Duopoly Killing Innovation

Duopoly Killing Innovation
Duopoly Killing Innovation

Economic sanctions imposed on Iran in recent years are not the main reason behind the problems in the domestic auto industry, said an auto specialist, as reported by ISNA on Monday.

Ali Khaksari instead blamed the duopoly of Iran Khodro and Saipa that have produced vehicles with repetitive designs and fixed prices with little regard for customer needs and rights.

Manufacturing, imports, pricing, and distribution have all been insidiously taken over by the duopoly of the leading Iranian auto manufacturers.

Sold internationally for $25,000, a Toyota Camry is offered for roughly $54,000 in Iran. If import tariffs were only 40 percent, the price should not exceed more than $33,000. This translates that vehicle import tariffs are over 100 percent as opposed to the official 40 percent rate. Car import tariffs in the new Iranian calendar year (which started March 21) remained unchanged. Based on official data, import tariffs on cars less than 2.5 liters will remain 40 percent for this year. The import of cars with engines larger than 2.5 liters is banned.

Khaksari criticized some officials for blaming the auto industry's problems entirely on western sanctions instead of addressing the problems closer to home. So long as these problems exist, even lifting sanctions would not turn things around.  

The policymakers need to convince the two auto giants to break the duopoly so that the industry may benefit from healthier competition. Iran has been under economic sanctions for the past few years over a nuclear dispute with the West.