Why not allowing private sector to enter the car market?

August 2, 2022 - 11:49

It has been proven that the government is not successful when it comes to business and economy. Nobody can dispute this fact.

Iran started a gradual process toward privatization in the years after the war against Iraq which ended in the late 1980s. The privatization plan was intended to expedite under Article 44 of the Constitution.

However, Iranians do not have a good experience with privatization. Most probably, the chief reason is that privatizations did not or are not taking place in a competitive and transparent manner.

Despite this bad experience, it is essential that the government allow the private sector to enter the car market and put an end to the monopolization by Iran Khodro and Saipa, which their substandard cars have wasted billions of dollars due to fuel inefficiency coupled with a lack of enough safety.

The car market is highly lucrative for the private sector. This time the government is not going to sell Iran Khodro or Saipa to the private sector. It must only allow the private sector to establish companies to manufacture their own brands. Except for setting certain rigid standards, the government should not interfere with their own management systems.

Also, it is important that the license to produce cars not be given to applicants or companies connected to top officials or centers of power. If this is not observed strictly, it will also prove a failure.

The government must also give priority to the production of electric vehicles (EV) as such cars are taking the center stage in the world. Just as in previous years that the government allowed persons who had a certain amount of money to establish banks, such a mechanism can be applied to the production of cars.

If the private sector starts to produce electric passenger cars, then conditions will be provided to gradually free the price of gasoline.

In that condition, the current car companies, which have monopolized the market, will be forced to either adapt to the new situation and make a transition to zero-emission vehicles or close down.


 

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