How much will the revival of Barjam reduce car prices? / The price of Peugeot Pars will be 200 million Tomans?
Eqtesadonline – Pouya Dadjoo; Will the car become cheaper if Barjam is revived? This is the most frequently asked question that car buyers are asking these days and waiting for the negotiation task to be determined. This has led to a severe recession in the car market, and as market participants acknowledge, sales have practically dropped to zero in the past few months. But should we wait for a reduction in car prices if Borjam is revived?
Although officials believe that car prices will fall next year, on the contrary, experts deny this. For example, Fatemi Amin, the 13th government’s Minister of Silence, believes that next year, with a 1.5-fold increase in production and a 15 percent reduction in carmakers’ costs, car prices will fall. But Farbod Zaveh, an automotive industry analyst, recently told Eqtesadonline that buyers should not wait for car prices to fall. Because even if Borjam is revived, the growth of commodity prices will continue, even with a slight slope, and it is better for buyers to buy the car they need sooner.
To answer the initial question to some extent, we examine the price trend of Peugeot Pars, one of Iran Khodro’s most popular cars over the past seven years. This car is still produced in two simple models and TU5, and it happens to be one of the most in-demand cars of this great automaker. The price of Peugeot Pars Simple at the beginning of 1394 was about 39 million Tomans and the price of Peugeot Pars TU5 was about 41 million Tomans in the open market. In March of 1400, the price of a simple Peugeot Pars reached about 262 million Tomans and the price of a Peugeot Pars TU5 reached about 315 million Tomans. The following chart shows the price trend of Peugeot Pars Sadeh and TU5 since 2015:
As it is known, from the beginning of 1397 and with the intensification of the country’s currency crisis, the price of cars and specifically Peugeot Pars car started to rise and in less than four years, the price of Peugeot Pars increased about seven times. But does the increase of about seven times the price of Peugeot Pars during this period indicate that this price increase is excessive and if the revival of Borjam and the return of relative calm to the economy, we can expect the price of cars to decrease.
Certainly, the rate of price increase can not be considered as a basis for the fact that the price increase has been excessive, so there is a need for another indicator. One of the most widely used indicators is the dollar price of the car. In other words, we have to see how the dollar price of the car has changed during this period. The following chart shows the dollar price trend of Peugeot Pars in simple and TU5 models:
A look at the dollar price trend shows that although the rial price of these two popular cars has increased significantly, but in practice has not changed significantly during this period.
To use this index (dollar price), we need to know what the dollar equilibrium price of Peugeot Pars has been. For this work, we set the years 1394 and 1395 as criteria. The reason for choosing 1394 and 1395 as the standard year is that the Iranian economy during this period was in relative equilibrium due to the conditions of those days. During these years, the average dollar price of a simple Peugeot Pars was about 10,600 dollars and the dollar price of a Peugeot Pars TU5 was about 11,300 dollars. Comparison of these numbers shows that at current dollar prices (26 thousand tomans) the expectation of a decrease in the price of Peugeot Pars is far from expected.
Another scenario is that if Borjam is revived, we will see a decrease in the price of the dollar, and some predict that the price of the dollar will decrease even to the level of 20,000 tomans. Others, on the other hand, find the dollar’s decline to these levels unrealistic. For example, Meysam Radpour, a financial market expert, recently told Eqtesadonline that the impact of the revival of Borjam on the dollar exchange rate has been exacerbated, and the maximum impact of the revival of Borjam on the price of the dollar is 10 to 15 percent.
However, if the dollar decreases to the level of 20,000 Tomans, assuming equilibrium dollar prices in 1394 and 1395, the price of Peugeot Pars simple model will be about 210 million Tomans and TU5 model will be about 225 million Tomans. Which shows a decrease of about 25% compared to current prices.
However, it should be noted that on the one hand, the production of car manufacturers has sharply decreased during this period, and on the other hand, the ban on car imports over the past four years, has led to a massive accumulation of demand. Issues that make it unlikely that car prices will fall, even assuming the dollar falls. Therefore, given the current situation, it seems that the reduction in car prices next year is far from expected.