Iran Khodro (IKCO) expects to finalize a deal with Nissan Motor Co for production of low-budget Datsun cars, the largest Iranian automaker’s CEO Hashem Yekezare says.
"We will enter into a contract with Japan’s Datsun in the next few months,” he said of the revived Nissan brand during a meeting with a group of media executives in Tehran.
The contract will be signed before the end of the current Persian year in March 2018, Yekezare said.
Nissan has already said it would send so-called knockdown kits, to be assembled locally, rather than finished autos to Iran and that the automaker was looking to export kits for several thousand vehicles a year.
IKCO’s talks with Nissan for production of affordable cars of high quality began in early 2016, with the Iranian automaker targeting Datsun cars in the price range of $11,500.
The production of Datsun cars can potentially enable IKCO to phase out its dilapidated models in the same price category including the Peugeot 405.
Datsun is a resurrected brand targeting emerging markets. Nissan quit using the Datsun brand in 1981 but revived the nameplate in 2013 for increasing sales to Indonesia, India and Russia.
Massive auto market
Iran is the Middle East’s largest auto market with a population of more than 80 million who are estimated to buy more than 1 million cars in 2017.
The automobile industry is seen as Iran’s biggest non-oil sector, accounting for nearly 10% of the country’s gross domestic product (GDP). Iran Khodro and Saipa companies account for more than 90 percent of the total domestic production in Iran.
According to Yekezare, Iran levies tariffs of 40% for imports and 26% for production, which means Iranian customers have to buy the imported cars at bloated prices. Officials say the tariffs are needed to protect the domestic automotive industry, which is the largest in the Middle East and North Africa.
Iran’s automakers have been approaching Honda, Toyota and Mitsubishi in the hope of transferring Japanese technology.
Mitsubishi Motors’ plug-in hybrid Outlander SUV is expected to hit Iranian roads as early as fall, Japan’s largest financial daily the Nikkei reported earlier this month.
The redesigned Outlander, which curbs use of the conventional engine in favor of the twin electric motors, will be built in Japan and shipped to Iran, it added.