Iran Invites Turkey to Jointly Produce New Car, Cooperate in Space

The Iranian Labour News Agency (ILNA) is reporting that aside from inviting Turkey to take part in its space program, which aims to put a man in space by 2017, Iran has also started talks with Turkey to jointly produce a new car named the "D8". According to the news agency, the announcement was made by Iran Khodro Co. (IKCO) Managing Director Mohammed Javad Najmeddin.

The car is named after the Developing Eight (D-8), a group of emerging countries with large Muslim populations that have formed an economic development alliance, which include the Islamic Republic of Iran Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan and Turkey.

Najmeddin told ILNA that there will be a need to invest around 2 million dollars for a new plant to manufacture the D8. "At first we will negotiate with the Turkish automaker Tofas (Türk Otomobil Fabrikasi Anonim Serketi) which will soon send a delegation to Tehran in this regard," Najmeddin added.

Analysts from Iran claim that Iran Khodro is seeking a deal with Turkey's Tofas not so much to further warm relations between the two countries, but because the company is experiencing economic troubles.

"Iranian car manufacturer giant, Iran Khodro, is experiencing tough times, struggling with government debts and employees unpaid salaries," Emad Honarparvar CEO of Iran's Import-Export Business Directory told The Media Line, a non-profit news organization with media coverage in the Middle East.

"The problem with Iran Khodro is not the market… where you have to pay 110 percent or higher custom tax for imported cars," said Honarparvar. "What Iran Khodro suffers from is mismanagement of resources and high end costs of production for the factory, which makes their profit margin very low. The prices are so high because the government is subsidizing the industry.

"As an example, Hyundai can import cars in Iran, paying 100 percent or even more for luxury cars custom clearance tax," Honarparvar continued, "while Iran Khodro sells cars with less than 20 percent tax. Yet they are still unprofitable!"

Iran Khodro Compan is based in Tehran and was founded in 1962 producing close to 700,000 cars last year (2009). Aside from vehicles with its own badge, the company also builds cars under other brand names including Peugeot and Renault/Dacia, and has plants in Egypt, Syria, Senegal, Venezuela, Belarus and Azerbaijan. The Iranian automaker targets fellow Islamic countries for export including Iraq, Syria and Turkey.

Sources: ILNA & The Media Line