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Iran: Foreign Car Imports Highlight Inequalities

By Arash Hassan-Nia, Tehran (Source: Mianeh)


After the eight-year war with Iraq in the 1980s, the only foreign cars in Tehran were secondhand European models from the 1970s, which had been imported by Iranian students hoping to fund their studies at European universities. But now the streets of Tehran and other big Iranian cities are packed with the very latest foreign cars.



With some luck you might even spot the odd Ferrari or Lamborghini - although they are unlikely to have passed through ordinary customs.


"Before foreign cars started to be imported, we either had to deal in a limited number of Iranian models or the same foreign cars that had been imported before the revolution and were at least 30 years old," Adib Zamani, a veteran car dealer in Tehran, says.


"But now things have changed and the dealership is full of new and used cars which are less than a year old."


However, import tariffs and other expenses add another 110 per cent to the cost of an imported car. So people are paying double what they might elsewhere, just to be able to drive the car they like.


"The tariffs are still high and importing cars can be very difficult. It is a pity that people cannot drive good cars at a fair price," Zamani says.


The first foreign car available in Iran in the 1990s was the Korean Daewoo, and it revolutionised the car market. The Kerman Khodro factory was set up in Bam to manufacture and assemble the cars. However, before the assembly line was finished, Kerman Khodrow was allowed to import some Daewoo models and test the market.


These imports - the Spero and the Racer - changed the face of Iran's cities.


"Driving a car like that was really flash in those days and people usually thought the owner would be rich. Paykans [a classic Iranian make of car] were not very easy for a woman to drive, so I bought a used [Daewoo] as soon as I could because it was much easier," Mehrnaz, an early fan of imported cars, said.


In 2004, during the last year of Mohammad Khatami's presidency, the government scaled back the assistance it gave to the 40-year-old domestic car industry. Henceforth, government backing was to be conditional on cars' ability to compete on international markets.


This major policy change paved the way for cars to be imported into the hungry Iranian market, with high import tariffs. The first agents were the Iranian car manufacturers themselves and they soon found rich Iranians were keen to buy luxurious cars at high prices.


According to custom office statistics, foreign car imports between March and September 2008 rose by 89 per cent compared with the same period of the previous year.


Japan's Toyota and Hyundai and Korea's KIA Motors are selling well, while two German brands, Mercedes-Benz and BMW, are among the bestselling European cars. Since Peugeot, Citroen, Renault, Mazda and Malaysia's Proton have co-production deals with Iranian firms, they are also allowed to export cars to Iran.


The price tag for a foreign car starts at 30,000 US dollars and goes up to 200,000 dollars. The cheapest models, at around 30,000-50,000 dollars are Toyota's Paris, Corolla and Camry. Mercedes Benz, BMW and Lexus are at the top end of the range, but judging by the number on the streets, it is plain there is an appetite for them.


Kayvan, the chief manager of a private company in Tehran who recently bought a BMW 318 for 45,000 dollars, says safety and peace of mind are very important to him, "especially in a country like Iran where technical problems are one of the main reasons for accidents".


Seeing a 2009 BMW 3, 5, 6 or 7 series Cabrio or Coupé on the streets of Tehran is now so normal that nobody would think the owner was anything out of the ordinary.


But Alireza Youssefi, a cab driver, wonders what sort of people can afford a top-of-the range car. He himself drives a KIA Pride, which was made under license by the Iranian company Saipa.


"I do not know who drives those cars. They say that the [economic] situation is not good. If so, how come people can drive a car costing [so much]."


Stuck in a Tehran traffic jam, Alireza points to a Hyundai in front of him and says he is always careful to give expensive cars a wide berth.


"If I collided with one of these [expensive] cars, I would have to give them my own car as compensation," he said.


Many other people who are struggling to cope with 25 per cent inflation would also like to know who buys these cars. You might find the answer on Abbas Abad street, in the centre of Tehran, with its string of luxurious dealerships filled with high-end German, Japanese and Korean cars.


Babak, a sales manager, laughs when I ask who his customers are, "Pay no attention to what they do for a living. Everyone who has the money and is obsessed with cars comes here: doctors, engineers, factory owners and businessmen. To look at some people who come in here, you wouldn't guess they were planning to spend 50,000-60,000 dollars on a car."


Soccer players, competing with each other over who has the most expensive and cutting-edge model, are especially loyal customers, he adds.


In fact, some car magazines like "Car World" [Donya-ye Khodrow] confirm what Babak says about soccer players with whom the magazine does interview weekly. In a recent report this magazine revealed the information about the models of cars owned by Commerce Chamber members and so called businessmen. The report shows that some of owners of these cars are businessmen.


While he is shopping around with the intention of buying a Tuscan Hyundai for his wife, Mr. Riyazati, the owner a construction company, says: " I have my own Prado Toyota, but my wife favors Tuscan".


I ask him about the Toyota Prado's price. "I bought mine for about $ 60,000. Though Tuscan is cheaper and could be bought for 30-40 thousand dollars. It is natural because Tuscan is less powerful than Prado. Furthermore it should be a difference between Toyota and Hyundai" he replies.


I ask him "doesn't it scare you driving a 60 million tomans car in the crowded streets of Tehran?" he responds "One earns money in order to enjoy a full life. After all, it is by our involvement in car accidents that other people like auto-repair workers make money".


Another young man who works at the same dealership says you can buy the latest models in Tehran just a few weeks after they are released in the United States and Europe.


"Sometimes our customers order their favourite cars from online catalogues and brochures so they can have the car as soon as possible after it is imported into Iran," he said.


According to central bank statistics published in August 2008, at least 14 million Iranians live below the poverty line. At the same time, more than 100,000 foreign cars with a price tag higher than 30,000 dollars were imported between March and September.


Put those two facts together and you can see that President Mahmoud Ahmadinedjad's slogans about social justice and the need to end economic inequality have not yielded results.


Some Iranians drive around in 100,000 dollar cars, while the value of everything most people own does not amount to even half that.


Arash Hassan-Nia is a journalist in Tehran


About Mianeh: Mianeh is a new independent web-based initiative run as a project by the Institute for War & Peace Reporting ( the award-winning non-profit media development organisation that works across the globe to platform local voices and promote international learning and engagement. Mianeh aims to be an open space for ideas, news and debate where writers in Iran can reach out to each other as well as to those outside the country who are interested in learning more about the vibrant and dynamic society that is Iran today.

... Payvand News - 03/05/09 ... --

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