Car market under the pressure of currency fluctuation and supply drop / buyers moved to the used market

Surveys show that the car market is affected by currency fluctuations, the difficulty of supplying parts and the possible drop in imports with high prices; Conditions that, while reducing the purchasing power of consumers, have increased the demand for used cars. The post Car market under the pressure of currency fluctuation and supply drop / Buyers moved to the used market appeared first on Safir Arjan.

According to Ambassador Arjan, in October 1405, the car market is faced with high prices and significant fluctuations, which factors such as exchange rate fluctuation, difficulty in supplying parts and raw materials, possible drop in production and assembly, and decrease in imports have affected the trading process. In the meantime, the increase in the price of cars with zero kilometers has pushed part of the demand towards used cars; A market that, although it provides the possibility of choosing a car with different budgets, still faces financial limitations and the difference in the value of cars.

Examining the current market conditions shows that sustainable control of prices is not possible with only temporary control of rates and requires a series of measures in the field of supplying parts, facilitating imports, maintaining production levels, managing costs and increasing competition in the market.

currency fluctuation and supply reduction; Two factors affecting the car market

In this regard, Babak Sadraei, an expert on the car market, referring to the influence of the car market on currency fluctuations, said: Car prices have increased significantly in recent weeks, and it is expected that as long as the currency fluctuations continue, the car market will face price changes under the influence of these conditions.

According to him, the price of some highly demanded domestic products, especially the more equipped versions, has reached very high limits; So that the price of Peugeot 207 in some models is close to four billion tomans.

Emphasizing the importance of the import and production situation, this car market expert added: the amount of car imports and the production and assembly process are decisive factors in the future market situation. If the import continues and its volume increases or at least reaches the level of last year, this trend can help control the market to some extent.

At the same time, Sadraei warned against the possible decrease in car imports and assembly this year and emphasized that the drop in supply along with currency fluctuations can put more pressure on the market.

Based on this, one of the important variables in determining the path of the car price is the balance between supply and demand. When the supply of cars does not increase according to the market needs, changes in the exchange rate and inflationary expectations can lead to the growth of the offered prices. In such a situation, some buyers may postpone their purchase to avoid further price increases; A behavior that, if expanded, can lead to short-term demand intensification and increase in market volatility.

The return of the 90s sanctions experience; The challenge of providing parts and transferring currency

Along with currency fluctuations, the restrictions caused by sanctions and the difficulty of foreign financial communications are also among the issues that can affect the performance of the automobile industry.

Saeed Zainali, an expert in the automotive field, referring to the experience of sanctions on the automotive industry in the late 1990s, said: Sanctions undoubtedly affect the automotive industry, but in order to evaluate their effectiveness, the mechanism of transferring these pressures to the supply chain, production and distribution of parts must be examined.

According to him, one of the important problems of car manufacturers and groups active in the supply chain is the supply of parts and raw materials needed from foreign sources and the transfer of currency to carry out these transactions. These obstacles have existed in the past years as well, but in recent months, more difficulties have been created in the field of moving financial resources.

Referring to an experience from the late 90s, Zain Ali explained that in one case, despite the preparation of the required device in China, currency transfer problems caused its shipment to be delayed for about a year. This example shows that financing and currency transfer, even after the finalization of the foreign purchase, can become a serious obstacle to supply the equipment needed by the industry.

He also pointed to the pressure on some financial channels and banks of neighboring countries that cooperate in currency transfer, and said: The restrictions created can make the process of supplying parts and raw materials more difficult and increase the total cost of production.

The increase in the cost of supplying parts and equipment can finally be reflected in the final price of the car; Especially since car manufacturers depend on a set of parts, raw materials and equipment to continue production, which cannot be supplied from within.

However, not all of the increase in car prices can be attributed to the sanctions alone. Production costs, supply and demand conditions, commercial policies, exchange rate and pricing structure also play a role in the formation of the final price. Therefore, accurate analysis of the market requires the simultaneous examination of internal and external factors.

