Iran's carmaker kills cheapest car model, send market into turmoil

TEHRAN, Iran, July 29 Trend: The production capacity of Iranian automakers couldn't provide for alternative vehicles of cheaper models, so some production lines have been limited this year, car market expert Amir Hossein Kakaei told Trend. Previously, Iran's giant carmaker SAIPA has decided to halt production of its cheapest model - "Pride". "In critical situation, it's better to compensate for losses than increasing profits, so the auto industry is seeking to improve safety and reduce emissions. But first thing to be done is to prevent losses," he said. "One of the biggest mistakes was to eliminate production of Pride and Peugeot 405 models since there are no alternatives for these two vehicles," he said. "An alternative for Pride should have stronger and safer engine, which means higher price, so there would be no economic sense in it, as Pride has been in production for over 25 years with minimum costs," Kakaei said. "The concept of a cheap car has its specifics. For example Tata Motors has produced the cheapest vehicle valued at $2,200 but it failed to attract customers in India," he said. "Pride in Iran is similar, but having a cheap car with good quality is impossible," the expert said. "Many have said that the auto standards should increase but when the purchasing price is down, increasing quality means increasing prices, so now either individuals should buy old cars or motorbikes that are more risky than profitable," he said. Kakaei also pointed out that increasing the auto standards to Euro-5, also means increase in auto prices, and this means further losses for the country in the current economic situation. "This would challenge the market and eventually people would turn to used cars and motorbikes," he said. "Peugeot 405 was the cheapest and safest vehicle but it's production was eliminated due to engine and body problems. Meanwhile, 'Tiba' model is an alternative to 'Pride' , and it has a higher price and its spare parts are ten times more expensive," Kakaei said.