Turkey and Iran to Spawn New Affordable European Brand

Carmakers selling cars in Europe could soon get a new and tough competitor as Iranian carmaker Iran Khodro Company (IKCO) and Turkey's Hema Endüstri have shaken hands for a new project that will spawn an entirely new automotive brand. The first project will be a passenger car that will be made in Turkey, officials of the two companies said after signing a memorandum of understanding, with more details to be disclosed at a later date.

The two partners are yet to pick a location and a plant to manufacture the new car but, according to official statements, the alliance will soon expand to other segments as well, including lightweight commercial vehicles. The factory will however be based in Turkey, but it's yet unclear whether the car will be exclusively addressed to European markets or it will be also exported to other markets.

Iran has in the last six months lost major players in the auto industry, most of them suspending exports to the country as a result of international sanctions that have been imposed for nuclear development. Toyota, Kia and Daimler are just three big names that decided to pull out of Iran, each of them mentioning that the comeback will happen as soon as the situation calms down a little bit.

“It is true Toyota has stopped exports of vehicles bound for Iran. We plan to continue to closely monitor this sensitive international situation,” Keisuke Kirimoto, a Toyota spokesman was quoted as saying by CNN in mid-2010.

Iran on the other hand targets the European markets and as far as Khodro is concerned, starting production of a new low-budget model might be the right path to success. Khodro has a production capacity of up to 800,000 units, so local production might be a future solution as well.