The Possibility of Internally Manufactured Automobile Prices’ Increase

Asre Khodro: Car prices have been soaring and do not seem to be going to slow down in the near future.

Asr-e Khodro News Agency reported ISNA that automobile has been among the commodities with the most stable price in the market over the past five years. This has been in a way that car manufacturers have sporadically born losses. They assert that the production price of Tondar ۹۰ for instance, is currently between $ ۵۰۰ to $ ۱۵۰۰ more than its selling price. Moreover, they claim that Vitara, before the ۳-percent price increase during the last weeks, was sold at around ۵ million Tomans lower than its production price.

Currency exchange increase, change in the market milieu, inflation and umpteen suchlike reasons are what the automobile manufacturers cite as justifying causes for price increase of cars.

The demands of the automobile parts’ manufacturers must not be ignored either. In contrast to the organization map of the automobile manufacturers which is so extensive and expansive that they can present their cars with a margin of loss, automobile parts’ manufacturers are usually retailing workshops whose profit and loss must be balanced.

The secretary of the automobile parts’ manufacturers’ assembly told that the market milieu has changed and the prices have increased; that means a demand for the increase of prices!

On the other hand, the automobile manufacturers, despite the agreement of the Pricing Committee to raise the prices of some products by ۴%, are still not happy.

The Sales and Marketing Deputy Manager of IK Co., referring to the recent price increase said: The total price of some products like Grand Vitara was more than its selling price. Once some of our products are loss-bearing, we cannot convince our shareholders. Thus, we wrote to the Pricing Committee and stated that with the current situation when we are selling some products at a price less than that of their production, our profit and expenditure are not balanced and this has caused IK Co. some problems.

Mr Ali Asghar Sarayinia added: Despite the consent of the Pricing Committee with the prices’ increase, our expenses are still not in sync with our revenue. For instance, after the price increase of Grand Vitara, it is being sold at R ۴۷۲,۰۰۰,۰۰۰ which is R ۲۲,۰۰۰,۰۰۰ higher than the previous price but is still underpriced in comparison to its production price.

In parallel to these changes, IK Co. has announced that further modification of prices will be under way.

Nevertheless, it seems that automobile manufacturers are not in much need of seeking the consent of the Pricing Committee; even before the announcement of the Pricing Committee, price increase was apparent in some Sales’ Affiliations.

In this regard the secretary of the automobile manufacturers said: According to the formal declaration of the Pricing Committee, automobile manufacturers may increase cash sale prices of their products at their own discretion and then seek the approving license of the Committee while going through the typical legal steps.

Considering the fact that after the session held by the Pricing Committee of the Ministry of Industries and Mines, one of the participants told ISNA that the expectation of the automobile manufacturers that was a price increase of ۸% was not met, it can be speculated that some cars’ prices will be increased even more in the coming months.

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