Iran Khodro and Saipa, two major car manufacturers in Iran, incur an average loss of about 600 million tomans for each car produced. Hossein Maghiseh, an automotive industry expert, criticized the policies governing the automotive sector, pointing to the inefficiency of price controls and high tariffs as some of the main challenges facing this industry.
Challenges of Pricing and Tariffs
Maghiseh stated that price controls and tariffs ranging from 100 to 160 percent on car imports not only fail to support domestic producers but also a significant portion of the revenue generated could be used to cover the government's budget deficit. He noted that the average dollar price of many products from Iran Khodro and Saipa over the past 10 years has been between 6,000 to 7,000 dollars, and finding an economical brand new car for less than 10,000 dollars in the global market is difficult.
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Consequences of Accumulated Losses
Maghiseh identified price controls as one of the root causes of the problems in the automotive industry and emphasized that car prices should be determined based on people's purchasing power, not the economic realities of production. These policies have led to losses for car manufacturers, limited consumer access to suitable vehicles, and the emergence of rent-seeking behavior. He also pointed out that about 2.4 million people registered in a sales plan, resulting in approximately 10 trillion tomans of rent due to the price difference between factory and market, stressing that this situation has disrupted production and reflects weaknesses in economic governance.
By examining the financial statements of Iran Khodro from 2018 to the end of 2025, Maghiseh estimated the total sales value of this company at about 14 billion dollars and the accumulated losses during this period at around 5 billion dollars. A significant portion of these losses is due to price controls.
Need for Reform in Currency and Tariff Policies
Regarding the supply of cars in the commodity exchange, Maghiseh mentioned that although car supply in the commodity exchange is not common in many countries, the pricing mechanism for cars in Iran does not necessarily have a similar model in global economies. He emphasized that raw materials and production inputs are provided to car manufacturers at prices close to global rates, while the final product is offered at a controlled price, which is one of the root causes of the problems in the automotive industry.
This automotive industry expert also called for a reasonable tariff that aligns with the country's economic conditions and stated that eliminating price controls alongside a reasonable tariff could create a competitive environment. Maghiseh concluded by emphasizing that reforming the automotive industry is not possible without simultaneously revising currency, tariff, pricing, energy, fuel, tax policies, and overall economic governance quality.
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