Economy, Auto

Pause Button Hits Wobbly Iran's Car Market

Following the unexpected rial rally, prices of locally-made vehicles declined 6-10%, but the erratic fluctuations and chronic market instability have put car sales on hold
Pause Button Hits Wobbly Iran's Car MarketPause Button Hits Wobbly Iran's Car Market
The recent decline in car prices pales in front of the steep rises the market has gone through over the past six months

With the foreign exchange market undergoing seismic shifts over the past several days, new car sales are in disarray and the auto market in a state of hiatus.
Following the rial’s unexpected rally, prices of locally made vehicles declined between 6-10%. However, market sources tell Tasnim news agency that considering the erratic fluctuations in forex rates, car dealers have opted for the so-called wait and see approach and the market has folded into a state of stagnation.
Ali Mohammadi an auto dealer in Tehran says, “With the rial strengthening over the week against hard currencies, car prices have declined.” However, because exchange rates are not stable, people are reluctant to buy cars and most prefer to wait and see what will happen next, he said.
Mohammadi pointed to the new offers from major local automotive companies, saying that Iran Khodro and SAIPA presales have had no effect on the car prices in the market.
During the past few months, IKCO and SAIPA announced presale schemes offering tens of thousands of cars. However, industry observers are of the opinion that since in the best case scenario the vehicles are to be delivered next year, the presales did not satiate the demand for new cars.
“The automakers’ recent moves have had no effect on the market simply because no car has been delivered to customers…While there are persistent calls on manufacturers to increase supply, they refuse to do so.”
Another auto dealer Mohammad Rashidi said, “Even prior to the rial rally the auto market was in a state of stagnation. Sudden changes in the forex market have intensified the hiatus.”
He further pointed out that people are waiting for carmakers to announce new prices. There have been rumors that Iran Khodro and SAIPA are planning to increase prices but so far have not made any official announcement.
Head of the Iran Auto Dealers Association Saeed Motemani says, “With the prices on the downward trajectory, no one is buying cars. Visit an auto dealership and you will get a better idea about how car business is on hold. Until the market returns to normalcy business will not improve.”

> Online Fraud
Motemani cautioned car buyers against online fraud.  “The chaotic state of the market in recent months has opened the way for fraudulent practices.”
To make his point clear, the dealer said, “Visiting auto sales websites you will come across dozens of ads about ‘immediate delivery’. The problem is that these ‘dealers’ have no car to deliver…Informed sources have routinely warned people not to buy cars from such websites.”
Motemani, like many other honest car sellers, is of the opinion that the online services are not monitored and regulated as expected and have become a fertile ground for fraud. 
In recent weeks online news outlets have been accused of market manipulation by some legal authorities. In an earlier interview, Motemani said, with the auto market plunging deeper into chaos every day, auto sales websites “stirred the pot further with their exorbitant prices.”
He said, “In a coordinated move, auto sales websites put outrageous prices on vehicles and other websites reported the same as news and views. 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 (approx $5,000 and $3,600). Activities of such websites must be regulated.”

> Graphs Explained
Tehran Gold and Jewelry Union website, in addition to currencies, lists car prices. According to, Iran Khodro’s Peugeot 405 was sold for 510 million rials ($3,695) on Monday, 20 million rials ($144) cheaper compared to last week’s prices.
Peugeot 206 was priced at 585 million rials ($4,239) down from 620 million rials ($4,492) less than a week ago. The small city hatchback Pride cost 320 million rials ($2,318) -- a 6% decline over the past four days.
However, the recent decline in prices pales if front of the exorbitant prices the market observed over the past six months. Following are graphs based on data available on which reflects chaos in the key sector.


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