The Industry Ministry says selling cars at the Iran Mercantile Exchange is incompatible with current rules to regulate the auto market.
Manouchehr Manteqi, deputy minister for transportation affairs, said this in a letter to Hamed Soltani, the IME managing director.
Manteqi referred to a ruling by High Council of Economic Coordination in October 2021 in which the ministry was mandated with regulating the auto market saddled with declining quality and rising prices unseen in decades.
The council is an ad hoc economic decision-making body comprising the heads of the branches of power.
In the follow-up to the letter, the IME issued an order to brokerages and temporarily suspended the auto offers.
For the first time in its history, the IME hosted the sale of 117 ‘Kara’ cars last month. Though not big in size, the auto offer was seen as an overture of a broader plan to move all auto transactions to the IME.
The suspension came just before the prescheduled offer of 430 cars on Wednesday, namely the Chinese-made Dignity and Fidelity assembled by local carmakers.
As per existing procedures cars that are not subject to pricing mechanism by the government could be offered via the IME. In the letter, the ministry added that it is in charge of regulating the price of all cars, including those exempt from pricing mechanism by the so-called Competition Council in charge of setting prices of several domestically-produced goods.
Similar to other products that made debut recently at the IME, offering auto at the IME was seen by some as a positive sign that could help curb, and possibly eliminate, the government’s unwanted pricing polices that have all but failed to produce the desired results.
Observers perceive the Industry Ministry’s move to cancel the auto offer as “resistance against transparency” which will render futile efforts to curb the government’s arbitrary intervention in the auto market.
There have been calls by capital market authorities and shareholders on the government to rethink its apparently dysfunctional policies of imposing prices on goods made by listed companies and let the market decide.
They argue that price caps set by the government are usually lower than the real prices and to the detriment of manufacturers and shareholders.
In the past several years, the Competition Council has been in charge of setting prices of a number of domestically-produced goods.
The long-held policy of dictating prices by the government(s), with open disregard for supply and demand mechanisms, are seen as unwanted and unhelpful.
