Fiat have come to an agreement with the Pars Industrial Development Foundation, to manufacture and distribute an expanded new range of cars in Iran.

Under the terms of the deal Pars Industrial Development Foundation (PIDF), an Iranian private sector firm, will invest around 200 million euros in a new plant, with Fiat providing "technical and technological support" according to a spokesman. Although any profit sharing arrangement was not hinted at, this deal will ideally suit the cash-strapped Italian firm.

A new factory is under construction and will come into full operation later this year, with seven models scheduled for production. Fiat already build the 'World Car' Palio and Siena models in the country. Initially it is planned to turn out 100,000 cars a year, although the facility will have the capacity to eventually assemble around 250,000 a year.

"The contract was to be signed between the senior officials from the Italian Fiat and the Pars Industries Development Bonyan Company, the agreement is regarded to be a beginning for the joint cooperation between the two sides for the manufacture and development of the automotive side industries" reported the Iranian ISNA New Agency yesterday.

Announcing the deal, Fiat Auto Division CEO Herbert Demel commented that, "the Iranian operation will form part of our strategy for strengthening Fiat Auto's presence in markets with a high growth potential in the automobile sector." Fiat Auto sees Iran as a possible long term regional manufacturing base and PIDF Chairman, Manouchehr Gharavi, announced yesterday that the Iranian company would be joining Fiat's supplier network, a position that could prove to be lucrative.

Iran is currently the largest car manufacturing nation in the Middle East, with several state-controlled industries presently building cars for Peugeot, General Motors, Nissan, and from later this year, Renault.
 

Last year one million cars were assembled, and this figure is expected to rise to 1.5 million in 2006. Car ownership is growing at an electrifying pace, and the automotive supply industry is well placed, currently the national carmakers are sourcing sourcing 80 percent of components from within Iran's borders.

The automotive industry in Iran kicked off in 1957, when a Tehran plant began tuning out Jeep vehicles. However it was during the 1960's that car, bus and truck production really took off. Fiat arrived, along with General Motors, Mazda, American Motors and a host of domestic firms including Iran National, Moratab, Iran Kaveh and Zamyad.

PIDF's new facility will now manufacture the full Fiat 'World Car' range: the Palio hatchback, the Siena saloon, the Strada pick-up and the Palio Weekend and Adventure.

Joining them, will be two bi-fuel 'green' cars: the Multipla MPV and the Doblo LCV. Fiat will monitor these vehicles with a view to expanding the global significance of the venture, while regional synergy will be provided Turkey, the nearest large manufacturing base, which also assembles the Doblo.

The deal fits in neatly with Fiat Group CEO Sergio Marchionne's stated commitment to forming new global relationships for the Italian carmaker, and establishing more cost effective production bases. Fiat presently has manufacturing and assembly operations Brazil, China, Turkey, South Africa, India, Poland and Venezuela.

by Edd Ellison