Economy, Business And Markets

Car Loan Scheme Draws More Fire

Car Loan Scheme Draws More Fire Car Loan Scheme Draws More Fire

Analysts are blaming the worsening weather inversion, air pollution and traffic problems, and the increasing fuel consumption in most large cities on the government’s controversial car loan scheme.

Despite alarming statistics that blame 82% of the existing air pollution on exhaust fumes, the government recently allocated 25 trillion rials ($828 million) in soft loans in a bid to bail out the loss-making and hopelessly inefficient domestic auto industry struggling with high inventories, Fars News Agency reported.

The government has now come under fire for failing to prioritize the owners of aging vehicles for receiving the car loans, a group said to be responsible for 50% of the air pollution that is said to be killing people in increasing numbers.  

High and rising air pollution prompted authorities in recent weeks to shut down schools for several days in the capital and other polluted cities. It also expanded the stringent odd-even rules for private motorists in the city of 12 million to control the alarming air pollution that filled hospitals and kept children, the elderly and the ill at home.  

 Aging Public Transport Fleet

According to a local analyst, owners of dilapidated taxis should have been the priority on the list of loan recipients as the clunkers are the biggest polluters.  “The car loan scheme instead rushed to support private car owners. In fact this measure further undermined the public transport system,” Hamid Reza Ghoreishi said.


Needless to say, the auto loan scheme made a bad traffic situation worse as it did not require applicants to first send their old cars (if they had one) to the scrap yard before qualifying for the loan.

The government unfortunately simply rushed to bailout the erratic automakers while the loans would be better spent to address several other urban ills, namely improving the public transport fleet, alleviating traffic congestion and reducing air pollution.

It is unclear when such a opportunity will repeat itself. The analysis, however, fails to discuss other important sources of air pollution, namely the increase in municipal construction permits for high-rises that have shot up in leaps and bounds after Mohammad Baqer Qalibaf took over as Tehran mayor a decade ago.