The price of domestic cars in the open market; 207 automatic 3 billion and 750 million tomans

Examining the announced rates of the open market in the week ending on 23 Mehr 1405 shows that the most demanded products of Iran Khodro and Saipa are still offered at high price levels. In the meantime, automatic cars and more equipped versions are in higher price ranges, and even some more economical products are present in the market with prices over one billion Tomans.

Based on the announced prices, Peugeot 207 automatic is priced at 3.750 billion tomans and the automatic panorama version of this car is also available at an approximate price of 3.910 billion tomans. Dena Plus Automatic is also in the range of 3 billion 750 million Tomans, while the price of Dena Plus MT6 is about 2 billion 860 million Tomans.

In the group of Iran Khodro products, automatic tare V4 with a price of about 3 billion 660 million tomans and manual tare V1 with an approximate price of 2 billion 848 million tomans are available in the market. Also, the price of Soren XU7P is about 2 billion 300 million Tomans and Rana Plus is reported to be around 2 billion 250 million Tomans.

In Saipa's product group, Quick S with a price of 1 billion 630 million Tomans and Quick RS with a price of 1 billion 640 million Tomans are in the market price list. Saina S is also priced at around one billion and 699 million tomans.

In the same group, the Atlas G is offered at an approximate price of 1 billion 970 million Tomans, and the price of Shahin GL has reached 2 billion 575 million Tomans. Shahin G equipped with a sunroof is also in the range of 2 billion and 860 million tomans.

Comparing the prices of mass-produced cars shows that the price gap between Saipa's more economical products and Irankhodro's more equipped automatic cars is still significant. However, the announced free market rates are not necessarily the final price of transactions, and factors such as car type, year of manufacture, performance level, technical condition and sales conditions can affect the final price.

On the other hand, the price gap between the open market and the factory is still an important issue for buyers. In some products, the difference between these two rates can reach several hundred million tomans; An issue that increases the cost of access to cars for consumers. Of course, to accurately calculate this distance, the factory and market prices of a certain type and in the same time frame should be compared.

Increasing demand for used cars; More choice along with financial restrictions

The increase in the price of cars with zero kilometers has made the used car market one of the main options for buyers with a limited budget. In this market, the buyer may have access to a car with features or a higher class by paying less than the price of a zero car; But the lower initial price does not necessarily mean that the cost of ownership is cheaper.

Used cars differ greatly in terms of technical condition, depreciation rate, repair history and maintenance conditions. Therefore, even two cars of the same model and year of manufacture may have different real values.

import of used cars; A capacity that still needs time

Another issue affecting the future of the market is the import of used cars. The order registration of these cars has entered the implementation stage since September; A policy that can increase the scope of consumers' choice if the conditions for the entry of a significant number of cars are provided.

However, the impact of imports on the market price depends on the actual volume of imported cars, the speed of clearance, the combination of models, final costs and the possibility of buyers accessing them. Therefore, the mere initiation of the order registration process cannot be considered as an immediate increase in the supply or decrease in the price of domestic cars.

If the import of used cars is done continuously and on an effective scale, it can cover part of the demand and affect the competition in some market segments. Conversely, if import volumes remain limited or entry and supply costs are high, the impact on general market prices may be less than expected.

The same consideration applies to the import of cars with zero kilometers. Import can help to regulate the market when it has a tangible effect on the market in terms of quantity, continuity of supply and suitability of products with the needs and financial ability of buyers.

Price control requires simultaneous modification of supply and market mechanism

The total changes in the car market in October 1405 show that the increase in prices is not the result of a single factor. Currency fluctuations, money transfer problems, the difficulty of supplying parts and raw materials, the possibility of reducing imports and assembly, and limiting the purchasing power of consumers form a series of interconnected factors that affect the price and volume of transactions.

The statements of car market experts also show that sanctions can put pressure on the car industry through the supply of parts, currency transfer and increase in production costs; But in order to reduce this pressure, in addition to managing external restrictions, internal barriers to production and trade should also be considered.

In the short term, continued currency fluctuations and limited supply can expose the market to an increase in offered prices and a decrease in purchasing power. In the medium term, maintaining the level of production, facilitating imports and reducing barriers to the supply of parts can help improve supply; However, the effect of these measures depends on their implementation and continuity.