The Puzzle of the Economical Car in Iran

As the factory prices of domestic cars rise above one billion tomans, the gap between policymakers' definition of an economical car and consumers' purchasing power has received more attention than ever.

Ambassador Arjan: In a situation where the factory price of domestic cars has exceeded one billion tomans, the gap between the policy maker's definition of an economic car and the purchasing power of consumers has been noticed more than in the past.

According to Ambassador Arjan, the economy car still has an important place in the literature of Iran's car policies, both in the production plans of domestic car manufacturers and in the import policy.

However, the increase in the factory price of domestic cars to more than one billion tomans raises a new question about the relationship between the policy maker's definition of an economic car and the purchasing power of the Iranian consumer.

It seems that the redefinition of the economic car, in addition to technical and industrial considerations, should be done according to the level of income, living expenses and purchasing power of consumers.

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The economy of the car can be checked from two different perspectives. On the one hand, car manufacturers and policymakers may place a product that is manufactured with lower production costs, lower fuel consumption, or simpler technology in the economic car group, and on the other hand, for the consumer, the purchase price and the possibility of providing the necessary financial resources to obtain the car are more important.

Now the economy car is not necessarily economical for the consumer, because the gap between income and purchase price has become very deep. With a monthly income of 24-30 million tomans, buying a one billion car requires years of full savings. In fact, due to the fall in the value of the Rial, the definition of an economic car has become meaningless in the country.

Cars that are considered cheap in the world markets, after entering Iran and taking into account the additional costs, are out of the purchasing power of the majority of the society. Also, the government structure and inefficient domestic production have prevented the improvement of productivity and turned the car into a luxury item.

In the field of imports, the current models are not for the benefit of the middle class, but mainly for providing government revenues.

Without making the market competitive and controlling inflation, emphasizing the word economic will only lead to the continuation of failed policies, such as the lottery and the presence of dealers, and it will remain difficult for households to access cars.

Practically, in the matter of importing, there is no car with a price of less than 5,000 dollars in the world markets, and if we use the same criterion, including 40% of the additional costs and tariffs, its final price in Iran reaches about 1.9 billion tomans.