The Ups and Downs of the Car Market in Iran

While car prices in Iran have seen a significant increase in recent months, the prices of some vehicles are now decreasing, and the Minister of Industry has announced new prices. However, some automakers intend to continue selling their cars at higher prices. These automakers, despite having received government-subsidized currency, cite the increase in currency value as a reason for their price hikes. Nevertheless, Reza Rahmani, the Minister of Industry, stated on Iranian state television, "Automakers are obliged to sell cars that have been sold at a fixed price at that same price." He emphasized that the main goal of the policy for selling cars based on market margins is to lower car prices in the market. The two main automakers in the country have only been granted permission to pre-sell 30% of their production capacity. The two main reasons for the automakers' failure to meet their commitments are issues with importing parts from abroad and a decrease in car production. Recent statistics in Iran indicate a decrease in car production. The production of passenger cars in November of this year has decreased by 58.2% compared to the same month last year, dropping from 126,135 units to 52,723 units. However, Reza Rahmani mentioned the 70 trillion toman car market in the country, stating, "A few months ago, car production in the country had significantly decreased, and we were in a dangerous situation, but now the downward trend in car production has decreased, and we are witnessing an increase in production." In recent months, car imports have also been halted, leading to a sharp increase in the prices of imported cars in the Iranian market. Nonetheless, the Minister of Industry claims that 13,000 cars "will soon be released" and that "the impact of the decrease in currency rates will show itself in the future." These statements come at a time when Iran is currently facing extensive and severe U.S. sanctions, and it remains unclear whether the financial mechanism between Tehran and the European Union will lead anywhere. In any case, if the customs cars are released and the decrease in currency rates affects the market, car prices in the short term may decrease in the Iranian market. Furthermore, in the past week, the prices of some cars in the Iranian market have decreased. The ISNA news agency reported on December 24 that "after achieving relative stability in the prices of household appliances, housing, and cars, the car market has somewhat emerged from a state of uncertainty, which could signal the beginning of transactions and the exit of factories from their current production stagnation. In this context, the factory prices of Peugeot 207, Dongfeng, Dena Plus, Haima, and Peugeot Pars were announced by Iran Khodro, while in previous months, showrooms had quoted exorbitant prices for these products. However, reports from the car market indicate that the announcement of new prices for these cars has led to a decrease in their prices in the free market." The Iran Khodro industrial group has communicated the new prices of five of its products to its sales representatives, with the new prices set at 70 million tomans for the manual Peugeot 207, 75 million tomans for the Dongfeng H30 automatic, 76 million tomans for the Dena Plus, 138 million tomans for the Haima S5 Turbo automatic, and 76 million and 700 thousand tomans for the Peugeot Pars LX automatic.