Azerbaijan to Be Regional Iran Khodro Hub

The Azerbaijan Republic may soon turn into a regional automotive hub, as interest from foreign car manufacturers continues to rise.

Being a favorable platform for major automakers, the sister country to Iran is now enlarging its car production and encourages foreign investments, especially from Iranian car companies.

Azerbaijan imported 3,454 units of cars in January-August 2016, which is 17,693 units less or some 83.67%, year-on-year. The significant drop in imports is mainly due to the switch to the Euro-4 engine standard in 2014.

At present, only cars produced in the EU since 2005, in the US since 2004, in China and Japan since 2011, in South Korea since 2006 and in Turkey since 2009 can be imported into the country, Azernews reported.

These countries have already made investments in the development of automotive industry in Azerbaijan.

Iranian multinational giant automaker Iran Khodro is currently engaged in the implementation of an automotive project in Azerbaijan.

The project, which is implemented jointly with Azerbaijan’s AzEuroCar LLC, will be located at Neftchala industrial district and cover an area of 10 hectares. The total cost of the plant is $15 million, while some 25% of the cost will be provided by the semi-state-owned Iranian company.

Based on the joint venture, 20% of the manufactured cars will be exported to regional markets, but it is not clear whether some of those models would make it back to Iran, considering Iran Khodro’s manufacturing base in Tabriz.  

The cars produced at the plant will meet Euro-5 standard, including Dena, Runna, Soren and Samand models.

The Azeri company said the Neftchala factory would have a capacity of 10,000 cars a year when the plant opens in May 2017.

Meanwhile, the Chinese are getting in on the act with a Lifan factory in the semi-autonomous Nakhchivan region, just north of the Iranian border.

The capacity of that plant is 5,000 units per year.

However, due to a series of setbacks, the site has not produced vehicles for regional sales. Also, the disputed nature of the territory may make it difficult for the Chinese JV to ship out their vehicles.