Decrease in Car Production and Price Gouging by Iranian Automakers

The latest statistics show that car production in Iran has once again decreased, while automakers in Iran have begun to price gouge their products. According to the latest statistics from the Ministry of Industry, Mine and Trade, the production of various types of cars in Azar (December) this year has decreased by 71.2% compared to the same period last year. During this time, the production of various cars dropped from 146,382 units in Azar last year to 42,145 units. Additionally, cumulative statistics for car production in the first nine months of this year until the end of Azar also indicate a 31% decrease in production. However, Mehrdad Lahouti, a member of the Iranian Parliament, in an interview with ISNA, referred to the presence of the Minister of Industry, Mine and Trade at a meeting of the Independent Faction of the Parliament, stating that 'Mr. Rahmani said that given the previous downward trend in car production, currently car production is on the rise.' The spokesperson for the Independent Faction of the Islamic Consultative Assembly quoted the Minister of Industry as saying that 'domestic automakers, despite many problems, have managed to prevent $15 billion in imports under the current currency conditions.' In such a situation, car companies have begun to raise the prices of their products. The Saipa automotive group has issued a circular to its sales representatives announcing the new prices of its products. For example, the announced price of Saipa for the Changan CS35 has reached 127 million tomans, while the previous price of this product was 74 million and 950 thousand tomans. The officially announced prices for some cars from the two companies Kerman Motor and Modiran Khodro are also set higher than the prices of these products in the free market. For instance, the Jack S3 car is sold at an official price of 161 million tomans, while its selling price in the free market is 153 million tomans. Additionally, the Jack S5 car is sold at 202 million tomans in the market, while the official price announced by this company is 219 million and 900 thousand tomans. The situation is similar at Modiran Khodro. For example, the MVM X22 Automatic Excellent Sport car is priced by this company at 158 million and 500 thousand tomans, while its price in the free market is around 120 million tomans. The Chery Tiggo 7 Excellent from Modiran Khodro is priced at about 272 million tomans in the market, while the company has priced it at 337 million and 600 thousand tomans. In recent months, the government has tried to prevent factory price increases for cars, but this has its opponents who argue that this factor has led to an increase in speculation. The newspaper Donya-e-Eqtesad has written that 'calculations regarding the suppression of car prices show that as a result of this policy, over 9 trillion tomans of producer money has gone into the pockets of speculators in just eight months this year. The sales of automakers during this period have been 32 trillion tomans, thus the profit ratio of speculators to this figure is 28%. The speculation profit in the car market during the year 96 (2017) was nearly 1 trillion and 400 billion tomans, which has experienced a 555% increase in the eight months of this year due to decreased production and the release of price pressure in the free market.' However, on the other hand, some believe that price increases by factories could exacerbate inflation.