The mystery of pre-sale of foreign cars – Tejaratnews

According to Tejarat News, “delivery of cars on time” and “expensive price of imported products” are two major challenges in this field. On the other hand, along with the history of accumulation of overdue car obligations, building trust in pre-sales should also be considered by policymakers.

Meanwhile, the Ministry of Industry, Mines and Trade has announced the gradual pre-sale of 200,000 foreign cars in the commodity exchange, and due to the country’s economic challenges and sanctions, the realization of this goal faces various challenges.
According to what the Ministry of Security announced, 100,000 foreign cars are expected to enter the country in the remaining quarter of this year. Also, according to the planning of the Ministry of Security, another 100,000 vehicles will be imported in the spring of 1402. Therefore, according to the planning of the Ministry of Security, 200,000 vehicles are expected to enter the country within six months. Since it is stated in the car import regulations that foreign cars must be offered on the commodity exchange, the 200,000 cars in question have no choice but to sell them on this platform. Therefore, the Ministry of Defense also says that the delivery of these 200,000 vehicles will be in three and six months.

The Ministry of Security emphasized that according to this planning, applicants who buy a foreign car through the commodity exchange may receive their car three to six months after the time of purchase. According to the spokesman of the Ministry of Security, this time of three to six months is normal for the delivery of foreign cars, considering the time required to build the car and also to transport it to the country. The pre-sale of imported cars in the commodity exchange faces challenges from different angles; Especially since the country is facing fluctuations and economic shocks, and this issue can delay the delivery of cars and increase the cost of imports compared to the time of listing on the stock market. On the other hand, the sale of foreign cars in the stock market is not unprecedented; Therefore, neither the Ministry of Security, nor the importers, nor the Commodity Exchange have the necessary experience in this field.

It seems that the Ministry of Security’s planning for the sale of foreign cars in the commodity exchange is facing several fundamental challenges, and among them, “delivery of cars on time” and “the final price of imports” are the main ones. In addition to these, of course, there are other challenges, including the possibility of citizens not trusting the issue of car supply in the commodity exchange and uncertainty and as a result of not receiving them, and another is the growth of the price of cars sold on this platform during delivery.
In the past, when the import of cars went through its normal routine without the government’s intervention in the field of sales, the importers also pre-sold or immediately sold their products. Due to various reasons, including the poor planning of some importers and of course government policies (such as sudden bans and restrictions against imports), sometimes the delivery of cars was delayed and in some cases even the car was not delivered at all.

This issue has also happened many times in the case of domestic and assembled cars, and it has often happened that the government and private sector car manufacturers have not been able to fulfill their obligations on time, and sometimes even the registered cars have never been delivered. A clear example of this happened in 2017 after the violation of JCPOA by the US government. At that time, it was said that the car manufacturers had pre-sold one million units of the product, which created a huge challenge due to the cancellation of the JCPOA and sanctions on Iran, especially in the automotive sector. It got to the point where automakers were forced to either replace pre-sold products or refund registrants with exorbitant interest. According to these experiences, it seems that the Ministry of Security and the Commodity Exchange should proceed with more caution in this field. Although the Commodity Exchange collects various commitments and guarantees from the suppliers of goods for delivery on time and at the discovered price, this does not necessarily mean that 200,000 foreign cars on the way to the Commodity Exchange, in accordance with the commitments of the suppliers (especially in the delivery deadline section) ) reach customers.

This uncertainty has various reasons, the most important of which is related to the issues caused by sanctions and the growth of currency prices. The final price of imported cars is directly related to the exchange rate; Therefore, the higher the currency price, the more expensive imported cars will be. Considering that foreign cars are supposed to be sold in the commodity exchange, it seems that the final price will not be a challenge for the buyers.

This is due to the fact that the supplier is committed to deliver the cars sold on the commodity exchange at the same price discovered on the exchange, and it doesn’t matter if the delivery time is a few months later. Therefore, if, for example, a certain foreign car is sold at the price of 1 billion Tomans in the commodity exchange, and three months later its price reaches, for example, 1.5 billion Tomans, this price change will not include the buyers. Meanwhile, it is possible that the increase in the cost of imports will hit the buyers from another area, and that is the delay in delivery. Let’s suppose that the supplier puts 10,000 foreign cars on the stock exchange next week, and the average price discovered is, for example, 1 billion tomans.

