Fundamental analysis of the car / increase in the price of products; The growth of profit margin of car maker or dealer?

According to Tejarat News, Iran Khodro, which, like its big competitor, Saipa, had been facing losses for years, managed to save itself from the morass of losses after its products entered the stock market. But after its financial statements announced that it was profitable, the challenge of staying and leaving the car on the commodity exchange began; It even got to the point where with every news of the release of a car in the stock market, the stock price of two car companies, followed by the car group, increased.

At the same time, whenever the news of the car’s withdrawal from the stock market was mentioned, the color of the car group’s shares turned red. Nevertheless, the story of the car supply in the stock market finally came to an end and the Ministry of Silence announced the big car pre-sale plan so that all car manufacturers’ products can be sold in the integrated car system.

This news affected the shares of the automobile group in such a way that the shares of this group stopped growing for a while and lost the rhyme to the refiners in the last weeks. However, gradually with the murmur of permission to increase car prices, car stocks attracted attention and gradually showed positive fluctuations of 5-6% on the board.

Finally, the Competition Council and the Consumer Protection Organization, which are two important institutions in car pricing, decided to increase the prices of the products of the two car manufacturing giants after conducting expert examinations based on the first 6-month audit report of the two car manufacturing groups.

Are the automakers profiting?

Now, with the announcement of the price increase, the question arises as to how much the change in product prices can affect the profitability of car manufacturers?

As a result of the increase in the price of products, Iran Khodro and Saipa will offer their products to buyers at a higher price, and in this way, they will record more income in their financial statements than in previous months.

Another look at the car increase license shows that car stocks will be attractive for the market oscillators and maybe the week ahead can be considered as the car week.

But is this the whole story? Whose pocket goes to the profit of the car price increase? Will companies benefit from this price increase enough to reduce their accumulated losses and approach profitability?

How much did the car earn in the last month of 1401?

To answer this question, perhaps it is better to have a look at the financial statement of Iran Khodro Company. A review of Iran Khodro’s monthly performance report in March 1401 shows that Khodro has been able to produce 47,857 cars this month; This number has decreased by about 24% compared to the production of 63,500 devices in February 2011.

Of course, Iran Khodro’s monthly performance reports in March 1400 show that the company had produced only 21,310 of its products during that period; As a result, the amount of car production in March 1401 compared to the same period of 1400 has increased by about 125%.

Further analysis of this report shows that Iran Khodro has managed to sell 56 thousand 611 units of its products in March 2011 and earn 29 thousand 505 billion Tomans in this way. Comparing these figures with February this year shows that the company’s sales in March decreased by about 6%.

However, this decrease in the amount of sales does not include the sales amount of Iran Khodro; Because the company’s income has increased by 92% due to the sale of 14 thousand and 241 billion tomans of parts and accessories, as well as the income of 616 billion tomans from the sale of CBU and 68 billion tomans from the sale of SKD parts.

It should be noted that the sales amount of this company during March 1401 has decreased by more than five percent compared to the same period of the previous year.

Is the increase in the price of the staircase products profitable?

Now Iran Khodro has received permission to increase the price of its products from 53 to 102 million tomans this year. Although the increase in the price of products can increase the income of Iran Khodro, it should be noted that the costs of car manufacturers also increase due to the increase in the price of the dollar and the growth of the inflation rate. Because car manufacturers will need more money to supply foreign parts that are offered at new rates day by day.

At the same time, domestic raw materials needed for car production, which include steel, copper, aluminum, and other metals, are priced in dollars, and are affected every time the price of the dollar increases, and the price of the goods produced by the car increases accordingly.

Reinforcement of companies or brokerage market?

Another point that should be taken into account is that basically, the increase in the car sales rate at the factory door is to reduce the production cost and increase the profit margin of car manufacturers.

But it should be seen whether with this increase in the car price, the supply of this product directly from the factory will increase in order to boost car production and reduce the distance between the free market and the factory? Or will this increase in the factory price cause strange jumps in the car price in the free market, and instead of increasing the profit margin of car manufacturers, the profit margin of dealers’ pockets will increase?

It should be mentioned that Iran Khodro Company was registered in 1341 with the original name of Iran National Industrial Industries. This company started working in October 1342 with the aim of producing all kinds of cars and related parts, and its shares were listed in the Tehran Stock Exchange in the end of 1371 with the symbol “Khodro”.

Currently, the main activity of Iran Khodro is the production of body parts, engines, production and assembly of passenger cars and vans. The shares of this company are now traded in the second market of the stock exchange and in the automobile and parts manufacturing group. Iran Khodro is the largest company of this group with a market value of about 93 thousand 935 billion tomans.

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