The Iran Khodro Co. (IKCO) has finalized an agreement with Jinhua Qingnian Automotive Co. to manufacture the automobile in Taian city, the China Economic Daily said on its website.
Annual production of the plant will begin with 30,000 cars, while both sides are hoping to increase production to 120,000 vehicles a year based on sales, it added.
The report did not say if the vehicles manufactured at the venture would be exclusively for the Chinese market or also for export.
Jinhua Qingnian will hold a 70 percent stake in the joint venture and the Iranian company will hold the rest, it added.
“Taian city has worked to get both sides together, the local government has been very supportive and the banks have given us capital,” said S.K. Hodiat, an official in charge of IKCO’s investment projects, according to the report.
Land for the factory has already been acquired and construction of the facility is ready to begin, the report said, without saying when the first cars were expected to roll out.
The production of a Samand model sedan with a 1.8-liter engine has already been approved by the state planning ministry, other press reports said.
French automaker Peugeot, which already has existing joint projects with IKCO, will continue to provide parts for the China-made model, they said.
Negotiations for the auto plant have been ongoing for several years.
Auto production and sales in China have boomed in recent years with over 3.53 million vehicles sold in the six months to June, up 26.7 percent year-on-year, the China Association of Automobile Manufacturers reported in July.
Production was up 28.9 percent to 3.6 million units, of which 1.89 million units were passenger cars.
