SAIPA backtracks on sudden price hike

Financial Tribune- Over the weekend SAIPA car company jacked up the price of the locally-assembled KIA Cerato by 14% announcing that henceforth the model costs 1.18 billion rials ($28,200), 140 million rials ($3,300) dearer than the price last week.

However, on Saturday, the company’s newly appointed chief Mohsen Jahrodi backtracked on the move saying, “The model’s price will not be increased.” At the time this report went to the print, SAIPA’s online news outlet and sales website were down. Earlier in the day, Cerato was removed from SAIPA’s sales website.

This would have been the second time over the past two months that the government-backed company increased the price of the sedan following a 50-million-rial ($1,200) hike in November. Strangely, but not surprisingly, the carmaker is accountable to no authority or oversight.

The move even shocked its own dealers with one telling the Tabnak news website that, “Normally when SAIPA planned to increase prices, before making it public it would inform its official dealers through internal communication. The sudden recent hikes have surprised dealers and customers.”

Speaking on condition of anonymity, he added, “No reason for the unexpected hike has been announced. However, the rising prices of imported cars in the local market could be one of the reasons.”

The prices of imported cars are going through the roof and are rising on a daily basis. In some cases prices have shot up by 280 million rials ($7,000). There also are unconfirmed reports that some cars have become dearer from anything between 20 to 40%. There are strong rumors that the Ministry of Industries is planning to increase auto import tariffs by up to 100%.

However, auto part imports tariffs (currently 15-20%) will not be increased and the government’s supposed plan to raise car import tariffs has absolutely nothing to do with SAIPA’s assembly of Cerato.

Another SAIPA dealer told the Financial Tribune that the increased price might be due to “the soaring foreign exchange rate.” The price of the US dollar has increased by 7% over the past two months with the currency gaining 3,000 rials in less than 60 days. The greenback now changes hands in the open market in Tehran for 42,000 rials.

The same dealer, however, fails to mention that the parts used in the locally assembled Ceratos were imported months (probably years) ago when the foreign exchange rate was significantly lower.

Ads for the model published in local newspapers on Saturday, without mentioning the sudden hike in the price hint that “the model has been upgraded”. However, it is not clear why adding a simple sunroof and an LCD panel would or should merit a 14% ($3,300) increase in the price. Maybe this is a mystery only SAIPA and its conceited managers can solve!

During the eight months to Nov. 21, the company assembled 17,406 units of the South Korean model. SAIPA’s Cerato is an old version of the model designed in 2010. Currently, the imported 2017 model produced by Kia Motors is available in the local market for 1.7 billion rials ($41,000). In the international market, the same car has few buyers even at such low prices as $20,000 to $34,000 depending on options.

Voracious auto dealers and carmakers with no regard for consumer rights have fleeced car buyers in Iran for decades and the current chaotic state of the market has many precedents. However, in its latest and twisted ways SAIPA has devised new shenanigans to exploit the market.

In a market afflicted with a growing price bubble and few days after jacking up the price of the Cerato, the company announced a “special sales plan” for the model with much pomp and show. Through the scheme it calls “special limited sales”, SAIPA has started offering the model with an 85-million-rial ‘discount’.