Iran exported 99,000 tons of home appliances worth $139 million during the five months to Aug. 21.
According to Mohsen Montazeri, an official with Trade Promotion Organization of Iran, refrigerators, freezers, evaporative coolers, washing machines, water heaters, stove, television sets, blenders, electric fans for oven, furniture and dishware were Iran’s main exported products.
Iraq, Afghanistan, Oman, Turkey, Azerbaijan and Italy were among the main destinations, ILNA reported.
“A total of $243 million worth of household goods, mostly intermediate goods, were also imported during the period,” Montazeri said.
According to Hamidreza Ghaznavi, the spokesman of Home Appliances Manufacturers Union, until the last Iranian year, which ended on March 19, 2020, imports accounted for 60% of the household appliance market.
“The sudden departure of international companies from Iran’s market due to US sanctions and problems regarding the supply of raw materials are to blame for the lack of balance between supply and demand, and the rise in prices. It is about a month now that foreign currency has not been allocated to the industry and no one wants to be accountable. In addition, high quality steel sheet is needed to make home appliances, the only producer of which is Mobarakeh Steel Company. But a flawed distribution system has created more profit for the middlemen than the manufacturers,” he said.
Iran Consumers and Producers Protection Organization recently issued a permit allowing producers of home appliances to once again raise their prices. Prices of audiovisual products were allowed to go up by 20% and other home appliances by 25% compared with prices registered in the Iranian month ending Feb. 19.
Producers of home appliances blame the 50% rise 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 the skyrocketing prices.
Unofficial reports say presently, prices are 30-60% higher than at the beginning of the current Iranian year and producers have reduced their supply to the market. Salespeople say companies are making considerably delays before making delivery to distributors.
Ghaznavi said greater support should be extended to domestic production to achieve self-sufficiency and restore balance to the market.
Strong Rise in Domestic Production
About 481,600 television sets were produced in the country during the five months under review (March 20-Aug. 21) to register a 78.7% growth compared with the similar period of last year, IRNA reported.
A total of 368,400 washing machines were manufactured during the period, registering a 58% increase YOY.
Moreover, 673,800 refrigerators and freezers were manufactured, indicating an 18.8% year-on-year rise.
Between 30% and 35% of home appliances and spare parts are imported and the rest are produced in local factories.
“The rise in production has come about in the midst of economic sanctions worsened by the spread of Covid-19 pandemic. To top those, imports and supply of the industry’s required raw materials have been hampered due to delays made on the part of the Central Bank of Iran in allocating forex to manufacturers,” Secretary-General of Iran’s Home Appliances Association Habibollah Ansari has told Financial Tribune.
Iran’s output of home appliances increased by nearly 8% in the last Iranian year (March 2019-20), a deputy industries minister said in June.
“Plans are to boost production by 34% in the current year for production to hit 11.6 million home appliances," Mohammad Reza Kalaami was also quoted as saying by Tasnim News Agency, adding that by March 2022, production will meet total domestic demand.
“Last year, the production of small appliances, refrigerator and television sets posted a year-on-year growth of 12%, 12% and 3%, respectively. The industry experienced a 10% growth last year, despite the restriction imposed by sanctions,” Mehdi Sadeqi Niyaraki, deputy industries minister, was quoted as saying by IRIB News.
“Nearly nine million devices were produced in the country last year. 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.”
Domestic demand for home appliances was around 13.6 million in the year ending March 2018, but has now reduced to 12 million given the rise in the value of foreign currencies and prices.
Thriving Black Market
The price hike in home appliances and problems associated with the decline in supply have prompted customers to approach unofficial markets that have been 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; 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. They are all available and are sometimes offered on discount.
Bandar Genaveh 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 Daragahan in Hormozgan Province.
Rising Demand for Repair
Demand for home appliance repair has increased by 90% on the back of price hikes, says the secretary of Tehran Home Appliance Sellers Association, Akbar Pazouki.
“The rise in prices and decline in people’s buying power have pushed the market into recession. There are practically no customers in the store, except for dowry purchases.”
Noting that providing working capital is the only way to help manufacturers boost their 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 need of the market. Offering loans to producers rather than customers would lead to more production and consequently lower 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 by 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.
