Market observers are anticipating a new round of car price jumps in the coming days as the auto market adjusts to the most recent increase in the USD rate against the rial currency.
The USD rate in the free market stood at 144,000 rials on Saturday morning, up 3.94 % from 138,530 last Saturday, sparking speculations that cars will also see another price surge in the following days.
According to an article published by the Persian economic daily Donya-e-Eqtesad, while the value of imported vehicles that has hit a ceiling is no longer affected by the volatility in the foreign currency market, locally-made cars have not yet settled at a steady rate due to the economic headwinds the country is facing.
The market for Iran-made vehicles has seen price jumps which have made car ownership a hard-to-attain dream at least for the younger generations. The cheapest vehicle in Iran’s auto market, the SAIPA’s Pride 131 is sold for 325 million rials ($2,765) in the open market.
Following US President Donald Trump’s withdrawal from the 2015 Iran nuclear deal, the rial’s value plunged to record lows against the US dollar, driving commodity prices exorbitantly high.
SAIPA’s Tiba now costs 400 million rials ($3,400) and the popular Peugeot 206 manufactured by Iran Khodro exchanges hands at 670 million rials ($5,700).
The price of another IKCO model Dena+ stands at 1.1 billion rials ($9,360) and the Peugeot 207 is priced at 1.05 billion rials ($8,930).
Deputy Director of Iran’s Auto Dealers Association Gholam Hossein Qasemian says the auto market has been unbridled and no one, even the market insiders, can predict what future may hold for the disheveled sector.
To Qasemian, the only viable solution is for carmakers to supply vehicles to the market en masse. He adds, “While the impact of pre-sales must not be dismissed, the market will only see stability and the prices will only decline when vehicles are actually delivered to customers.”
Murky Pre-Sales
In line with a government initiative, carmakers have tried to balance supply and demand in the auto market to trigger a decline in car prices in the free market.
In the past weeks, SAIPA offered 50,000 of cars, and IKCO is set to offer 40,000 cars in the near future.
While SAIPA’s presale of 50,000 cars was supposed to quench the thirst of customers and lead to a drop in prices, the measure has only forestalled an imminent sharp rise.
According to market insiders, the supply of cars could have led to a slide in prices if the vehicles were delivered to customers shortly after the pre-sale. Furthermore, the carmakers have not put a final price tag on the vehicles on offer, a move which has widely been censured.
SAIPA’s authorities said the prices will be estimated according to future factory prices at the time of the delivery. Iran Khodro’s sale will neither have definite prices nor a specified car model.
Precautionary Measures
To curb the influence of middlemen who buy vehicles at factory prices and sell them based on the free market rates, the two leading manufacturers have both taken precautionary measures to give ordinary people a chance to buy vehicles at factory prices.
SAIPA’s conditions for signing up for a car purchase stipulated that only customers who have not purchased vehicles in the past 18 months are allowed to register in the pre-sale.
Moreover, every national Identification Number and IP could apply for one vehicle.
IKCO further tightened the rules on car purchases for its upcoming car pre-sale, only allowing those with a driving license to register for cars.
Furthermore, buyers must not own a vehicle at the time of the purchase, and they must not have pre-ordered a car in SAIPA’s pre-sale.
The pre-sale will be phased and conducted in five days according to the National Identification Number of buyers to avoid a website crash.