Considering that the supplier will deliver the car three to six months later (according to the Ministry of Security), the fluctuation of currency prices and other related costs can increase the cost of supplying 10,000 cars sold in the stock market. For example, it is possible that due to the possible growth of the currency price and the increase in the cost of transportation, the total price of importing the cars in question, which was supposed to be 900 million Tomans at the time of delivery, may reach 1 billion Tomans or more at the time of delivery. In such a situation, the supplier either does not make a profit or suffers a loss, because according to the commitment he gave, he cannot supply the cars sold on the stock exchange at a higher price. On the other hand, when such an event happens (cars are not delivered on time), customers will be distrustful of buying cars from the commodity exchange, and then maybe the Ministry of Security will be forced to reduce imports or change the sales platform.

Are customers welcoming?

Apart from the challenge of increasing the cost of importing cars at the time of delivery, the Ministry of Security’s planning for the pre-sale of 200,000 imported cars probably has other challenges. In the meantime, many people may not accept the risk of buying a car from the stock market due to the fluctuation of currency prices and the challenges caused by sanctions. Although it seems that due to the strong possibility of the continued growth of car prices, customers will not lose money for buying foreign cars from the commodity exchange, but the problem is that some cars may face the challenge of delayed delivery or even non-delivery.

Currently, the country is under a heavy embargo and there is a possibility of its escalation. Therefore, it is unlikely that the car import process will face challenges. Although the export of a complete car to Iran is not sanctioned, issues such as banking problems and difficult money transfer can challenge the car import process and thus delay or even make the delivery impossible. Currently, there is no clear prospect of resuming negotiations and revitalizing the JCPOA, and the country is also facing heavy inflation. Therefore, the growth of inflationary expectations and currency prices is not at all unlikely.

This issue will directly affect the final price of car imports; Therefore, it can reduce the ability of the supplier to deliver the cars that are to be sold on the commodity exchange on time. Naturally, the more serious this doubt becomes, the more it will reduce the reception of foreign cars on the stock exchange; Because according to the experience of car pre-sale in the country, many will not be willing to accept this risk.
While one of the objectives of the ministry of silence from the sale of foreign cars in the commodity exchange is to reduce the inflammation of the market, there is a possibility of creating rent in the field of selling these cars on the stock market. To explain this possible challenge, we can use the same example as before. If we assume that a certain foreign car is sold at the price of one billion tomans in the commodity exchange, there is a strong possibility that due to the growth of inflationary expectations and currency prices, by the time the car is delivered (three to six months later) its price will be, for example, 1.5 billion tomans With this account, because the car will be delivered to the customer at the same fixed and discovered price three or six months before, 500 million tomans will be generated for each rental car. Therefore, according to the Ministry of Security’s plan for the pre-sale of 200,000 imported cars, and assuming that the currency price and inflation expectations will rise within the next three to six months, a huge rent will be obtained from this pre-sale.

Another issue is that the Ministry of Security has not yet issued a license to sell all domestic cars on the commodity exchange, and even when this happens, not all car manufacturers’ production will be listed on the stock exchange. This is due to the fact that, according to the tasks of the Islamic Council, car manufacturers must sell 70% of their products (including 50% in the form of population youth plan and 20% for the scrapping of used cars) outside the stock market and at a mandated price. Therefore, while all imported cars are required to be offered on the commodity exchange, only 30% of their production capacity will be sent to this platform.

If, as promised by the Ministry of Security, 700,000 cars will be produced in the country in the next six months, 30% of them will be sent to the commodity exchange, which is equivalent to 210,000 cars, which is equal to the number of imports, but the problem is that the remaining 70% will be sold outside the auxiliary exchange. It will not achieve the goal of the Ministry of Silence (regulating the car market by offering cars on the commodity exchange). Therefore, many experts and activists of the automobile industry believe that if the Ministry of Security seeks to regulate the market in terms of the supply of automobiles in the commodity exchange, it should eliminate such challenges. According to them, the principle of requiring importers to supply cars in the commodity exchange has no place in the Arabs, and it is better for the policymaker to allow foreign cars to be sold according to the previous procedure and under the full authority of the suppliers.

Source: World Economy