Automotive Mood in Autumn

Automotive Mood in AutumnAutomotive Mood in Autumn

Automotive production and car sales over the last seven months have witnessed a slowdown as drastic as that of 2013, at the height of western sanctions.

The decline in demand for new cars is in part caused by issues like lack of liquidity and the online campaign against purchasing local cars due to their high price and low quality, Eghtesad News reported.

It adds that the fall in purchasing power has worsened tepid sales. Expectations of the entry of new and affordable foreign cars have also exacerbated the problem.

  Political Dimensions

Despite the signing of the historic Joint Comprehensive Plan of Action in Geneva between Iran and P5+1, namely the United States, China, France, the United Kingdom and Russia, plus Germany, sales have not seen the spike predicted by auto analysts.

Instead, what has happened is that sales have grinded to a halt, which has surprised the industry's officials and experts.

The report notes that automotive market watchers believe the market will not see any significant positive development such as rise in sales until the beginning of the next Iranian year (starting on March 20, 2016). It declares that the current recession in the industry is one of the worst in in recent years.

In addition to the woes afflicting the local auto players, the continuing strength of the US dollar against the Iranian rial makes any significant reduction in vehicle prices highly unlikely in the near future, it adds.

The report did note that if the dollar exchange rate and vehicle prices were to decrease, sales would increase in the next Iranian year. Generally, in summer (ending Sept. 22), car sales are at their strongest. However, results from the summer of 2015 reveal that the three main Iranian automotive producers experienced an unimpressive trend.

  Buyers' Grievances

The report does not mention the growing impact of public clout, particularly the boycott campaign continued by Iranian car buyers.

Beginning online and via social messaging platforms like Telegram, the "No to Local Cars" campaign has heaped extra pressure on local producers.

In September, Ahmad Nematbakhsh, secretary of Iran's Competition Council, said auto producers have every right to charge their current prices and that they are "justified" to further increase car prices.

He dismissed the boycott campaign by saying, "The campaign has not had a big effect on auto sales."

Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh branded supporters of the campaign as "traitors", while other officials admitted that sales have slumped.

He later apologized after President Hassan Rouhani asked him to retract his offensive comment.

Car buyers are furious over the systemic rise in vehicle prices and the continuing decline in quality. They are adamant about prolonging the campaign to boycott the purchase of local cars, as long as prices are not reduced drastically.