Iran General NewsChina's Chery finds a Toronto partner for Iran

China’s Chery finds a Toronto partner for Iran

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The Globe and Mail: A tiny, all but unheard-of Canadian auto company has scored an international coup by brokering a deal with China’s giant Chery Automobile to make cars in Iran. The Globe and Mail

Solitac secures $370-million deal to build Chinese microcar for Iranian market

MARCUS GEE

A tiny, all but unheard-of Canadian auto company has scored an international coup by brokering a deal with China’s giant Chery Automobile to make cars in Iran.

Solitac Inc. of Toronto will join with Chery, China’s biggest domestic car maker, and Iran Khodro, Iran’s biggest car maker, to set up a $370-million (U.S.) plant in Babol in northern Iran.

It is a remarkable feat for a company with just five people in its Toronto office and a nearly invisible profile.

“How do you spell that?” asked the well-informed Gerry Fedchun, president of the Automotive Parts Manufacturers Association, when told that a company named Solitac had brokered the deal. He admitted he had never heard of it and went to look it up in the APMA directory.

Callers to the company’s Toronto number get no receptionist or even company voice mail. Instead, calls go to the personal voice mail of its president, Hossein Bavafa, whose recording gives only his name.

He did not respond to calls yesterday. But the head of its Iranian office, Ali Zara, said Mr. Bavafa and his obscure company dreamt up the idea of bringing Chery to Iran and then spent more than a year sweating out the deal.

“We went to them,” Mr. Zara said of the initial approach to Chery last year. “We started this venture and we are the architects.” He said Solitac decided that there was a gap in the Iranian car market at the low end, which is dominated by a South Korean version of the Ford Fiesta.

It sells for about $8,000 (U.S.). Chery’s four-door QQ6 microcar, by contrast, will sell for about $6,000. “We are sure there will be a huge market,” Mr. Zara said. “We can sell more than 200,000 a year, easy.”

He said that when Solitac approached Chery about making cars in Iran, the Chinese company readily agreed.

It took just three months to reach an agreement in principle, another year to hammer out the final deal.

“This is a complicated agreement,” Mr. Zara said. “There were tons of documents. We worked very hard.”

Under the terms of the deal, Chery would own 30 per cent of the Iranian plant, Khodro 49 per cent and Solitac 21 per cent.

Mr. Zara said Solitac is investing on behalf of a group of Iranian auto parts makers, not contributing capital itself. “Our investment is our knowledge,” he said. “We are still very small compared with [Chery”>.”

The company’s website says it has been in business for 22 years, starting off as a mechanical engineering firm serving the Canadian auto parts market.

It was renamed Solitac in 1999, helping international companies “access the North American market by promoting their products across North America, and identifying and importing technological solutions.”

Apart from its Toronto headquarters, it has small offices in Beijing and in Tehran, the Iranian capital.

Chery’s president, Yin Tongyao, said in a statement that the Iranian venture “can strengthen Chery’s competitiveness in Iran or even the entire Middle East market so as to build up Chery into a ‘Chinese brand in the world market.’”

Chery’s sales topped all its domestic rivals’ beginning in March, the first time in 20 years that a Chinese company outdid foreign auto makers making cars in China with Chinese partners.

The firm has ambitious plans for international expansion. It already assembles vehicles with overseas partners in Indonesia, Uruguay, Egypt, Ukraine and Russia.

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