Inflation, foreign exchange rates car clinic basis of Irans automobile pricing

According to The Iran Projects, last year, the car market witnessed many shocking events. One day, the car was going to join the stock exchange, and the next day the move was called illegal.

These confusions has led to a 100% increase in the prices of domestic and foreign cars. The spike in the car price the chaos in its market last year and the monopoly of the production and import of these capital goods into the country eventually led to the intervention of the Competition Council to prevent further turmoils.

Although at first Saipa, Iran Khodro and Bahman Group took a strong stance against this resolution, after a while, they realized that there was no escape from the supervision of the Competition Council, and they finally gave in to it.

Therefore, the Resolution 543 of the Competition Council was ratified on January 31, 2023. The resolution determined the instructions on how to calculate car prices in the Competition Council.

It also includes the basis for making decisions regarding the surge in car prices.

Accordingly, the National Competition Council uses three factors, "inflation", "foreign exchange rates" and "car clinic" to determine the car price.

"Inflation" is the first and most important factor in determining the price of a car. The inflation rate is announced by the Central Bank of Iran and examined every three months. And if the price of materials necessary for the production of cars, such as glass, steel, etc. has grown, then, the price of cars can increase according to the inflation rate of these inputs.

Another factor that affects the price of a car is "foreign exchange rates". To produce a car, it is necessary to import some materials and inputs from foreign countries, which are purchased with dollars and euros.

The price of the announced currency is checked by the central bank every three months, and if the price of the dollar or euro increases, the price of the car will also grow.

In addition to the above two factors, the Competition Council uses the "car clinic" to determine the price of domestic cars. In this method, 10 to 12 experts, according to the specifications of the car, announce their proposed price, and after approval in the Competition Council, the final price of the car is declared.

It should be noted that a car Clinic is a research approach that is unique to the car industry and includes both descriptive and analytical phases.

According to The Iran Project, as per Resolution 543 of the Competition Council, pricing criteria and related calculations are carried out by the Consumer and Producer Support Organization and the results of this organization's calculations are provided to the Automobile Working Group of the Competition Council.

This working group examines the prices announced by the support organization as well as car manufacturers and presents its expert opinion to the Competition Council.

So that finally what is approved by the Council is communicated and enforced.

But some rumors during the last few days were talking about the establishment of a new formula for car pricing by the Competition Council

Based on that, from the next year, the price of cars would be calculated based on the formula of production cost plus 2.5% profit.

Yesterday, Sepehr Dadjoi Tavakoli, the spokesperson of the Competition Council rejected this claim and said that there is no new formula and the same formula approved since January 2023 is being applied.

The Ministry of Industry, Mine and Trade also makes decisions in full coordination with the Competition Council and under the approvals of this Council, he added.

There is not going to be any change in the way of pricing in the car market. These undocumented speculations, unfortunately, only lead to inflammation of the market, he concluded.

Translator : Fatemeh Khoshroo

Inflation, foreign exchange rates & car clinic basis of Iran's automobile pricing