EghtesadOnline: A two-year tussle between Iranian auto importers and government officials is coming to a close, with 7,500 imported vehicles receiving permits to hit the domestic roads.
Secretary of Iran Auto Importers Association Mehdi Dadfar has announced that following extensive talks between IAIA and officials, 7,500 imported vehicles will receive permits to enter the Iranian market, IAIA’s website reported.
“With the help of government agencies, license plates are to be issued for these vehicles,” he added.
In the past two years, auto imports were banned, reinstated and banned again while a scandal unfolded, in which government officials were accused of facilitating the illicit import of luxury vehicles, Financial Tribune reported.
Auto imports have been barred in Iran since June 2018. However, prior to the introduction of the limit, companies had brought cars into Iran, which were in the middle of getting customs clearance when the ban was imposed. Those vehicles have been stuck in the warehouses of customs department, or other state agencies.
However, despite the ban, illegal car imports continued for months. Following a public outcry over the issue, the Iranian Parliament launched an inquiry, which proved allegations that the sector has been riddled rent-seeking and lawlessness.
Furthermore, most of the imported cars were presold even before entering the country.
Dadfar said, “If everything goes as planned, the cars will be delivered to customers within a few days.”
Dadfar noted that the cars' prices are to be adjusted in accordance with changes in forex rate and “buyers need to settle the difference between the current rate and what they paid two years ago”.
Over the period, foreign exchange rates have more than tripled in Iran. Dadafr said forex rates will be determined on the basis of what is listed on Sanarate.com, a website established by the Central Bank of Iran, that records the average exchange rate of foreign currencies from across the market.
The USD exchange rate on the website was 130,500 rials on Saturday. The greenback would not have fetched 42,000 rials back in 2018, when the cars were presold.
“Customers will be charged [an extra] 2-6 billion rials [$15,300 to $46,000]. Iran Consumer and Producer Protection Organization will oversee the process and determine the difference that buyers need to pay,” he said.
Following US President Donald Trump’s decision in May to pull out of the Iran nuclear deal and reimpose sanctions on Tehran, the rial tanked and its value plunged to unprecedented lows. In the process, foreign currency became a precious commodity and there was not enough of it to continue importing everything, namely expensive foreign cars.
In a move aimed at preserving the exhausted currency reserves, the administration of President Hassan Rouhani introduced drastic measures to curb spending. The first to take the hit was the auto import sector. However, illicit imports continued.
An Intelligence Ministry briefing to the Iranian Parliament confirmed “the existence of rent-seeking and other illicit practices” in the lucrative auto import sector.
The legislative report noted that between July 2017 and January 2018 when the website, locally known by its Persian acronym Sabtaresh, which provided importers with permits to bring in foreign vehicles was shut down, “6,481 import permits were issued illegally”.
While the parliament put the number of illegally issued online import permits at 6,481, the IAIA estimates that the real number is closer to 17,000.
In a sector marred with corruption, the biggest losers are customers who are charged again and again for vehicles, without knowing when they would actually be delivered.