Iran's Competition Council, the body responsible for setting vehicle prices, gave the go-ahead last week to domestic carmakers allowing them to increase car prices.

The council announced that local automakers may increase the price of cars sold for less than 400 million rials ($11,500) by 1.5%.

It did not set a price for Tondar L90 (known globally as the Dacia Logan) and Dena, leaving them open to market forces.

IKCO's Peugeot 206, Peugeot 405, Peugeot Pars and Samand as well as SAIPA's Tiba and Pride fall in the above price range. All of which, due to the affordability factor but not cheap by world standards, are top-selling cars in the Iranian market.

According to Eghtesad News, a look at the websites of the country's largest auto manufacturers reveals that they have refrained from hiking the prices since the announcement was made by the oversight body.

Given the stagnant state of the auto market, not only have the auto manufacturers not increased car prices, but they are also making special offers to attract customers, with some paying customers up to 28% monthly interest on their down payments until the car is delivered (new cars are not usually immediately available).

Oddly enough, customers who place an order via the Internet receive less interest than those who make a purchase through an official showroom. Many of these showrooms have been touting their wares by putting up red banners highlighting 28%.

Recently, carmakers started making special offers to mark national or religious occasions such as the anniversary of the liberation of the southeastern city of Khorramshahr during the Iraq-imposed war on May 22.

Despite the fact that those occasions have passed, the special offers remain valid on the companies' websites.

In the unstable economic situation of the past few years, Iran's leading carmakers repeatedly sought the Competition Council's permission to increase prices, which were rejected on the grounds that the cars were already overpriced.

Currently, however, the carmakers have taken notice of the coming competition from foreign brands setting up joint ventures in Iran. Hence, the carmakers have not only refused to increase prices, but are also offering attractive discounts to lure customers.

By Financial Tribune