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Auto imports resume in Iran new rules resemble a ban

Auto imports resume in Iran new rules resemble a ban

TEHRAN: After months of squabbling over shutting down the online auto import registration system by the government, the website resumed work on Sunday. As per law, after getting auto import permits from the Industries Ministry, local firms must also register online with the Trade Promotion Organization separately for every single unit.

According to the website of the Cabinet, the government passed an amended version of auto import rules on Saturday, according to which, depending on engine capacity, import tariffs on gasoline-fueled vehicles have increased 15-40%. Furthermore, while most governments are offering incentives to promote use of and create interest in hybrids, the customs duty in Iran for hybrid gasoline-electric cars has been increased significantly from 4% to 45-65% depending on the vehicles gasoline engine capacity. According to the new rules, vehicles costing more than $40,000 are barred from entering Iran. The cap includes the vehicle’s transportation costs. Moreover, henceforth instead of the previous CIF (Cost, Insurance and Freight) method to calculate the customs duty, the CFR (Cost and Freight) system will be applied. A list of models that can be imported has been published on the TPO website. It includes BMW, DS, Hyundai, Toyota, MG, Borgward, Renault, SEAT, SsangYong, Foton, Citroen, Volkswagen, KIA, Mitsubishi and Nissan.  Two luxury cars popular with those who can afford it, Mercedes-Benz and Lexus, are not on the list.

The new ruling bans import of cars with engine capacities over 2.5 liters. However, the government reserves the right to wave the general ruling “in special cases.” It is not clear who will benefit from the special cases. Foreign carmakers manufacturing in Iran and their local partners get 20% off on duties if they decide to import cars. Iran Khodro is certain to exploit this clause. The company already imports two Peugeot models namely 508 and 301 through a deal with the French automotive company. Among other restrictions, the new rules say importers must sign “official representation deals” with the parent company and offer after sales services in Iran. Previously, importers were allowed to bring vehicles if they had an agreement with the parent company or its official distributor. This clause can limit the range of vehicles entering Iran because many foreign carmakers are reluctant to have any financial deals with their Iranian partners due to the US banking restrictions. Moreover, grey importers are back in business but must have an agreement with the “brands’ official importer”. Through the agreements the grey importers are required to pay the “official distributors” to offer after sales services on their behalf.

Overheads of bringing vehicles into Iran do not end with tariffs, state and government bodies have a share in the lucrative business. An importing company or the car buyer must also pay extra charges, taxes and other overheads before the vehicle is ready for the road.