Over the past month and during the early days of the Iranian calendar year (which began on March 21), Iran’s car market has gone through one of its most volatile periods.
The unchecked rise in the prices of both domestic and imported cars in the open market has raised widespread concerns among the public and economic experts. Many analysts believe the root causes lie in poor policymaking, excessive government taxation, chronic inflation, the persistent rise of the U.S. dollar against the rial, and the monopoly held by domestic car manufacturers.
Imported car prices have surged dramatically in recent weeks. For instance, the cheapest used imported car in the open market has been priced at a minimum of 18 billion rials (approximately $17,143), while the prices of some high-mileage SUVs have surpassed 40 billion rials (about $38,100). Since the beginning of the new year, the price of certain foreign vehicles has increased by as much as 4 billion rials (around $3,800) in just 20 days. This is despite the fact that, according to automotive industry insiders, the car market is in a state of complete stagnation with very few buyers.
The situation with domestic cars is not much better. Price reviews show that the Peugeot 206 Type 2, which was trading at around 6 billion rials (about $6,000) in March, has now surpassed 7.2 billion rials (around $7,200). The Saina EX has increased by 200 million rials (approximately $190) in just four days, reaching 4.45 billion rials (roughly $4,239). The Shahin, one of the cheapest models produced by SAIPA, has also exceeded 6 billion rials (about $5,715) in the open market, and its Plus version is being sold for at least 6.5 billion rials (about $6,190).
What has sparked the most public anger and discontent is the vast gap between car prices and the income of salaried workers. This year, the minimum official wage for workers has been set at about 111 million rials (approximately $106)—a figure that doesn’t even cover the monthly installment of a low-cost domestic car. For Iran’s working and middle classes, owning an affordable car has become a distant and unattainable dream.
Causes of Uncontrolled Surge in Car Prices
Experts believe the continuous rise in car prices in Iran stems from various factors, the most important of which are chronic inflation and economic instability. In an environment where the exchange rate constantly fluctuates and monetary and fiscal policies lack clarity and stability, the car market is always among the first sectors to react to economic shocks.
Another major factor is the car manufacturing monopoly. For years, Iran’s auto market has been dominated by two large state-owned automakers—Iran Khodro and SAIPA—or companies managed by their executives. The import of foreign vehicles is also heavily restricted and controlled by these same domestic car industry managers. Under such conditions, the lack of competition has allowed domestic car prices to continuously rise without any improvements in quality or standards. These two companies, which are affiliated with the Islamic Revolutionary Guard Corps (IRGC), also control the production, distribution, and import of cars and their parts.
Restrictions and delays in importing vehicles, especially economical and fuel-efficient ones, have also exacerbated the problem. While many countries balance their markets through strategic imports and reasonable tariffs, in Iran, car imports over the past decades have faced numerous obstacles and heavy duties, alongside a domestic industry that lags behind modern automotive technologies. Even during brief periods when imports were allowed, the vehicles that entered the market were few and more expensive, making no real impact on reducing prices.
The rise in car prices, alongside increases in the cost of other essentials, has made car ownership unaffordable even for Iran’s middle class.
Runaway inflation, production monopoly, import bans and restrictions, chronic inflation, and weak oversight are the key reasons behind the current disarray.
Meanwhile, the Fararu news website reported: “The rising prices of Iran Khodro and SAIPA’s products directly influence the offers made by sellers in the open market, and this price hike has essentially become an annual routine for the automakers. Based on their own justifications, they cite the rising exchange rate and increasing labor costs as reasons for raising factory prices. As a result, even within the first few days of the new year, the prices of domestic cars in the open market have jumped significantly.”
