By Ladane Nasseri

Source:

October 11, 2010

Iran Khodro, the country’s largest automaker, plans to open a second assembly facility in Senegal in November, part of a broader push into other emerging markets including Venezuela and Turkey.

Iran Khodro wants to use the West African nation as a base from which to export vehicles for sale elsewhere in the continent. The company’s Africa strategy fits with its ambitions in South America, where it is in talks to quadruple the number of cars it assembles each year at a plant in Venezuela. Iran Khodro also wants to form a joint venture in Turkey to build a car to be marketed in Islamic countries.

The new operation in Senegal will be “complete and comprehensive,” said Mir Javad Soleimani, Iran Khodro’s deputy chief executive officer for quality and product development. “We will be able to produce all the vehicles that can be supplied to central African states,” he said in an interview yesterday at the company’s headquarters outside Tehran.

Iran Khodro has invested $60 million in the facility, which will be able to produce as many as 15,000 vehicles a year. Nigeria, Africa’s biggest country by population, is a potential market for vehicles assembled there, said the company’s export deputy, Yaser Seifvand.

Iranian President Mahmoud Ahmadinejad said on Sept. 14 that he saw “no limits or restrictions” on Iran’s cooperation with Africa, describing African nations as “friends and brothers.”

Two U.S. Foes

In Venezuela, Iran Khodro aims to boost production four-fold to 60,000 cars in its joint venture with the government of President Hugo Chavez, in a sign of strengthening commercial ties between two U.S. foes.

Venirauto Industrias CA is owned by the Venezuelans, Iran Khodro and the Saipa Group — Iran’s second-biggest carmaker. The South American plant’s current annual output is 16,000 vehicles, Seifvand said.

“We are still at the initial stage and need to reach our full potential at this site” in Venezuela, said Abdolazim Sadian, Iran Khodro’s deputy chief executive officer responsible for exports. “We have suggested a plan and are waiting for feedback from the other party.”

Sadian declined to quantify the amount of investment needed for Venirauto to expand, saying that the joint venture’s owners were in talks about this. Sadian and Seifvand did not specify the respective shareholdings in the car-assembly project, which the two countries set up in 2006.

Five-Speed ‘Centauro’

Venirauto assembles Iran Khodro’s Samand LX passenger car, a five-speed, manual-transmission model that sells in Venezuela as the Centauro. The plant also makes a Saipa car with a 1.3- liter gasoline engine that it markets locally as the Turpial.

Iran’s ties with Venezuela have intensified since Iranian president Mahmoud Ahmadinejad took office in 2005. Iran and Venezuela are members of the Organization of Petroleum Exporting Countries, and both have long sought higher crude oil prices. Ahmadinejad and Chavez favor populist economic policies and have used their nations’ oil wealth to pay for social programs.

The two presidents are also outspoken critics of U.S. foreign policy, which they characterize as imperialistic.

Iran faces four separate rounds of international sanctions because of its nuclear energy program, which the U.S. and many western nations suspect of concealing efforts to develop technology for nuclear bombs. Iran’s government says its nuclear program is for civilian purposes.

Power Outages

Soleimani said Iran Khodro’s second Senegalese plant will assemble the company’s Samand and Suren models, and also tractors, under a contract with another company. The facility’s location outside the capital, Dakar, must rely on electric generators because local power supplies are inadequate, Soleimani said.

“We hope electricity shortages can be overcome so the plant gets started according to plans,” he said.

Iran Khodro, founded in 1962, produced about 680,000 vehicles in the last Iranian calendar year that ended on March 20. The company, which also assembles vehicles in Syria, Belarus and Azerbaijan, plans next to discuss a venture with Turkey.

“An economic and industrial delegation will come within two weeks to Iran to start initial negotiations,” Soleimani said. “If we reach an understanding we will begin producing an Islamic car.” The new automobile “will be a brand specifically for Muslim states,” he said. “We will target their markets.”

Iran had sought to pursue a similar project with Malaysian state-controlled carmaker Proton Holdings Bhd.

“Proton pulled out and we are now looking into this with Turkey, which is interested,” Soleimani said, without giving the reason for the Malaysian company’s decision.

Iran’s government has started to sell shares in Iran Khodro and Saipa Group on the Tehran Stock Exchange, as part of a wider plan to privatize major state companies and boost the economy.

Iran produced 1.39 million vehicles in 2009, making it the world’s 12th-largest carmaker, according to the Paris-based International Organization of Motor Vehicle Manufacturers.

–Editors: Bruce Stanley, Inal Ersan