According to Tejarat News, the exchange rate has always been one of the decisive factors in the car industry and market of the country. With the unbridled increase in the exchange rate in the past days, the discussions about its impact on the car market were hot. But to what extent will the car industry of the country be affected by this issue?
The insistence of the Ministry of Security on the growth of car production
In fact, car manufacturers cannot have a proper reaction to the increase in the exchange rate due to mandatory pricing. Therefore, the only impact that the country’s car industry gets from this is the increase in costs. This is in a situation where the Ministry of Defense has also increased its insistence on the growth of production. Omid Qalibaf, the spokesman of the Ministry of Security, announced on Monday that car manufacturers should produce 700,000 cars in the next six months, that is, until the end of June. An issue that seems to make it difficult for these manufacturers with the ever-increasing cost of car manufacturers.
According to the budget law of 1401 as well as the new amendment of article 10 of the law on organizing the automobile industry, another 20% of their products must be sold to the owners of used cars. According to the budget law, 10,000 cars will be allocated to veterans at the same factory price. Therefore, only less than 30% of the products remain that can go to the market. It should be noted that with the increase in the exchange rate and the consequent increase in the costs of car manufacturers, just as the profit from the sale of manufactured cars increases by 30% in the stock market, the loss from the sale of more than 70% at the factory price also increases. Let’s not forget that the last car pricing for the factory happened in December of last year, which has been over a year now. This is despite the fact that the country’s economy has recorded 48.5% inflation during this period. Producer inflation has grown at the same rate. Therefore, perhaps another facet of the car supply in the commodity exchange can be found in this lack of new pricing.
In fact, if the entire products of the car manufacturers were to go to the stock exchange, the car manufacturers could easily react to the inflation and increase in costs caused by the growth of the exchange rate and release this industry from this abyss. But what has happened is the incomplete supply of cars in the commodity exchange, which has somehow prevented the new pricing of the car in the factory. Therefore, when the law emphasizes that 50% of the products must be allocated to mothers with two or more children at the “factory price”, the factory price becomes the same as the price of a year ago. This makes any price increase for car manufacturers to have a double impact. Therefore, the car manufacturer is placed in the middle of the blades of a pair of scissors; So that, on the one hand, the price of raw materials and parts increases, and on the other hand, the government orders to prevent any price increase for their products.
We went to Hasan Karimi Senjari, an expert in the field of automobiles, to investigate the impact of the increase in the exchange rate on the automobile industry. Karimi believes that the increase in the exchange rate directly and indirectly affects the car industry of the country. However, this car expert has a positive view of the car supply in the stock market. He emphasizes that the incomplete supply of cars in the glass hall cannot cover all these costs. According to him, the parliament as a legislative body should avoid allocating cars to different groups at the factory price.
Karimi Sengari says that the growth of the exchange rate can affect the cost of the car supply chain in two ways. The first path is in the form of direct influence. This automobile expert says that many parts are imported from abroad for the production of domestic automobile products, and the increase in the exchange rate can cause the price of these parts to increase and affect the costs of automobile manufacturers. Another way in which the exchange rate can play a role is indirectly through the raw materials of component manufacturers. In fact, parts manufacturers import raw materials for their products that they sell to car manufacturers, whose prices have also increased, which causes the price of parts that the parts manufacturers sell to car manufacturers to grow.
In addition to these two ways, the growth of the exchange rate can affect the country’s car industry through another indirect way. In fact, the exchange rate can be seen as a full-view mirror of the inflation path in the country. It is not the case that the currency price will increase first and then we will see inflation; Rather, this path is the opposite, that is, the growth of the exchange rate is due to the decline in the value of the national currency caused by inflation. In a simple definition, inflation means the amount of jump in prices compared to the time graph. Therefore, in addition to foreign purchases and the increase in the cost of parts, this inflation automatically involves car manufacturers in more costs.
The economic logic of this work says that with more sales and lower profit margins, more profits are earned in total. This is in the context of talking about a profitable industry, the country’s loss-making car industry may not be considered as subject to this issue. Karimi Sengari also says that in the past, it would have been possible to raise the criticism that when the manufacturer makes a percentage loss on every car produced, what is the insistence on increasing car production? But he believes that with measures such as the sale of cars in the commodity exchange, this criticism has probably become less.
This automotive expert believes that the government did not insist much on increasing the circulation of car production from the beginning and insisted on completing incomplete cars. In a situation where car manufacturers can sell a part of their products at a profit through the commodity exchange, the government has gone towards increasing production.
Karimi also believes that the 30% supply of cars in the commodity exchange cannot cover the increasing losses and costs of car manufacturers. In this regard, he says that if the commodity exchange is to be successful, all the products of car manufacturers should go to the commodity exchange and be offered in this way. He emphasizes that even if the law says that 50% of car manufacturers’ production should be spent on the policy of increasing fertility, in a situation where the situation is out of control, the parliament as a legislative body should step in and prevent its implementation. He emphasizes that all car manufacturers’ products, regardless of what the law says, should be sold on the commodity exchange so that the success of this mechanism can be announced in covering the losses and the growth of car manufacturers’ costs. According to his belief, we should not use an implementation method incompletely.
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