Economy, Business And Markets

Auto Part Association Faces Ban After Vote

Auto Part Association Faces Ban After Vote
Auto Part Association Faces Ban After Vote

The Iranian Auto Parts Manufacturing Association (IAPMA) has been threatened with dissolution after an Administrative Court of Justice ruling on September 21, annulling the election of the board of governors at IAPMA.

The verdict announced that the election of the board of governors last held on July 23 was illegal.

Since March last year, the election at IAPMA was postponed several times due to serious disagreements within the association. The country’s largest association of auto parts manufacturers has long been the scene for disputes between the two groups of auto parts makers.

The first and the older group, known as the traditional wing, is composed of veteran parts manufacturers which have long dominated the market, having strong ties with the country’s giant automobile manufacturers.

The other group is those known as reformists who believe logical relations should be established between automakers, parts manufacturers, and consumers. They also insist that numerous problems exist regarding tax issues, banking obstacles and their negative impacts on parts manufacturing, growth in raw material prices, rising production costs, and overdue debts.

The reformists say during the past three years, the above-mentioned problems have caused a worrying atmosphere in the country’s auto manufacturing sector, blaming the traditional group for their mismanagement.

Following a dramatic rise in car prices in July, there has been constant disagreement between the country’s decision makers over the new prices.

The Customers and Producers Protection Organization, the ministry of industry, mine, and trade, IAPMA, the Competition Council, and the parliament have been directly involved in the argument.

Lawmakers, after a thorough study of Iran’s car production and the recent increase in car prices, believe prices should reduce 30%.  A special parliamentary committee designated to investigate and probe the auto industry, said recently that it identified numerous abuses and violations in the auto industry and sent six different cases to the judiciary, while another seven cases were ready to be referred to court.

The parliament said the recent rises in car prices had no legal basis and that automakers were taking advantage of their oligopoly in violating consumers’ rights.

The lawmakers’ opposition was expressed after the Competition Council -the official authority responsible for setting domestic car prices in the market- yielded to pressure by carmakers and increased car prices by 30% in July. Following the rise, the MPs threatened they would grill the minister for industry, mine, and trade, Mohammad Reza Nematzadeh over the price hike.

In addition, the government spokesman, Mohammad Baqer Nobakht, said such an increase was not admissible. Nobakht criticized the council, urging it to reconsider its decision.

Many parliamentarians say the main reason for the latest hike in the prices of cars is mismanagement in the auto industry. They argue that a limited group of people are benefitting from the car industry and that they are not ready to give up their interests.

The country’s major automakers -Iran Khodro, Saipa, and Pars Khodro- have constantly been criticized for not organizing certain representatives to sell their cars in installments.

Car dealing companies are the main connection between domestic automakers and consumers in Iran, which creates opportunities for fraudulent activities.