Soaring Car Prices in Iran Leave Drivers Stuck With Old, Unsafe Vehicles

Tehran — Hossein, a 32-year-old marketing specialist in Tehran, has long planned to replace his 13-year-old domestic car. Despite a recent pay rise that put his take-home pay at roughly 900 million rials a month (about $390 at current rates) — roughly four-and-a-half times the minimum wage — newer vehicles remain out of reach.

Imported cars are effectively unaffordable for most Iranians, and even some locally produced models now sit beyond ordinary budgets. "I'm losing hope of ever being able to buy a new domestically produced car too, unless the country opens up and becomes a bit more normal again," Hossein, who requested his family name be withheld for security reasons, told Al Jazeera.

Costs and Calculations

Hossein's old manual Peugeot 206 — originally a French model but now produced in Iran after foreign partners withdrew under sanctions — could fetch up to 10 billion rials (about $4,350) if sold toward an upgrade. But a slightly upgraded Peugeot 207 with an automatic gearbox currently lists for roughly 28 billion rials (about $12,170). Even after selling his car, Hossein would need more than 20 months of his full salary to cover the difference.

Other domestic models are costlier: a Shahin sedan is priced at more than 31 billion rials (around $13,480) and a Reera crossover costs over 43 billion rials (about $18,700). At those prices he would need to save roughly 24 months and 37 months of his entire salary respectively — assuming prices remain stable and he spends nothing on living costs.

Rising Prices, Rising Costs

These figures come amid rapidly rising living costs and stagnant or slowly growing incomes. Domestic car prices have risen mostly between 40% and 80% since the outbreak of war in February, and some models now sell for more than 130% of their September 2025 prices. Maintenance costs have climbed even faster: locally produced tyres, motor oil, brake pads and clutch kits have at least doubled in price compared with a year ago, and some spare parts have more than tripled.

Safety, Pollution and Economic Drivers

Domestic models are widely criticised for low safety standards, a factor that contributes to a high toll on Iran’s roads. Officials report at least 1,609 deaths on intercity roads in the current month of Shahrivar (which ends on September 22), and annual road fatalities exceed 20,000 people — far higher than in the European Union despite the EU's roughly fivefold larger population.

Many locally produced cars are fuel-inefficient, worsening urban pollution and increasing running costs as petrol prices rise. Experts point to a combination of protected, state-linked businesses, privileged access for a few importers, economic isolation, import curbs and opaque market practices as reasons households must pay high prices for low-quality vehicles.

Supply, Imports and Industry Strain

Conflict damage — including strikes against industrial sites — and a naval blockade of southern ports have disrupted supply chains and limited access to parts and finished vehicles from regional markets. Production figures reflect the strain: state media report about 233,000 cars were manufactured or assembled in Iran in the first five months of 2026, down from 366,000 a year earlier; only around 25,000 vehicles were imported in the same period.

Only a small number of state-linked companies and intermediaries are permitted to import vehicles, and combined duties and value-added tax can inflate final prices by as much as 200%. Government and parliamentary discussions about lowering import tariffs have not yet resulted in an agreed change.

High-End Disparities and Public Frustration

Price disparities are particularly stark for high-end models. A 2026 Toyota Land Cruiser VXR sells for roughly 660 billion rials (about $287,000) in Iran, while the same car is priced at approximately $86,000 in the UAE. A mid-range Chinese SUV marketed internationally as the Exeed VX lists for about $32,000 in China and about $42,000 in the UAE, but an Iranian-assembled version currently costs the equivalent of roughly $53,000.

The paradox was visible at a three-day "international" car exhibition in Tehran that largely showcased Chinese models. Many manufacturers and importers were absent either because they had no stock or because customers who registered months earlier had not received vehicles. Spare parts for some models are unavailable locally or sell for multiples of their international prices.

Even the cheapest cars on display were unaffordable for the average Iranian. Organisers said an XPENG G9 electric SUV was listed at 120 billion rials (about $52,150). A worker on the minimum wage would need around 50 years of wages to buy that vehicle without spending on food, housing or clothing. Still, queues formed outside the exhibition centre each day — many visitors came simply to look at vehicles they knew they could not buy.

"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," said Mohammad Rashidi, a member of the presiding board of Iran's parliament. "The traces of a mafia system are visible throughout the process."

Consumers continue to face currency and financing costs, heavy government charges, margins added by opaque intermediaries and, in numerous documented cases, corruption — all of which compound the affordability crisis and reduce incentives for domestic producers to improve quality.