Economy, Domestic Economy

Auto Giants on the Downside

Auto Giants on the DownsideAuto Giants on the Downside

Customers are apparently more satisfied with services offered by car importers and those in the assembly business compared to major automakers, a recent report by the Iran Standard and Quality Inspection Company said.

The report measures customer satisfaction with 11 auto companies via a customer satisfaction survey, the Persian daily Ta'adol reported. However, it was not clear how many, in what age group and at what levels of socioeconomic rank were interviewed by the economic newspaper.

According to available figures, average customer satisfaction with sales services fell by 1.6 percent in the first half of the current Iranian year (ends March 2015) compared to the second half of the previous year.

The survey found that customer satisfaction vis-à-vis the performance of small carmakers and importing companies had improved. Naming names the paper mentioned Mediamotor (1.4%), Bahman Group (4.8%), and Diar Khodro (4.3%) as doing much better than Iran Khodro – the leading automaker – that came at the bottom end of the satisfactory list with barely 0.3 percent.

Saipa, the second major car manufacturer in Iran that has drawn a whole lot of criticism from car owners and retailers alike, came in with one percent on the satisfaction chart.

Atlas Khodro (3.2 percent), Assan Motor (4.7%), Modiran (8.7 percent), Kerman Motor (9.2%), and Aryan Motor Pouya (9.2%) were the other mid-level companies who saw their sale service reputation with clients fading in the said period.

  High Prices a Common Complaint

The most frequently cited reasons for dissatisfaction among customers are the low quality and high price of domestically produced cars, the study found out. Ordinary sedans and budget cars selling in the range of $8,000-$10,000 in 2010 now are sold for at least three times that amount simply because car prices in Iran almost always are tied to the volatile foreign exchange market.

Needles to say, over the past three years the local currency has lost 70 percent of its value for a variety of avoidable/unavoidable reasons, namely mismanagement of the economy, corruption, greed and the sanctions imposed due to the nuclear program.

A recent survey on customer satisfaction among auto buyers by ISNA indicated that customers also complain about the bitter reality that neither automakers nor importers really care about assuring customers that the relatively costly vehicles they are buying are free of defects at the time of delivery. However, buyers said they were generally satisfied with the behavior of the staff in the car companies.

  Call for Mergers

The ministry of industry, mine and trade last month recently floated the idea of mergers between small manufacturers, claiming that the low number of cars produced by them "has led to increased production costs."

It urged such companies to produce at least "100,000 cars annually to reduce prices and prepare the grounds for the expansion of the domestic spare part industry" most of which are in dire straits.

Industry Minister Muhammadreza Nematzadeh criticized the auto assembly sector for what he claimed was "against the interests of the auto manufacturing industry by importing and assembling car parts."

He was widely reported as complaining that "this (assembling) does not create any value added, besides making the country dependent to others for supplying auto parts."

According to official reports, the domestic auto part industry is fighting for its survival for the past two years largely because of the decline in the auto industry, high prices of scrap iron, hard currency rates, mounting overheads, and the near dumping of poor quality and low priced Chinese parts. Many small part makers have filed for bankruptcy while the few big ones say they sooner or later they too will be on their way out.

In related news the chairman of the Competition Council said last week it is unlikely that the car prices will rise by the end of the Iranian year.  The formula for deciding retail car prices "is revised annually according to the inflation rate and other variables," Reza Shiva said without elaboration.