Financial Tribune recently covered the prospect of zero import tariffs on electric and hybrid cars to Iran. In our assessments of this burgeoning industry we noted that in theory it would be possible to import a BMW i8 Hybrid sports car for around $85,000, roughly 4 billion Rials in local currency.
The BMWs price was benchmarked against non-hybrid and electric cars already in the market. We discovered that the price would roughly correlate the same as a top end Hyundai Centennial, the Korean manufacturers’ luxury market large vehicle.
In May of 2014 the Rouhani administration stated that it had removed import tariffs on all electric and hybrid cars with engines of 2500cc and smaller. The administration did not state that it would be working in conjunction with any specific car manufacturers or when they would be bringing the new law in.
In a statement Valiollah Afkhamirad, the deputy industry and trade minister, made last may he said this is the first time Iran has dropped import tariffs on electric and hybrid vehicles.
Unfortunately, what seemed to be a clear run has been dashed by something in the small print, it seems. After being tipped off by a local car importer, the new rules come with a few conditions. The new guidelines are as follows: currently Iran will only accept the Lexus CT200 hybrid and no other manufacturers will be accepted under the special rate.
After confirming the new regulations with the Customs Administration, Financial Tribune contacted car importers to find out their views. So far only one has come back to us on the issue.
Kourosh Ara, a car specialist in Tehran, confirmed our research and said he had been looking to import cheaper electric cars than the Lexus, but was rebuffed by the Customs Administration, which stated, “The only hybrid car currently import duty-free is the Lexus CT200 hybrid. On further questioning the customs stated that there are various types of “hybrid” and added that the only hybrid car which meets Iran’s new tough regulations is the new Lexus.
Upon finding this new regulation we found that the price for this car previously was $83,000 on the priceiran.com (February 2014), a website that covers the prices of imported cars.
After doing some online investigations we found some prices for the CT200h on bama.ir, an Iranian car sales site. They did have a selection the CT200h priced at over 2 billion rials ($66,000+) per car. That suggests that these dealers are making roughly $33,000 profit on every car, in other terms this equates to over 100 percent profit on each car, without tax.
We spoke with another Tehran-based importer, who didn’t wish to give his name, and he told Financial Tribune that he had previously ordered a consignment of six CT200h’s from an authorized Lexus dealer in the United Arab Emirates; however, when the Emirati dealer learned of the new rules for the Lexus hybrid they promptly cancelled the shipment due to unspecified reasons, he told us.
We contacted the Customs Administration for further information on why the CT200h is the only hybrid available at the discounted rate, they responded with “this is a test period in bringing the car to Iran and we wanted to test the waters of the market.”
There are currently no updates if and when other cars will be added to the official zero percent tax rate. However, with this current trial period coming to a close within the next 12 months, customers are likely to see more cars added to the list in the medium to the long run.
