Economy, Business And Markets

Bankruptcy Looms for Home Appliance Producers

Bankruptcy Looms for Home Appliance ProducersBankruptcy Looms for Home Appliance Producers

Many producers of home appliances are on the verge of going bankrupt by March 2016 since there is virtually no customer for their products, says the head of Home Appliances Union.

Mohammad Tahanpour added that their business is in the grip of a deepening recession, Mehr News Agency reported.

“Previously, retailers would begin restocking for summer as of January, but up until now they have not signed any contract with the producers,” he said.

“The government’s promise of new credit cards for civil servants and laborers [and the consequent wait on the part of the customers until the government implements the scheme] should not be completely blamed for the recession; its effect has not been insignificant, though.”

The credit card scheme for buying Iranian home appliances is a part of the President Hassan Rouhani administration’s incentive package, unveiled in October, to help domestic manufacturers unload their bulging inventories, promote consumer spending and stimulate growth.

For years, the home appliance industry has been in dire straits and operating below its potential.

The high inflation rate that brought about a considerable hike in production costs, along with significant currency devaluation, caused foreign products with lower prices to be favored over their domestic counterparts.

Coupled with rampant smuggling and the drastic reduction in people’s purchasing power, the industry is finding it difficult to stand on its feet.

Earlier, Habibollah Ansari, the head of Iran’s Home Appliances Industry Association, said domestic brands currently have only a 35% share of the domestic appliance market.

According to data released by the Ministry of Industries, Mining and Trade, domestic production of most home appliances rose in the last Iranian year (ended March 20, 2015).

About 1.9 million television sets were produced last year, which shows a 20% increase compared to the previous year. The figures for refrigerators and washing machines were 1.3 million and 824,000, indicating a 35% and 8% increase respectively.