Noticed this on Automotive World, and was struck by two things.  First, it is just yet another example of China reaching out to smaller developing markets, especially those “off-limits” to the west for various reasons.  And, second, the joint venture’s annual output – up to 200,000 cars – is a large number that indicates the robustness of the domestic Iranian market (although I suspect that the plant won’t ramp up to full capacity immediately and that some of the production may be tagged for export to the region).

After more than a year of negotiations, Chery Automotive has announced that state owned OEM Iran Khodro and Canadian investment firm Solitac have entered into an agreement to jointly set up a factory in Iran.

The facility will be built in Babol, in the Iranian province of Mazandaran at a cost of US$370m. Iran Khodro, Chery and Solitac will hold 49%, 30% and 21% of the venture respectively.

The plant is scheduled to commence assembly “after May 2008”, Chery said in a statement. As per the companies’ plans, the factory will have a production output of 200,000upa and will assemble Chery’s QQ6 (known internally as the S21) four-door sedan, which is based on the first generation Daewoo Matiz.

Manouchehr Manteqi, the managing director of Iran Khodro, believes that this venture will improve Iran Khodro’s competitiveness in its home market as well as in neighbouring countries.

“Our cooperation…is bound to benefit all the three parties; also, it can strengthen Chery’s competitiveness in Iran or even in the entire Middle East market, so as to build up Chery into a Chinese brand in the world market,” Yin Tongyao, president and general manager of Chery, added….”