increase by 35% in the current fiscal year.
“The price increase will vary from 25-35%, depending on the availability of domestic and imported raw materials, and the quality of the product,” Hossein Lajevardi was also quoted as saying.
“In addition to the cost of imported and domestic raw materials, each manufacturer determines the price of the product based on wages and other production costs, and for this reason, a price is not determined for brake pads.”
The official noted that the brake pads of all light, semi-heavy and heavy vehicles, such as passenger cars, SUVs, trucks, trailers, minibuses, buses, trains, subways and all types of motorcycles, are produced in sufficient quantity and a portion of domestic brake pads production is exported.
According to Lajevardi, since the brake pad is one of the vital parts of the car, it must observe the necessary standards in terms of quality.
“Brake pad producers are required to comply with the standards announced by Iran’s National Standards Organization, but the quality of each brake pad is different, depending on its price. Hence, people could buy brake pads of different qualities based on their budget,” he said.
Auto Parts Smuggling Hit $2b
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.
