Consumer Boycott of Iranian Automakers on Social Media

In early August, Iranian internet users of social networking sites (SNS) launched an initiative calling for a boycott of Iran’s two largest automakers, Iran Khodro and Saipa, demanding that they lower the prices of their new vehicles, and calling on citizens to favor Western-made cars instead. This is not the first time that a consumer boycott of Iranian automakers has been organized on SNS. In recent years, several users have launched Facebook pages calling for a boycott of Iranian-made cars due to their high cost and low quality,[1] but these initiatives never achieved the momentum and significant media coverage that the current protest has managed. It can be assumed that this protest gained such strength in the wake of reports that Western automobile manufacturers intend to resume their activities in Iran, following the nuclear deal and the expected lifting of sanctions.

The automotive industry of Iran, which is the largest car manufacturer in the Middle East, accounts for approximately 10% of GDP. Although the sanctions and the economic crisis hit the industry hard in recent years, it did manage to recover after the interim nuclear agreement was signed in late 2013, and production increased by more than 50%.[2] Following the signing of the nuclear agreement in July, European and east Asian automakers have begun exploring opportunities for returning to the Iranian market and establishing manufacturing plants there. If they indeed do this, they can expect to compete not only with the Iranian companies, but also with the inexpensive Chinese automakers who have introduced their cars to the Iranian market in recent years.

The consumer boycott was launched a few weeks ago on Telegram, which is considered the most secure text messaging app for cell phones. It is very widely used by Iranians for whom the network’s security capabilities are especially important given the regime’s efforts to monitor traffic on SNS. The protest included calls for citizens to avoid buying new locally-manufactured cars until foreign cars are imported into Iran. Many text messages circulated claiming: “Automakers must realize that no one will buy their cars after the sanctions are lifted, and European and Korean cars enter the market.” For example, one writer texted that he had planned to replace his car with a new one, but changed his mind because of the boycott initiative.

The protests later spread to users’ comments on news sites. Many users complained not only about the price of locally produced vehicles, which are generally in the range of 20-40 million tomans (about $6,000 to $12,000), but also about their lower quality. One user wrote that the main problem is that 2015 model cars are sold with technologies from the 1990s, while another claimed that new cars require repairs within six months because of poor quality parts. Other users expressed doubts about the success of the protest, and one complained that Iranians actually tend to buy when prices rise, and that they would even buy foreign cars at double the price.[3] Conversely, some responses included calls to extend the boycott to other areas such as housing and food.

In mid-August, the campaign expanded with the launch of a Facebook page “Buying a 0 [km] car is forbidden,” which includes newspaper reports on consumer protests, price comparisons for new cars manufactured by foreign and local companies, and calls for citizens to join the boycott.[4]

Automakers were left with no choice but to respond to the consumers’ protest, even though they rejected the demand for lower prices. Chairman of the Iran Vehicle Manufacturing Association, Ahmed Nematbakhsh, explained that automobile prices depend on fluctuations in foreign exchange rates so lower prices cannot be expected in the near future, and that prices might rise even further. He predicted that the protests would not affect the consumer car market, given that there is no change in the demand for locally-produced cars. Economic commentators also found the expectation of lower prices in the near future to be unrealistic. According to a leading economist, Sayed Laylaz, current economic conditions make it impossible for foreign companies to produce cars in Iran, meaning that there would be no substitute for those manufactured by local companies. Despite this, he did express understanding for the consumers’ protest and blamed their rage on the conduct of the Iranian automakers in recent years. He said that the manufacturers need to apologize to customers for providing low-quality service and not keeping the promises made before cars were sold.[5]

The fact that the protest against the automakers has mostly been conducted using Telegram draws attention to the increasing use of this network in Iran. Roughly five million Iranians use the app, and there was a significant leap in usage last year, mainly due to the technical problems that Iranians encountered using similar cellular-based apps, particularly Viber (which is Israeli in origin).[6] The growing popularity of Telegram in Iran was clearly evident in July, following a slowdown in its browsing speed that lasted several weeks and sparked angry reactions from users. In response, Telegram blamed the slow browsing speeds on local suppliers in Iran who, they claimed, were trying to limit traffic on the network.[7] For their part, Iranian authorities rejected the claims and denied that they attempted to block use of the network.[8]

It is too early to assess whether the consumer boycott against the automakers will eventually lead to lower car prices in Iran. However, representatives of local manufacturers report that since the campaign was launched, sales volume has dropped by roughly 50%,[9] although it is unclear whether there is a direct link between the two. In any case, after years of being denied easy access to Western-made consumer products, Iranians expect that the lifting of sanctions and return of Western companies to Iran will encourage competition in the domestic market and increase pressure on local manufacturers to ensure lower prices and better quality. This is one of the indirect socio-economic implications of the nuclear deal, of a type that usually does not get heard in the traditional media, which tends to focus on security aspects. Therefore, SNS offer a unique glimpse of the direct impact of the nuclear agreement on the lifestyle of Iranian citizens, while allowing the leaders of the protests to maximize the benefit of the change.