The Iranian automotive industry is facing serious challenges due to price control policies. According to Jamshid Imani, the chairman of Iran Khodro, this policy has led to an accumulated loss of over 600 trillion tomans. This situation not only harms automakers but also deprives consumers of access to quality vehicles.
Turkey's Experience in Vehicle Pricing
Hamid Keshavarz, a representative of the majority shareholders of Iran Khodro, referred to Turkey's pricing mechanism during a visit by the Minister of Industry, Mine and Trade to the company. The Turkish government has successfully globalized its automotive and parts industries by relatively liberalizing prices and attracting foreign investment. This approach has not only led to improved product quality but has also organized the market.
In Turkey, the prices of new vehicles are determined based on supply and demand in a competitive environment. Automakers can offer discounts of 10 to 15 percent on new cars, reflecting a normal market performance. In contrast, price control in Iran has pushed the automotive industry towards losses and punitive measures.
Consequences of Price Control
According to Jamshid Imani, the current conditions, especially with an inflation rate close to 100 percent, have put additional pressure on the automotive industry. The gap between factory prices and the free market has benefited brokers and intermediaries, ultimately harming both automakers and consumers. For example, the cost of developing a new platform is currently estimated at about 10 trillion tomans, while financial resources have been depleted in previous years due to inappropriate policies.
Ultimately, these policies have not only led to a loss of 300 trillion tomans for Iran Khodro and Saipa but have also created the potential for each automaker to generate at least 300 trillion tomans in profit. According to published reports, the accumulated losses of Iran's three major automakers will exceed 300 trillion tomans by the end of the year 1404.
The request from Iran Khodro shareholders to the Minister of Industry, Mine and Trade is based on the logic that price control has not only resulted in losses for automakers and shareholders but has ultimately deprived consumers of access to quality vehicles at reasonable prices. Turkey has shown that price liberalization, along with ex-post supervision and targeted taxation, can lead to the growth of the automotive industry and product development.
