Demand for home appliance repair has increased by 90% on the back of price hikes, the secretary of Tehran Home Appliance Sellers Association said.
“The rise in prices and decline in people’s purchasing power have pushed the market into recession. There are practically no customers in the store, except for dowry purchases,” Akbar Pazouki added.
Noting that providing working capital is the only way to help manufacturers boost production, Pazouki said, “Local producers have managed to increase their output by 30-100% in recent years, but their supply has yet to meet the total market demand. Offering loans to producers rather than customers would lead to more production and consequently lower end prices.”
Statistics provided by the Ministry of Industries, Mining and Trade show Iranian companies manufactured 210,200 TV sets over the first quarter of the current year (March 20-June 20), registering a 49.4% growth year-on-year.
Refrigerator and freezer production increased 7.9% to reach 328,500 and a total of 207,400 washing machines were manufactured in Q1 to post a 115.1% rise YOY, IRNA reported.
Black Market Thrives
Iran Consumers and Producers Protection Organization recently issued a permit allowing producers of home appliances to again raise their prices. Prices of audiovisual products are allowed to go up by 20% and other home appliances by 25% compared with prices registered in the Iranian month ending Feb. 19.
The organization set June 16 as the deadline for producers to log the new prices on 124.ir, otherwise they will be subject to regulations of supply outside the network.
A day later, CPPO said more than 30 producers had registered more than 1,000 items on the database. The new official price increase comes in less than six months since the previous announcement.
Producers of home appliances blame the price hike on the 50% increase in prices of steel sheets and the metal’s shortage in the market, ban on imports and the outbreak of coronavirus as well as the depreciation of national currency against foreign currencies in the first quarter of the current Iranian year (started March 20) for prices to skyrocket.
Unofficial reports say presently prices are 30-60% higher than at the beginning of the current Iranian year and producers have reduced their market supply. Salespeople say companies are considerably delaying delivery to distributors.
“Last year, the production of small appliances, refrigerator and television posted a year-on-year growth of 12%, 12% and 3%, respectively. The industry experienced a 10% growth last year despite all restrictions imposed by sanctions,” Mehdi Sadeqi-Niyaraki, deputy industries minister, was quoted as saying by IRIB.
“Nearly nine million devices were produced in the country last year, indicating a 10% year-on-year growth. However, that is barely 50% of the industry’s potential,” Kayvan Gordan, another senior official with the ministry, said.
“There is no shortage of supply of home appliances, though a ban is placed on their imports since two years ago. Some smuggled goods in the market have seen price increases recently,” he added.
Price hikes of home appliances and problems associated with the decline in supply have prompted customers to approach unofficial markets that have developed across the country’s borders to the west and south, the Persian-language daily Etemad reported.
In fact, the gap between supply and demand is filled by contraband home appliances and smugglers have overtaken licensed importers.
Baneh in the western province of Kurdestan is a well-known gateway for smuggled products for 15 years now. “Buying from Baneh” is one of the main Google trends now.
There are more than 50 websites dedicated to selling home appliances from Baneh. These websites are not filtered; various methods of purchasing and long-term warranty and after-sales services have been posted on these websites to ensure customers feel they are in the right place.
By and large, the prices of products on these websites indicate a wide gap with those in official markets. At times, they are also offered at a discount.
Bandar Ganaveh in the southern province of Bushehr is another gateway to smuggled home appliances. Close to 30 channels on Telegram messaging app encourage customers to buy cheaper, high-quality home appliances. For example, a washing machine of an international brand is valued 70-100 million rials cheaper in Genaveh compared with Tehran’s online or bricks-and-mortar shops. You can find a variety of such offers in Qeshm and Dargahan in Hormozgan Province.
