Iran - Cars In Exchange For Oil!
With Iran cut off from most international economic markets, China has stepped into the gap to provide consumer items such as cars in exchange for oil. Chinese car brands such as Geely and Chery are expanding imports and dealerships in the country and Chery is now manufacturing some of its budget model line up in Iranian factories.
With Iran cut off from most international economic markets, China has stepped into the gap to provide consumer items such as cars in exchange for oil. Chinese car brands such as Geely and Chery are expanding imports and dealerships in the country and Chery is now manufacturing some of its budget model line up in Iranian factories. Whether it is a good deal or not for the Iranians remains open to question but with the sale of western marques restricted by import sanctions, the Chinese manufacturers are fast becoming the only game in town.
Until recently Renault's Megane was a popular option for the Francophile locals but due to restrictions it now sells for £22,000. Spare parts for the cars are now becoming scarce and Chinese manufacturer Geely is capitalising on the situation by offering its cars at price points about 10% less than the French hatch. Although cheaper and more available, it is questionable whether quality levels are comparable, with one disgruntled Iranian financial expert claiming: "It's an appalling car." It seems though that the Iranians have little choice and instead of hard cash China is bartering its questionable quality cars in return for the Iranian oil its economy so desperately needs.
China imports more than 440,000 barrels of oil each day from Iran and is the country's largest trading partner by a considerable margin. That situation is not likely to change as further US sanctions imposed on February 6th make it even more difficult for Iran to do business elsewhere. These sanctions restrict Iran's ability to get cash for its oil and the Chinese barter deals represent a method of getting around the currency restrictions. The barter deals have extended to all sorts of consumer goods but local economists are concerned that these deals are to the detriment of Iranian manufacturers.
Cheap imported Chinese consumer goods are beginning to fill Iranian stores, pushing out locally made products as indigenous companies struggle to compete on price. Currency restrictions have caused the value of the Iranian Toman to plummet against foreign currencies, making non-Chinese imports of raw materials too expensive and pushing up the price of Iranian manufactured goods to the point where they are uncompetitive with the Chinese offerings. Iranian businessmen are also complaining that often the goods arriving from China are not the same as those that have been ordered and quality levels are unacceptably low. Perhaps something similar to those imported vehicles which are now cramming the streets of Tehran?
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