EghtesadOnline: While semi-state owned automotive companies say they are struggling to stay afloat, CEO of the private car company Karmania seems upbeat, saying that his firm has devised a strategy to weather US sanctions and the economic hard times.
Calling the stringent US restrictions a full-fledged economic war against Iran, Pouya Salari Sharif said, “Spare parts needed for maintenance of vehicles sold by Karmania have been imported in large quantities.”
Based in the southeastern city of Bam in Kerman Province, Karmania is a subsidiary of Kerman Automotive Industries Company. Karmania is the producer of Chinese BYD cars in Iran, including the SUV model BYD S6.
The group produced 25,900 cars during the first six months of the current fiscal that started in March, indicating an 8.6% year-on-year increase, Financial Tribune reported.
Sharif reassured customers that the firm has imported enough auto parts to meet the needs of after-sales services up until 2020.
Following the imposition of the US sanctions, the value of the rial has plunged to unprecedented lows in recent months and created big problems for several major industries including the key auto sector and its affiliates.
As the auto industry’s problems pile up with no early solution in sight, companies are reporting significant decline in output and car prices keep on rising at terrible speed.
According to statistics released by the Ministry of Industries, during the first six months of the current fiscal, 547,271 cars were produced in Iran, indicating a 15.2% decline compared to the same period last year.
Furthermore, the disruptions is the supply of spare parts has forced many companies to deny mandatory after-sales services to customers.
As part of measures to boost its operations, Karmania’s production capacity has increased to 30,000 units per year.
A new paint shop has been built in the factory at a cost of 350 billion rials ($2.5 million) that enables it to make cars with a wider range of color options. The company is set to introduce a new model in the coming months, the BYD S7.
According to Sharif, test production of the BYD S7 has been successful. The locally-made model is currently going through technical tests and mass production will start in the coming days. The vehicle is expected to be in the market in winter.
“Given the instability in the currency market and its huge impact on car prices, the company cannot announce a final price for BYD S7.” The same car sells for 119,000 Yuan ($17,148) in the international market.
On Monday the dollar was sold for 140,000 rials in Tehran. Six months earlier it hardly fetched 42,000 rials.
The carmaker says given the high and rising production costs and to uphold consumer rights, car buyers will be offered “new payment options.” He did not elaborate.
Car prices have skyrocketed over the past several months. For instance, the BYD S6 made by Karmania which is priced by the company at 1.36 billion rials ($9,764) is now sold for 2 billion rials ($14,285) in the market.
The CEO said “Karmania is getting ready to relaunch production of the family sedan BYD F3 in the coming months.” The model is priced at 650 million rials ($4,642) by the company but sells for 950 million rials ($6,785) in the market.
Earlier the company had outlined plans to assemble hybrid electric vehicles. Sharif said, “In light of the present economic problems the plans have been put on hold.”