The lack of automotive spare part imports due to the foreign currency crunch will create problems for customers, according to an auto spare part expert.
Navid Habibi also told the Persian automotive daily Donyaye Khodro that this issue will cause a shortage of parts in the coming months and customers would be compelled to buy them at a much higher rate.
The expert added that the spare parts market is facing various problems, including the difficulty of importing parts as the Central Bank of Iran does not allocate the required foreign exchange.
“Our foreign partners also accept the risk of sanctions in order to cooperate with Iran, but when it comes to the money transfer, the Iranian businessman is discredited for not keeping his word. The foreign company thinks that the Iranian businessman does not want to pay their money,” he said.
“The foreign exchange of individuals or those procured from other methods are not accepted. Unfortunately, last year, CBI did not allocate foreign currency for import.”
When such problems disturb the supply of parts, the government will face unsurmountable problems.
The Ministry of Industries, Mining and Trade’s new Product ID Registration Plan was aimed at combating smuggled or counterfeit products, as the product ID identifies the manufacturer.
Habibi said the implementation of the plan has forced a number of dealers to leave the market, but when we have a shortage of goods, they are supplied through different ways, including smuggling.
“Therefore, smugglers, who met a part of the market demand, have been eliminated from this market. The legal merchants are also facing problems due to the lack of forex and some of them will be sidelined if the problems are not solved. This issue will disturb the supply of parts,” he added.
The expert explained that government obstacles would lead to a shortage of parts and price hike.
“The shortage of consumable products is eased faster than the so-called durable parts, the supply of which requires higher liquidity. For instance, when the door of a foreign car is not imported for whatever reason, it is not possible to supply it easily and this car will be grounded for six to seven months,” he said.
Habibi noted that even if a part is imported by a legal agency, it takes a few months to reach the customer.
Therefore, durable parts have decreased in the market and their distribution is facing problems.
“If this problem is not solved in the next few months, we will face challenges in even supplying consumable parts such as filters. This means the customer would be forced to purchase these parts at a higher price,” he said.
Call for Tackling Automotive Spare Parts Production Woes
Three major problems have reduced the domestic production of automotive spare parts in the current fiscal year (started March 21).
Delays in the payment of spare parts manufacturers’ dues, foreign currency allocation and price adjustment are the three main problems that have beleaguered the automotive component and spare parts industry, the secretary of the Iranian Association of Parts Manufacturers said.
“Unfair price adjustment delayed by several months is one of the major issues currently troubling parts producers,” Mansour Mansouri also told the Persian automotive daily Donyaye Khodro.
“The increase in the factory prices of cars is half the growth in the open market price. This is not considered price adjustment. Therefore, parts manufacturers have to receive half the increase in car prices,” he added.
The secretary noted that the lack of forex allocation for the import of raw materials is hindering production.
“We have deposited money in the bank for two months [to receive foreign exchange for imports], but the banks do not accept any responsibility and direct the currency applicants to foreign exchange offices,” he said.
“The foreign exchange is being supplied to parts manufacturers at a higher price, but these factors are taken into consideration by car manufacturers.”
According to Mansouri, the production of car parts declined last week mainly because manufacturers could not clear their goods from customs.
“Because we cannot provide the currency needed for imports, we cannot clear the needed materials. At present, we can neither get the SATA code, nor complete the customs clearance process” he said.
The SATA code is the goods’ customs declaration permit that is issued when the origin of the currency is approved by the Central Bank of Iran.
Referring to other challenges in the auto parts industry, Mansouri said the sale method of cars is another challenge impacting the spare parts industry.
“Nowhere in the world do we have a ministry that functions like the sales organization of automobile manufacturers. We are surprised that the sale is being handled by the Ministry of Industries, Mining and Trade,” he said.
“Even customers do not have sufficient information about the prices of the products that they are buying. Those who have registered for a car in the national online car ordering portal in the current fiscal year and are going to receive them next year are clueless about the prices.”
Mansouri said the two parameters of production and sale are determined by the ministry.
“Due to its unreasonable interference, the ministry has created problems for both car producers and parts manufacturers, and on the other hand, people are also dissatisfied with the current condition of the automotive market.”
