Volkswagen will set up a plant in Iran, within the Special Economic Zone of Arg-e-Jadid, near the city of Bam, to assemble the Brazilian designed Gol compact.

The plant will assemble CKD kits shipped from Brazil and will have capacity for over 20,000 units a year.

VW will launch the four door Gol with 1.8-litre eight-valve petrol engine and a second radiator to help it cope with the higher temperatures in Iran. The vehicle will also have air conditioning, power steering, front airbags and power windows and locks.

Volkswagen said, if business develops successfully, local manufacturing could be set up within a few years. Other models may also be added in the coming years, depending on development of the car market.

The cars will be assembled by Bamco, a subsidiary of Kerman Automotive Industries Co and will be sold throughout Iran by an exclusive dealer network owned by Modiran Pars Co., also a Kerman subsidiary. Initially, there will be over 70 dealers located primarily in Iran’s urban centres. Bamco was founded in the Bam economic zone in 1994 and currently employs about 800 people.

All parts in the Gol’s CKD kits will be sent from Brazil. The body will be supplied from the Taubaté plant while the engine and transmission will come from the São Bernardo do Campo plant. Others parts will be supplied by Brazilian manufacturers. Volkswagen of Brazil will also install the assembly line in Iran and train the workers.

The Volkswagen Gol is now in its third generation (it was introduced in 1980) and was initially designed and produced only in Brazil. From 1983 to 2002 it was also made in Argentina. The model is the best-selling vehicle in Brazil (for 17 years), Mexico, Argentina and Uruguay.

Volkswagen Brazil also sells the Gol in more than 20 countries. All bar China, where about 20,000 CKD kits are assembled each year by Shanghai Volkswagen, receive fully assembled cars.

Volkswagen believes that the Iranian motor vehicle market has great potential for growth. In recent years the industry has grown at a much greater pace than the country’s industry as a whole. By 147% between 1999 and 2003.

According to VW, there is a high demand for new vehicles in Iran. Estimates indicate a current requirement for some one million vehicles, which currently cannot be met due to a lack of capacity in the country’s closed car market.

Over half the vehicles in Iran are over 25 years old and vehicle density is relatively low at 55 cars per 1000 people.

Rogério Louro