Fiat, IKCO Exploring Deal

Fiat, IKCO Exploring Deal Fiat, IKCO Exploring Deal

Iran Khodro Company, the country's largest and oldest car manufacturer, hosted a 12-person delegation from Italy's Fiat this week in Tehran.

The Italian delegation visited production lines at IKCO's manufacturing site in western Tehran. It is also expected to visit another production line in Neyshabour, Khorasan Razavi Province, in northwestern Iran, Fars News Agency reported this week.

The official tour aims to assess the Islamic Republic's production capability and further develop relations.

The managing directors of both companies will discuss future cooperation at Iran Khodro's main plant as part of their negotiations. The report states that at present, the talks will not discuss the production of specific models, although IKCO has proposed that Fiat produce economy-class cars as replacement for the popular age-old sedan Peugeot 405.

Previously, Fiat was touted by the head of the Iran-Italy Chamber of Commerce, Ahmad Pourfallah, as the "fourth international carmaker entering Iran", to which Fiat's Corporate Communications Manager Claudio D’Amico responded to the Tribune by saying: “FCA declines to comment on rumors from Iran."


  Nissan May Play Role

Fiat may not get its own way however, as in the past few months, IKCO announced repeatedly it would select its fourth foreign auto partner in the near future and recent updates suggest Nissan is set to take that role.

According to Eghtesad News, the Japanese company has also been in talks with IKCO to produce cars that feature the latest technologies and are no more expensive than 400 million rials ($11,400 at market exchange rate).

However, some critics of joint ventures and projects for assembling Complete Knocked-Down cars in Iran are of the opinion that selecting multiple business partners is not the ideal choice for Iran's auto sector. They state that the local industry will become overly dependent on foreign manufacturers and not invest in their own models to name a few reasons. These experts suggest that, similar to India's approach, Iran should convince Renault to manufacture the economy-class KWID inside Iran. Also, factoring in the average income of Iranian families, other foreign companies that agree to produce here should make cars that can be purchased by the lower and middle class.