With the rial reportedly continuing its rally on Wednesday after weeks of steep decline, auto market insiders are reporting that car prices also are on a downward trajectory.
Head of Iran Auto Dealers Association Saeed Motemani told IRNA, “The prices of locally made cars have declined by up to 120 million rials (€800) in the market.” However, the prices are still significantly higher than what the factories charge.
Motemani says that the effects are not isolated or limited to locally made cars. “Prices of imported vehicles have also declined sharply, which in some cases amount to 500 million rials (€3,333).”
Tehran Gold and Jewelry Union’s website, in addition to currencies, lists car prices. According to TGJU.org, Iran Khodro’s Peugeot 405 was sold for 525 million rials (€3,500) on Tuesday, Peugeot 206 was priced at 620 million rials (€4,133), and the small city hatchback Pride cost 334 million rials (€2,227). Data available on the websites shows a slight decline in prices.
Factory prices of Peugeot 405, 206 and Pride respectively are 329 million rials (€2,193), 362 million rials (€2,413) and 230 million rials (€1,533).
While the prices have declined, seemingly due to the chaotic state of the market, most customers have opted for the so-called wait and see approach. Motemani says, “Following the sharp decline in car prices, the market is in a state of shock. While there were people wanting to sell, there were no buyers.”
In an unusual blunt manner, the senior auto dealer said, “Carmakers are the main culprits behind the chaos in the market. They have blocked the supply side.”
In recent weeks online news outlets have been accused of market manipulation by authorities. Motemani said auto sales websites “have also stirred the pot by placing exorbitant prices on cars for sale.”
Elaborating the point, he said, “In a coordinated move, auto sales websites put outrages price tags on vehicles and other websites reported the same as news items. People believed the news and bought cars at such (much higher) rates. The websites increased the price of Iran Khodro’s Peugeot 405 and SAIPA’s Pride to 700 and 500 million rials (€4,666 and €3,333). Activities of such websites must be regulated.”
>Apparent Failure
He further points out to the local carmakers large number of presold vehicles that so far have miserably failed to have any significant impact on the exorbitantly high prices.
During the past weeks, following the government push to regulate the market, IKCO and SAIPA, the two largest automotive companies started extended presales offering tens of thousands of vehicles that will be delivered in the distant (unknown) future.
Motemani is of the opinion that “in the past when carmakers initiated such sales, prices declined in the market. However, this time the strategy has failed to deliver simply because both carmakers and car buyers expect further increase in prices.”
He also made reference to the recent car buying frenzy saying that during the past two weeks many people tried to change their cash into safe-haven assets due to the galloping inflation, widespread economic uncertainty and tanking of the national currency.
With rial reportedly gaining in Tehran against the USD, Motemani says, “Yesterday [Tuesday], demand for vehicles declined in the market.”
He called on carmakers to boost supply to bring some semblance of calm to the market. “If prices of locally made cars are to change, carmakers should introduce the new rates as soon as possible” because the prolonged waiting periods have created uncertainty in the market.
There have been rumors that Iran Khodro and SAIPA are poised to increase prices of their vehicles. The two carmakers have so far not made any official announcement about the higher prices.
