Iranian Export Cars; Cheaper Abroad, Unsold Outside

The prices of Iranian export cars are significantly lower than their domestic counterparts, with the Pride priced at $5,500, the Peugeot 405 at $6,000, the Samand at $6,000, and the Peugeot Pars at $6,650. Considering the dollar rate at 3,400 tomans, the Pride costs 18 million and 700 thousand tomans in Iran, while the export model is sold for 21 million tomans. Similarly, the Peugeot 405 is exported for about 20 million tomans, while it retails for 28 million tomans in Iran. All Iranian export cars are several million tomans cheaper than similar models sold domestically. This issue has gained significant attention in the 'Zero Car Purchase Ban Campaign', with many questioning why Iranian cars are sold cheaper to foreigners than to their own citizens. According to Ahmad Ne'matbakhsh, the secretary of the Automobile Manufacturers Association, the lower prices of export cars are confirmed, and he cites four reasons for this. The first reason is that domestic automakers pay about 1.2 million tomans in taxes per car, while export cars are exempt from these costs, which include value-added tax, customs duties, and registration fees. The second reason is that domestic cars rely on some imported parts, leading to currency dependency for automakers, while customs reimburse the costs of these parts for export cars, reducing their production costs. The third reason involves tax law reforms that reduced the tax rate from over 50% to 25% for automakers, and they are also exempt from taxes on export cars. Ne'matbakhsh explains that to enhance their competitiveness, automakers lower the prices of export cars in exchange for not paying taxes. The fourth reason is that the government provides export incentives to keep currency prices low, which automakers deduct from the prices of their export products. Despite these lower prices, Iranian cars have not seen significant demand abroad. In 2010, Iran exported 69,613 cars worth $434 million, but in the first five months of this year, only over 1,000 cars were exported. The five-month export statistics show that Iranian passenger cars were exported worth $7,819,828, equivalent to 21 billion and 16 million tomans. Most of these exports went to Iraq, with over 1,100 cars sent there. In 2004, Iran had ambitious plans for car exports, with several large companies aiming to turn Iran into a regional hub. Mercedes-Benz planned to produce E and C models in Iran to supply the Middle Eastern market, while Renault aimed to export 20% of its Logan production from Iran. The Tondar 90 was expected to reach a production capacity of 300,000 units per year by 2009, with around 60,000 units intended for global markets. The Peugeot 206 sedan was also planned for export to various Asian and Eastern European countries. Alongside these plans, there was a comprehensive program for exporting Iranian-branded cars like the Samand, which underwent rigorous quality inspections. In 2004, the Samand was technically competitive against foreign rivals and was well-received in markets like Russia, Azerbaijan, and Syria. Buyers in Azerbaijan and Armenia were satisfied with the Samand's quality and cited Iranian companies' after-sales service as a reason for their purchases. However, with the change of government, these plans faced serious alterations, and foreign companies encountered production obstacles in Iran. Increased political tensions between Iran and Europe led to Mercedes-Benz exiting Iran, and the Peugeot 206 sedan export plan was not realized. Delays in Renault's contract execution resulted in production levels that never met domestic market needs. The Samand's export path also changed, as political factors forced Iranian automakers to establish production lines in countries like Senegal, Venezuela, and Belarus, despite insufficient economic justification. This reduced the financial power of Iranian automakers and hampered their export agility due to increased production costs. For instance, transporting Samand parts to Venezuela cost over $4,000, and in Senegal, it was discovered that the local electrical system could not support the factory. However, the Samand and Pride found acceptance in war-torn Iraq, and Iran Khodro's production line succeeded in Syria until the war there escalated. Gradually, the aging of Iranian products and economic sanctions weakened the industry, leading to reduced exports. After the nuclear agreement between Iran and the five world powers, the Iranian automotive industry hopes to increase its exports again, with companies like Mercedes-Benz and Peugeot planning to resume operations in Iran, and Renault aiming to make Iran a regional production hub. Iranian automakers hope to enhance their presence in global markets by improving quality and technology alongside major automakers' sales networks.