Will the carmakers’ lottery be eliminated next year?
Eqtesadonline – Pouya Dadjoo; Seyed Reza Fatemi Amin, the 13th government’s Minister of Silence, appeared on television on Saturday, claiming that car production would increase by 50 percent next year and that the lottery would be phased out by mid-next year. Of course, he had said before that we will not have a lottery next year, but this time he fell short of his position and said that it is not the case that we will not have a lottery from the beginning of 1401 because production is still growing and far from demand. .
Of course, during this time we have become accustomed to the contradictory words of the Minister of Silence, Mr. Reisi, and his ideas. But the question is, is it possible to eliminate the lottery in the current situation?
According to Fatemi Amin, demand is more than supply and there is a gap between the market price and the production price, so it is adjusted with the market balance and the solution is to increase production. According to the estimates of the Minister of Silence, the need for cars in Iran is a maximum of 1.5 million units per year, which will be covered by a 50% increase in production as well as imports, and the market will reach equilibrium.
But will Minister Samat’s decision to end the car lottery really work?
To answer, let’s take a look at Iran Khodro’s immediate lottery statistics; Since June last year, when the lottery method was implemented, the automaker has held thirty-four stages of immediate sales. During this period, on average, more than 3,267,000 people participated in each stage. This is while the average supply of cars in each stage was equal to 10 thousand and 700 thousand units. These numbers show that there is more than 300 times the demand for cars offered in immediate sales. The following diagram shows the number of cars offered and applicants by Iran Khodro immediate sales process:
These figures clearly show that the demand for cars is far beyond that a 50% increase in production (assuming realization) or the import of 100,000 units can create a balance in the market.
The issue of the automotive industry goes back to mandatory pricing and monopoly.
During the stages, the average difference between the market price of the offered cars and the approved price was about 100 million Tomans; This issue is due to the imposition of the approved price or the same ordering pricing to the automaker. The result is a cumulative loss of tens of billions of carmakers, which manifests itself in a decline in production and a decline in the quality of domestically produced cars.
On the other hand, with high tariffs on imported cars, as well as a multi-year ban on imports, practically domestic automakers have neither the ability nor the interest to improve the quality of their products in a monopoly space.
Therefore, as long as the government does not give up on carmakers and competition in the automotive industry is not formed, Minister Samat’s beautiful words are only effective for poetry readings in praise of the minister when he visits Iran Khodro, and not to improve the bankrupt car industry.