The perpetual rise in foreign exchange rates is expected to trigger a 10-20% increase in the prices of all kinds of car spare parts in the market, according to the head of the Tehran Automobile and Machinery Spare Parts Dealers Union.
“Some of the spare parts are produced domestically and some are imported. Since factors such as supply and demand, and the type of parts affect prices, we cannot estimate the exact increase in prices,” Ahmad Hosseini was also quoted as saying by Khabar Khodro.
“But we will definitely see an increase in spare parts prices, following the increase in forex rates,” he added.
The official noted that a price increase in foreign exchange rates does not instantly affect spare parts, but it will eventually impact the market.
“The rise in foreign exchange rates has a direct impact on spare parts imports, as the final price and overseas costs are based on the USD rates. Therefore, import costs will increase in proportion to the rise in forex rates,” he said.
Hosseini announced that the complete implementation of the identification code and tracking code plan by all spare parts manufacturers is being postponed until the end of the year.
“The infrastructure for the implementation of this plan is facing problems and the conditions for the implementation of this law are expected to be provided by the end of the year,” he said.
“If the current approach was modified, this plan will be implemented completely in the spare part market. The main problem of guilds is the simultaneous implementation of two laws.”
Hosseini explained that the tax system’s store terminals law, which will be implemented for guilds and private sector players from next year, has been enforced in other sectors, and the other is the law against the smuggling of goods and currency.
“These two laws have two executors, but both follow the same goal. Why should we have different laws from the Ministry of Industries, Mining and Trade and the Ministry of Economic Affairs and Finance with the same outcome? This is a futile measure [as the two laws slow down the guilds’ activities],” he said.
ID Plan Boosts Automotive Spare Parts Quality
The implementation of the plan for the mandatory registration of IDs for auto spare parts has eliminated most of the unlicensed producers and led to a 50% increase in the quality of spare parts.
The ID registration plan was also effective in increasing the competitiveness and liquidity of official spare parts manufacturers, according to the head of the Spare Parts Committee of the Association of Homogeneous Propulsion Industries and Component Manufacturers.
“Currently, [however,] of the 3,000 spare parts manufacturers, only 55 are selling products with a tracking code,” Ahmadreza Ranaei was also quoted as saying by Khabar Khodro.
“The implementation of the spare parts ID plan and tracking code has been effective in eliminating 80% of unlicensed producers from the domestic market,” he added.
Nevertheless, the official did not elaborate on the plan’s impact on smuggled automotive parts that earlier swarmed the domestic market.
Asked whether the plan has helped sustain the ban on the import of counterparts available in the domestic market, he said the import of matching parts has declined because of the tight foreign currency situation and not this plan.
“With the ID registration for spare parts and the removal of unlicensed producers, official manufacturers are no longer under pressure and can sell auto parts at a more convenient pace,” he said.
Ranaei noted that the plan has improved the quality of 55 spare parts by about 50%.
According to another official, imported and smuggled brake pads meet 30-40% of domestic needs.
While domestic production can supply the market demand for brake pads, imported and smuggled parts constitute 30-40% of the domestic market, said secretary of Iran’s Brake and Clutch Manufacturers Association.
“Since the market is aflush with imported brake pads, there is no demand for the domestic product. As there is no incentive, production has declined and it is lower than the domestic capacity. About 60-70% of domestic products and 30-40% [20,000-30,000 tons] of imported and smuggled goods meet the 75,000-ton demand of the Iranian market,” he said.
Masoud Hassanpour added that the domestic brake pad production capacity exceeds 100,000 tons.
