Three predictions of the future of car pricing
According to Tejarat News, it was last week that the Speaker of the Islamic Consultative Assembly announced the law on organizing the automobile industry to the government for implementation.
Quoted from the world of economyDue to the fact that one of the clauses of this law was the issuance of a 5-year license for the import of cars, many of its other provisions were not given much attention.
This is while the law in question covers the entire industry and car market of the country.
One of the most important clauses of this law, which somehow overshadowed the issue of car imports and was not seen much, states that “car companies are obliged to calculate the cost price of the car, 2% profit and the final price and sell it to the Competition Council;” Violation of this matter is considered a crime and the perpetrator is sentenced to one of the six-degree ta’zir punishments, the subject of Article (19) of the Islamic Penal Code, approved on 1/2/1392, with subsequent amendments and additions.
This paragraph is important because it addresses the issue of car prices. According to the clause, automakers must announce the final price of their products, in addition to the cost price and the amount of profit, to the Competition Council, which last fall for the second time Car pricing set aside.
Although the text of this section of the law is ambiguous and the position of the Competition Council in the car pricing process is not specified in a precise and clear manner, it has nevertheless created the ambiguity of what is the duty of car pricing from now on and according to the law. will be?
To answer this ambiguity, three scenarios can be proposed. First thatAutomakers are only required to keep the Competition Council informed of the prices of their products, and the council does not have the authority to interfere in prices, but the Market Regulation Headquarters will still have pricing authority.
The second scenario It is also that the Competition Council, after receiving the prices of domestic cars, will comment on them and the final prices will be determined and announced by this council. Finally but The third scenario Also, neither the Market Regulation Headquarters nor the Competition Council will have the right to interfere in the pricing of domestic cars, and pricing is somehow free and in the hands of automakers.
Last fall, the Competition Council removed the car pricing from the car pricing council by a decision of the Economic Coordination Council, and the market regulation headquarters took control of the price.
Therefore, based on the approval of the Economic Coordination Council of the Heads of Forces, the market regulation headquarters is responsible for determining the price of domestic cars; Meanwhile, the law promulgated by the Islamic Consultative Assembly (Organization of the Automotive Industry) also mentions the Competition Council, and car manufacturers must inform the council of the prices of their products.
Despite this dichotomy, now the big question and ambiguity has arisen, which decree is the ruling of the upstream law in the issue of car prices? The decision of the Coordination Council of the three powers to remove the Competition Council from car pricing and make the market regulation headquarters responsible for pricing, or the law on organizing the car market, according to which car manufacturers must inform the Competition Council of the prices of their products?
Incidentally, the current period is the time when the price of domestic cars changes according to the routine every year, and car manufacturers and customers are waiting to see what the price of domestic cars will be. However, at present, neither the market regulation headquarters has made a specific comment on the car price, nor has the Competition Council taken a position in this regard according to the law on organizing the car industry.
Of course, the Minister of Silence has generally stated that the car will not become more expensive, but did not specify the time frame for the price freeze. It must be provided through product price correction.
However, according to the announcement of the law on car organization on the one hand and the decision of the Economic Coordination Council of the heads of forces on the other hand, the price and price of the car have remained unresolved and it is not clear which institution is legally responsible for this. The question also arises as to whether the law promulgated by the Islamic Consultative Assembly can be considered as liberalizing car prices?
The role of formality in car prices?
According to the first scenario, and according to the law announced by the parliament, car manufacturers are only obliged to inform the Competition Council about the prices of their products, but this council will not have the power to price.
Therefore, the price of domestic cars is still determined by the Market Regulation Headquarters in accordance with the approval of the Economic Coordination Council of the heads of the three powers. In December last year, the headquarters issued an 18 percent increase in the price of domestic cars, a number that was unprecedented in terms of price increases (during mandatory pricing).
The issuance of the license gave carmakers hope that the market regulation headquarters would treat them better than the Competition Council. However, the non-determination of new car prices this year has affected this issue. According to the routine of the past few years, the price of domestic cars was expected to change in June this year as well, and an increase permit was issued for car manufacturers.
However, there is no decision to increase the price at the moment, and as Minister Samat stated, the price of the car will not change. The government recently abolished the preferred currency of some basic commodities, leading to sharp increases in the prices of oil, poultry, eggs and milk.
This issue was followed by social protests; Therefore, the government has chosen not to issue another price increase permit for sensitive goods at the moment, and it seems that one of them is cars.
Although the car is not a basic commodity, due to its high social sensitivity to it, the government is not satisfied with price liberalization in this area and is even cautious in raising prices.
Since the Market Regulation Headquarters is a government institution and is headed by the First Vice President, he is naturally the implementer of government policies and therefore has no plans to change car prices at the moment.
However, given the growth in production costs in the automotive industry on the one hand and the production program of 1.4 million cars on the other hand, it seems unlikely that the market regulation headquarters will be able to freeze car prices for a long time.
Therefore, it is possible that if the first scenario occurs and the market regulation headquarters remains in the position of determining the price of the car, the headquarters will issue a permit to increase the price in a while.
Return of the Competition Council
According to the text of the Law on Organizing the Automotive Industry, car companies are obliged to calculate the cost price of the car, 5% profit and the final price at the time of sale and report it to the Competition Council. According to the second scenario, this clause of the law could mean the return of the Competition Council to pricing.
The Competition Council took power in late 1991, after the government reversed its decision to liberalize prices Car pricing Took over.
The council was excluded from car pricing in September 1997, but returned to pricing almost 19 months later, after the liberalization project failed again. The return of the council, however, did not last long, with the Economic Coordination Council of the Armed Forces excluding the council from the pricing process for the second time last year.
Due to the change in the composition of the Competition Council and the selection of the Market Regulation Headquarters as the person in charge of car pricing, there was no news about this council for the past seven months, but now, according to the law announced by the parliament, Car pricing Is open.
Of course, the text of the law does not explicitly state whether the Competition Council has the authority to interfere in the prices announced by automakers or not, but if we consider the answer positive, the second scenario is the return of the Competition Council to the position of determining the price of domestic cars. Under this scenario, the Competition Council will intervene in the announced prices after receiving the final price list, final price and profit of the automakers, according to its own factors (these factors used to include production and quality).
Since the Competition Council usually does not accept the costs claimed by the automakers during these years, it is likely that it will not accept their bids and will consider lower rates. This will certainly not be to the liking of carmakers and will intensify their loss cycle (as they claim).
Will the price be released?
But according to the third scenario, which, of course, is unlikely to happen given the government’s policies, price liberalization is according to the law passed by parliament. The price clause states that carmakers must notify the Competition Council of the final price, final price and profit from the point of sale, however, it is not clear what the Competition Council owes to the bids.
Can the Competition Council change the prices in question or will it not have the authority to do so? Considering the third scenario, the Competition Council does not have the right and duties to change the price of cars announced by the car manufacturers, and considering that in this scenario, the market regulation headquarters will not have a role in determining the price, pricing will be free.
Accordingly, car companies can set the price of their products themselves, and their only duty under the notification law is to inform the Competition Council of prices. Assuming this scenario is implemented, the price of domestic cars will most likely be set close to the market, so there will be a sharp rise in car factory prices.