Iran, Turkey to cooperate on cars and trips to space

Islamic Republic seeks help for struggling, fledgling automobile industry and space program in its infancy from friends in Ankara.

By ADAM GONN / THE MEDIA LINE
September 20, 2010 12:39
2 minute read.
ahmadinejad erdogan 248 88 AP

ahmadinejad erdogan 248 88 AP. (photo credit: )

Iran has invited Turkey to jointly produce a car and cooperate in the development of Iran’s space program, the Iranian Labour News Agency reported.

Iranian car maker Iran Khodro plans to open a joint production plant for its ‘D8’ model with Turkish auto manufacturer Tofas. A delegation from Tofas is scheduled to leave for Teheran shortly to close the deal, and production is expected to start in two to three years

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The car, D8, is the namesake of an economic cooperation organization made up of Iran, Turkey, Pakistan, Bangladesh, Malaysia, Indonesia, Egypt and Nigeria. The D8 countries will be the car’s principal market.

The news came as Iran has also invited Turkey to take part in its space program, which aims to have a man in space by 2017, the Turkish newspaper Haberturk reported.

Iran’s space program is in its infancy, and to date has only test launched a satellite rocket. Turkey has not formally replied to the offer.
   
But while trade between Turkey and Iran has risen from $1.2billion in 2002 to $10 billion in 2010, analysts said the new car deal was less a sign of warming relations than a sign of bad times for Iran’s fledgling car industry.

“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.

“The problem with Iran Khodro is not the market… where you have to pay 110 percent or higher custom tax for imported cars,” he said. “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 Company was founded in 1962 under the name Iran National and its first model was the Paykan. Today Khodro controls 65 percent of the local car market.

Over the years the company has signed a number of deals with the French car giant Peugeot to produce several of its models under a different name. For example the Samand, sometimes referred to as the Iranian national car, is based on Peugeot’s mid-size 405 model. 

Yusuf Kanli, former chief columnist of the Turkey Daily News and an expert on Turkish politics, said the new deal should not be seen as Turkey turning its back on Europe.  

“I don’t think Turkey will be leaning away from the west any time soon,” Kanli told The Media Line. “It’s about business.”
   
Iran has been facing increased sanctions from the United Nations over the nature of its nuclear program, which according to Kanli is affecting Turkey as well.

“Any sanctions against Iran will hurt Turkey equally,” he said.


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