Ambitious plans to build a swage of Fiat models in Iran through a local joint venture operation are finally coming to fruition according to national media sources.

The project, which was first unveiled two years ago, saw a agreement between Fiat and the Pars Industries Development Foundation (PIDF) to create a joint venture project in Iran, known as Bonyan Auto. In early 2003 almost a hundred of Iran's top managers in industry joined Mr. Manouchehr Gharavi to establish PIDF, a holding company with long-term plans to produce 1 million cars a year and boost Iran's position as a global vehicle manufacturer. Already Iran is well inside the top-20 biggest car making nations.

The partnership between Fiat and PARS called for the Iranian partner to invest 200 million euros in a new factory with a production capacity starting at 100,000 cars a year, but rising in stages to 250,000. A whole swage of models were earmarked for local production including the Palio, Siena, Strada and the Palio 'Adventure', and an ambitious plan was also floated to make the country a 'hub' for the manufacturing of Fiat's CNG (Compressed Natural Gas) powered models, starting with the Multipla and Doblò. This last concept slotted neatly in with the Iranian government's wish to purse other technologies to reduce Iran's dependence on oil. Initial local content was targeted at 35 percent, and at the signing ceremony in February 2005 Tehran the-then Fiat Auto CEO Herbert Demel said: "This initiative is important because it forms part of our strategy for strengthening Fiat Auto’s presence in markets with a high growth potential in the automobile sector." He also added: "Our goal is to transfer modern technology to Iranian automobile industry."

At the signing ceremony Manouchehr Gharavi, the Chairman of PIDF said: "Thanks to our cooperation agreement, Fiat is back in our country after 50 years. We are delighted to be adding Fiat automobiles to our factory and introducing its successful models to the Iranian market. Fiat is one of the most prestigious names in the automotive industry. It has consistently developed cars that have been affordable, practical and have greatly contributed to the motorisation of entire countries.
 

"Fiat is a world leader in the area of bi-fuel vehicles and its technology in CNG engines, which have great potential especially in the Iranian market, is second to none. Our plans call for establishing an important and consistent market share in Iran. Furthermore, our new venture is destined to play an important role in the expansion of Iran’s automotive supplier industry, further enhancing its expertise as it joins Fiat Auto’s worldwide suppliers’ network," added Mr Gharavi.

However  only very sporadic news has been heard of the project over the last two years; but with problems reportedly having been resolved, the first projected car, the Siena, is expected to roll off the production lines as early as October. Fiat's Turkish joint venture partner, Tofas, has been logistically involved in the project. The company says it will begin by building taxi versions of the Siena and ambulance versions of the Doblò, adding other models to the mix as it progresses and with investment still set to hit around 200 million euro mark. The cars are expected to cost between 90 to 170 million rials.

The Iranian car industry is growing steadily; the market's best-selling model is the locally-built Kia Pride. Iran Khodro is the major domestic car maker, with a majority share of the market. It produces a diverse range of model including a local-built car, the Samand, which is closely based on the Peugeot 405 and which exported to selected countries; last year it also started building the Renault/Dacia Logan. The Iranian government has recently become involved in a new high-profile joint venture, setting up a car factory in Venezuela to build the Samand. This model is also assembled in Belarus and Azerbaijan, and further countries are expected to build it in the near future. Due to high import tariffs Iranian manufacturers assemble a wide range of cars under licence; these including models from VW, Nissan, Renault, Proton, Hyundai, Suzuki and Citroen.