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Jointly Produced Iran-Azerbaijan Automobiles Ready To Roll By September

By Yaver Kazimbeyli July 7, 2017

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Iran Khodro's Dena car will be produced at the Neftchala Industrial Park of Azerbaijan

The first automobiles jointly produced by Iran and Azerbaijan will roll off assembly lines and go on sale this September.

"Release of the first cars at the plant in Neftchala is planned for the end of September," said Javad Jahangirzade, Iran’s Ambassador to Azerbaijan, at a press-conference on Wednesday.

Iran’s largest car producer Iran Khodro Company (IKCO) and Azeurocar Limited Liability Company teamed up in 2016 to produce motor vehicles at the Neftchala Industrial Park, located in the Azerbaijani port city of Neftchala. Azeurocar has a 75 stake in the joint venture, which cost $15 million to start, while Iran’s Khodro owns the remaining 25 percent.

Four Khodro brands are produced at the plant – Dena, Runna, Soren and Samand – which churns out about 10,000 cars per year. All vehicles are in line with Euro-5 gasoline standards, an environmental standard that regulates the content of harmful substances in exhaust gases, pursuant to Azerbaijani law.

One fifth of overall production from the facility is destined for Russian and Georgian markets, while the remaining automobiles will be sold in Azerbaijan and Iran. 

Azerbaijan has been one of the largest consumers of IKCO cars within the Commonwealth of Independent States, or post-Soviet countries. Sabina Nobari, the director of America, Asia, Europe and the CIS region at IKCO, said Azerbaijan purchased 19 percent of IKCO cars, or 5,000 out of 26,500, delivered to CIS countries, including Russia, between 2006 and 2016.  

Nearly 540 Iranian companies operate in Azerbaijan. Trade turnover between Iran and Azerbaijan stood at $15.77 million in January, compared to $9.56 million trade volume registered during the same month in 2016. Overall trade turnover reached $210.76 million in 2016, surpassing the 2015 figures by 70 percent. Iran has so far invested $2.7 billion in Azerbaijan’s economy, the fourth largest in the Caspian region, with the largest share of capital, or about $2.6 billion, in the oil sector.

Kazakhstan, the third largest economy in the Caspian region after Russia and Iran, signed an agreement in February to import 3,000 Samand automobiles from IKCO, in order to upgrade Astana’s aging taxi fleet. Neighboring Turkmenistan imported 1,200 IKCO behicles since May 2016, for its police units, further bolstering IKCO’s presence in the Caspian and Central Asian car market.

Azerbaijan’s Economy Minister Shahin Mustafayev announced in February at an Iran-Azerbaijan business forum in Urmia, Iran that IKCO was planning to open four additional automobile plants in Azerbaijan, with the same production portfolio as the factory located in Neftchala. 

Neftchala Industrial Park, the fifth high-tech industrial park to be built in the Neftchala region, was established in 2015 to help diversify Azerbaijan’s economy and create commercial and processing enterprises for local and foreign investors. The park consists of eight production units, where administrative, industrial, production and social areas were built in line with international industrial norms, competitive business standards and modern technological novelties.

“The technological capacity and high standards of Neftchala Industrial Park allows Azerbaijan to attract large companies from the developed countries, including the US and Europe, in addition to Iran,” Vugar Bayramov, head of the Center for Economic and Social Development, told Caspian News.

“The next step is successful negotiations with leading world companies, necessary for bringing their investments to Azerbaijan.”