An Engine of Inequality: The Unaffordable Car Market in Iran

The cost-of-living crisis in Iran is exacerbated by the automotive market, which has been described as a “mafia” system where protected state-linked businesses collude to transfer costs onto households. This has made buying a car nearly impossible for even those with decent salaries.

Hossein, a 32-year-old marketing specialist in Tehran, earns around four-and-a-half times the minimum wage but cannot afford a new car – not even one made domestically. The prices are staggering: an upgraded Peugeot 207 with an automatic gearbox costs over 28 billion rials ($12,170), requiring Hossein to save more than two years’ worth of his salary just to afford it.

Domestic car prices have risen by as much as 130% since the start of the war with the US and Israel, while some vehicles sell for double their original price. The costs of maintaining these cars are also skyrocketing: domestically produced tyres, motor oil, brake pads, and clutch kits have at least doubled in price over the past year.

The situation is not just about affordability – it’s also a safety concern. Domestic vehicles have notoriously low safety standards, contributing to staggering road accident deaths. At least 1,609 Iranians have been killed on intercity roads so far this year, with over 20,000 people losing their lives on the roads every year.

Experts point to a combination of factors: protected state-linked businesses, privileged access, economic isolation, and a curtailing of imports. The war has only added insult to injury, with the naval blockade preventing goods from entering the country.

Domestic vehicle manufacturers have little incentive to improve quality or reduce prices, as they rely on government protection and high profit margins. End customers are forced to pay exorbitant prices for low-quality cars, with real prices often a quarter of global prices. This is a direct harm done to households, who bear the brunt of a system designed to enrich a select few.

Mohammad Rashidi, a member of parliament’s presiding board, was quoted in local media saying: “People are forced to buy expensive low-quality cars whose real prices should be a quarter of global prices, and this is a direct harm done to them.”

The government has discussed lowering import tariffs, but no agreement has been announced. Meanwhile, the premiums on high-end cars are eye-watering – a 2026 Toyota Land Cruiser VXR costs approximately $287,000 in Iran, while the same model can be bought for around $86,000 in the UAE.

The unaffordable car market in Iran is not just a symptom of a broader economic crisis; it’s also a reflection of a deeper problem: the concentration of power and wealth among a select few. The government’s failure to address this issue has only exacerbated the situation, leaving households to struggle with exorbitant prices and low-quality vehicles.

Unless the government takes concrete steps to address the root causes of this crisis – including the protection of state-linked businesses and the curtailing of imports – the automotive market will continue to be a source of inequality and suffering. The situation demands a fundamental rethink of economic policy, one that prioritises people over profits.