Azerbaijan to make car export hub through Iran

By  Trend

Opening Iran-Khodro’s new site in Azerbaijan will turn Azerbaijan into the company’s export hub in Central Asia and the Caucasus, the company told Trend September 17.

Iran-Khodro plans to manufacture 10,000 cars per year in Azerbaijan, which will be exported.

Car imports to Azerbaijan fell after introducing the Euro-4 ecological standard over a year ago. In the first half of 2015, the country imported 17,640 vehicles, compared to 34,359 units in the same period of last year.

Azerbaijan plays an integral role in regional projects thanks to its advantageous geographical location. The active implementation of projects in energy and other sectors will allow Azerbaijan to enter a new market, which corresponds to an overall strategy to diversify the economy and reduce its dependence on oil and gas.

Iran-Khodro is launching the production line in Azerbaijan through partnership with Aziorocar.

“Aziorocar’s record of selling cars in Azerbaijan and its good cooperation with Iran-Khodro as an agent for selling CBU (complete built up) cars make us see a bright future for the project,” Iran-Khodro said.

According to Iran-Khodro, preliminary agreements say that the Azerbaijani partner will make the initial investment, then Iran-Khodro will provide equipment and install the production line, which will make about 25 percent of the whole investment.

To be inaugurated by September 2017, the production line in Neftchala district will be able to support the production of more modern versions of cars as the market would demand.

“The number of Iranian experts who will work in Neftchala district will depend on the stage of progress of the project. As the project will include the transfer of know how, Iranian experts will be always working as administers, supporters, or inspectors,” the Iranian company told Trend.

”Right now Aziorocar after sales and customer service agencies are responsible for covering the needs of their CBU customers in Azerbaijan, where the gratification of customers is being monitored. As for other target markets, Iran-Khodro’s preference is to create a network of agencies with the company’s standards, which will come as a prerequisite for giving sales permits.”

Iran-Khodro’s policy is to localize the production once setting a unit in another country, so local production of parts are encouraged if the ability exists, the Iranian partner added.

“Iran-Khodro products find favor with Azerbaijani customers, making it possible to imagine Iran-Khodro gaining a good part of the market. This will become more feasible once the new production line in Azerbaijan goes on stream, lowering production cost and eliminating customs tariffs.”

Iran, as a powerful oil country, has had little opportunity to improve cooperation with Azerbaijan in the various economic sectors due to international sanctions. After Iran was freed from the Western sanctions in January, however, it has become more open to further business agreements and relations.