Gov’t Car Import Plan Will Create New Monopolies

Allowing import permits to auto manufacturers alone will give them ample space for monopoly to consolidate their position in the auto industry, says head of Iran’s Auto Importers Association, Farhad Ehteshamzad.

“Granting import permits only to domestic automakers, some of whom are ostensibly producing one or two models of the same brand to get the permits, will limit buyers’ options and not do justice to customers,” he told a press briefing, the local auto website Persian Khodro reported.

Following a proposal by the Ministry of Industries to restrict car imports by independent firms, the end could be near for such dealers.

In late 2015, the ministry announced it would introduce new regulations for car imports with the so-called “intent to boost local industries and curb import of vehicles.”

Despite this seemingly innocuous purpose, the new guidelines stipulate that if any given brand is manufactured in Iran, that brand cannot be imported by independent vehicle importers. In other words, only the company making the foreign brand would be allowed to import cars.

The proposed ministry guidelines have yet to come into effect, and are still under review and waiting parliamentary approval to become law.

Ehteshamzad had previously stated that the conditions put forth by the government are almost impossible to meet for more reasons than one.

“It is not economically feasible to produce most foreign cars inside Iran. Only a limited number of cars are imported, and it is simply impossible to export locally-manufactured cars,” the industry expert said.

However, with the possible imposition of the new rules, almost all companies importing cars will have to pull down the shutters.

Auto manufacturers are producing some models that at the same time are also imported by other firms.

The two largest carmakers, Iran Khodro Company and SAIPA, both assemble Renault, Haima, Changan, Dongfeng and Peugeot-branded vehicles, with SAIPA having an exclusive assembly contract with Kia for the production of its Cerato model.

If any other company including PSA Group seeks to create independent import dealerships, they could be blocked by the government measure.  Moreover, the independent Kerman Motor Company is now producing the Hyundai i10 and i20 models in Iran. If the rules change it could block the dealerships of other companies like Asan Motor, which currently imports the Hyundai brand to Iran.