It is mandatory to provide after-sales services for imported economy vehicles compared with other classes, according to a faulty member of the Automotive Engineering Faculty of Iran University of Science and Technology.
Masoud Masih-Tehrani, who is also a member of the automotive quality working group of the Ministry of Industries, Mining and Trade, added that the 15% profit set for importers includes the cost of after-sales services such as warranty and development of services network, Khabar Khodro reported.
“If the price of imported cars increases based on some tariffs, these cars will be subject to luxury car tax. If the commercial profit determined for car imports is unable to cover the cost of warranty services, spare parts supply, repairs and periodic services, the car will soon become dilapidated,” he said.
“If the required services are not performed on time, these cars will face numerous problems.”
Masih-Tehrani noted that in general, after-sales services for economy cars are necessary, as they are used more in everyday life and for travelling long distances than other car classes.
The automotive expert said many importers had applied for undertaking imports, but those who had performed well in the past and had better resumes from an economic perspective succeeded in getting the import permit.
He stressed that if the importer cannot provide after-sales services and meet the needs of imported cars for repairs and maintenance, the imported car buyer will suffer losses.
Commenting on the price of imported cars in the domestic market, Masih-Tehrani said, “Importers will not import cars worth less than 3 billion rials [$7,334]. If the price of imported cars is around 7 billion rials [$17,114] to 10 billion rials [$24,449], the price of domestic cars with average prices will change since all prices are linked to each other in the market. Therefore, competition will increase and buyers will have more choices.”
Imported Vehicles Will Not Belong to ‘Economy’ Class
Economy cars are a priority for imports, but in case costlier cars are imported, they will be subjected to the luxury car tax, the Ministry of Industries, Mines and Agriculture has announced.
However, given the fact that the final price of imported cars will be 120-140% higher than the initial price and they will be subjected to the luxury car tax, it becomes obvious that none of the imported cars would be considered an economy car.
In an interview with Donyaye Khodro, Morteza Afqeh, an economic analyst, said as per import regulations, the import of cars with a maximum price of €20,000 are permitted, although those priced under €10,000 are considered economy cars and enjoy import priority.
“It will be Iran Mercantile Exchange’s responsibility to set the prices of imported cars,” he added.
Asked about the profit margin of these cars, the analyst said, “According to the directives of the Industries Ministry, imported cars will enter IME with a 15% profit added to the final price. Therefore, the base price of imported vehicles can be estimated. Of course, other costs such as tariffs, car scrap and logistic fees will also be added. With these costs, about 120-140% will be added to the final price.”
Commenting on the final price of imported vehicles costing less than €10,000, Afqeh said, “A car valued at €10,000 at the Nima rate of each euro priced at 296,290 rials will amount to 2.92 billion rials [$7,845]. Now, if we consider the average final price to be 130% higher, it will reach 6.81 billion rials [$18,296]. By taking into account the 15% commercial profit, the car’s price in IME will be approximately 7.83 billion [$21,037].”
Calculating the final price of imported vehicles worth €20,000 in IME, the analyst said, “According to the price limit set for car imports, a €20,000 vehicle based on the Nima foreign exchange rate will be priced at 5.92 billion rials [$15,905] and the total price, including insurance costs, freight, customs duties, etc., will amount to 13.62 billion rials [$36,693]. Therefore, this car will probably go to IME with a base price of 15.67 billion rials [$42,101] and the profit determined for this car will be 2.35 billion rials [$6,313].”
Afqeh noted that the impact of car imports will become evident when these products are released in the domestic market.
“The expectations of buyers who have the financial ability to purchase products worth more than 15 billion rials [$40,300] should be checked, because these cars will not be included in the economy car category,” he said.
