Iran's largest vehicle manufacturer, Iran Khodro Company, has signed a contract with an Algerian private company to set up a production line and exchange technical and engineering knowhow.
According to the local automotive news website Asre Khodro, the Iranian partner will not have to provide direct investment for operating in Algeria.
The report explains that IKCO's latest strategy is to expand its operations overseas.
Saeed Tafazzoli, the company's export deputy, stated that during the first phase, IKCO will export a range of its products, including Dena, Runna and Arisun pickup, as semi knocked-down kits to be assembled in Algeria.
"The line will begin operating late in January," he said, adding that the annual production capacity at the manufacturing line in Algeria will be 10,000 units.
The official noted that the Algerian partner has placed an order for 15,000 units.
To cover the order, IKCO will first export 1,500 Denas and the rest will be sent as SKD kits.
"Our Algerian partner, Famoval, has also invited IKCO to set up a complete production line, including a paint line system, body works and assembly line. Famoval will provide the needed investment and the project is expected to be completed and begin production by 2017," he said.
Tafazzoli further said that in order to share the knowhow, IKCO's specialists and engineers will hold training courses for the local workforce.
The production line will be located in the province of Relizane in northwest Algeria.
According to Tafazzoli, this will help ease exports to the north and northwestern regions of Africa.
IKCO is not the first Iranian auto company to set up a production line in Algeria. In November 2015, SAIPA, Iran's second largest carmaker, also signed a deal with Algerian business partners.
"SAIPA's production line will become operational by 2016 and produce 20,000 units annually," Mohsen Dastkhosh Javan, the company's exports deputy, was quoted as saying by IRNA.
Algeria has a long history of building cars of other countries. Historically, as the country was linked to France from 19th century onward, French technology has had a strong presence in the country.
Iran's vehicles, too, are based on French technology, which helps make the transfer of knowhow from Iran to Algeria less complicated.
Earlier this year, Algeria also signed contracts with Peugeot to produce complete knocked-down vehicles in the market, which was signed by MEDEF, the French national industrial organization.
