Iran’s second largest auto manufacturer SAIPA hiked the prices for its products, some by as much as 9.4%, according to leaked data vaguely affirmed by officials.
In an underhand move, SAIPA initially pushed up prices up to 60 million rials ($1,428) last week through a directive issued last week. Facing heated criticism, the company initially caved in and reversed the prices. However, later, on Saturday, the firm issued a new directive jacking up prices up to 90 million rials ($2,142) this time, reported Donya-e Eghtesad.
Depending on the vehicles’ model, the price hikes vary from 6.6% to 9.4%. The State Inspectorate Organization of Iran, affiliated to the judiciary, advised SAIPA to return prices to previous levels when first news broke about the jump.
SAIPA suspended the price increase announcement for less than a week before they communicated the new rates to sales branches to be applied retroactively.
Car Prices
The price of Renault’s Logan (AKA Tondar 90) offered by SAIPA subsidiary Pars Khodro has experienced a 6.6% rise, now sold at 44.1 million rials ($10,514).
The price of Sandero with automatic transmission (also sold with Renault’s emblem in Iran) has been jacked up 9.4%, and the manual model saw an 8.8% increase, the asking price for the models now stands at 54.6 million rials ($13,000) and 49 million rials ($11,666), respectively.
A customer now has to pay 61 million rials ($14,523) to purchase the crossover Sandero Stepway, up 8.9% compared to a few days ago.
All Brilliance models cost more than before, an example is the Brilliance Cross which experienced a 9.3% rise and changes hands at 67.7 million rials ($16,119).
The price of Chinese pickup model Rich shot up the most in terms of percentage points, a staggering 9.4% which translates into 76.4 million rials ($18,190).
The most increase in terms of value belongs to Kia Cerato with automatic transmission, up 90 million rials now sold at 1,130 million rials ($26,904).
The automatic versions of Changan CS35 and Zotye S300 (locally known as Ario) both jumped 8.6%, their value now stands at 750 million rials ($17,857) and 630 million rials ($15,000), respectively.
Supine Directors
This is not the first time SAIPA backtracks on a price change that is eventually applied anyway.
In December 2017, the company raised the price of the locally-assembled KIA Cerato by 14%.
The firm later retraced the move, but finally increased the cost of obtaining the vehicle, a trend gradually becoming a routine for the carmaker and its managers which many call “supine businessmen”.
Official Support
Industries Minister Mohammad Shariatmadari talked to reporters regarding price fluctuations on Monday saying, “The Competition Council has drafted rules for [economic] cars which are worth under 450 million rials [$10,714]. Other sectors including imported vehicles are to be regulated as well.”
For increasing the prices, producers need to obtain the assent of the Competition Council—a government-backed body that monitors, and in some cases sets, prices of local products including cars.
According to Shariatmadari, factors such as the volatility in the foreign exchange market, 5,000 rials (11 cents) rise in subsidized currency (which used to be given to producers) and the upward adjustment to the minimum wage will certainly impact prices.
Since last December, the foreign exchange market has been in a state of upheaval as the US dollar exchange rate jumped to unprecedented levels several times before the government of President Hassan Rouhani stepped in and unified the rate at 42,000 rials to put an end to the raging market.
Even so, production expenses will still experience a rise since the local manufacturers received subsidized currency in the past at 37,000 rials for each dollar.
The minister says he will do “his best” to make the rise of prices in imported vehicles as small as possible. Something that both market observers and the general public censured as vague and empty promises
Deputy Minister of Industries Mohsen Salehinia reaffirmed Shariatmadari’s comments, saying automakers are negotiating with officialdom so as to raise prices in accordance with inflation and costs analysis, which eventually translates into a simple familiar axiom: people need to dig deeper into their pockets to get a new car.
Ill Omen
The increase in prices initially hit the headlines last week following a reported data leak. Both arguments offered by the company officials and the government show that the Competition Council is poised to give the green light to SAIPA to make the detested but supposedly inevitable move.
Although auto experts say the council and the ministry are yet to confirm the prices announced by SAIPA, the managing director of the company, Mohsen Jahroudi, is of the opinion that the new prices are final and have been endorsed by related authorities.
Iran Khodro has not yet announced the costs for its products in the new Iranian year but all signs point to an uptick in prices.
Critics argue that such price jumps can no longer be tolerated by a population already suffering from the volatile economy.
Car prices have been on a rising spree for months, and SAIPA’s new statement, followed by the confirmation from Shariatmadari and Salehinia that a surge is inevitable, ushers in the latest slash to the public’s purchasing power.
