Tata Motors in talks to set up car unit

India's Tata Motors is in talks with a local manufacturer in Iran to set up a joint venture for assembling its petrol cars here, as it looks to tap the fast growing market that has just emerged from sanctions.

Tata Motors is talking to Iran Khodro company for a joint venture to assemble knocked down units of the petrol versions of its models, including the latest compact car Tiago, Bolt and Zest, which are powered by the company's new Revotron petrol engines, sources said here. Knocked down version of the cars will be imported and assembled at Iran Khodro's manufacturing facility after adding local contents like tyres and batteries.Tata Motors will use Iran Khodro's sales network to sell the cars.

INK THE PACT

• Tata Motors is talking to Iran Khodro company for a joint venture to assemble knocked down units of the petrol versions of its models
• The models include Tiago, Bolt and Zest
• Initially, Tata Motors is looking at 100,000 cars a year
• The factory may be located in suburban Tehran and Masad

The branding will be of Tata Motors and Iran Khodro will  just be a contract manufacturer, they said, adding that Tata Motors will start assembling in Iran in less than two years.

Initially, Tata Motors is looking at 100,000 cars a year which will be gradually ramped up. Production at the factory, which may be located in suburban Tehran and Masad, is slated to begin by 2018.

Iran Khodro had earlier this year renewed partnership with French manufacturer PSA Peugeot Citroen.

Iran Khodro Company (public joint stock) was founded in August 1962. Starting with contract manufacturing of sedan 'Paykan' for British firm Rootes in 1966, it has manufactured for France's Peugeot as well as Tondar 90 sedan (Renault Logan). It manufactures several Chinese models now.

Peugeot had earlier this year signed a contract with Iran Khodro to start a joint venture that will make three new models.

Peugeot's January 2016 deal marks its return to Iran after a four-year absence.

Iran Khodro, which is 14 per cent-owned by the Iranian government, was Peugeot's former partner before the French company's decision to shut down its operations in 2012 in the wake of international sanctions.

Before 2012, Peugeot would send parts, which then were assembled in Iranian plants.