Oman Investment Fund, Iran's Khodro sign joint venture for auto factory

Published January 28th, 2016 - 12:00 GMT
Iran's Khodro Haima S7 was launched in 2015. (
Iran's Khodro Haima S7 was launched in 2015. (

A first-of-its-kind car manufacturing facility with a capital expenditure of $200 million is planned in Duqm through the establishment of an Iranian-Omani joint venture, targeting Oman and neighbouring regional markets.

A memorandum of understanding (MoU) was signed by Oman Investment Fund (OIF), Iran’s leading car manufacturer Iran Khodro and an Omani investor for the creation of the joint venture during Iran’s second solo exhibition on Wednesday.

Khalid Al Yahmadi, investment director at OIF, said that a preliminary study had been conducted before the signing of the MoU and a detailed study will be carried out within the next three months about the requirements of Oman and other target markets as well as the brand and types of the cars required.

As per the initial plan, it will be a new brand that will be created with the support of Iran Khodro, he told reporters. The project will start with an assembly unit but the objective is to have a full manufacturing facility, Al Yahmadi explained.


The initial capacity of the unit will be around 20,000 cars per year, the official said, adding that the total investment at the full stage is going to be around $200 million.

Around OMR5 million will be invested in the assembly line, he stated, adding that the ground breaking for the assembly line is expected by the fourth quarter of this year.

He noted that it will take several years for other local ancillary industries, such as production of tyre, glass, batteries and brake pads, to be developed either through the private sector in Oman or other government entities to transform the unit into a full production facility.

Job creation

Al Yahmadi said that around 100 to 300 jobs will be created in the assembly line but definitely more employment opportunities will be created by a full-fledged project. A portion of the cars will be sold in Oman but a majority of the cars will be exported to other markets including the Gulf Cooperation Council (GCC) countries and some African markets.

Issa Al Riyami, chairman of Al Riyami Automobile and Al Orkid Automobile, said that the share of OIF in the joint venture is 57 per cent, Iran Khodro 20 per cent, Al Riyami Automobile 20 per cent and Al Orkid Automobile 3 per cent.

He noted that the cars will start to be sold to the market in 2017, adding that 20 per cent of the cars will be sold to the local market and 80 per cent will be exported to other countries.

Economical cars

Mehdi Akbar, regional director of Iran Khodro in Gulf countries, said that the company has participated in the exhibition with Dena, Runna, Soren and Samand passenger cars. He said that the cars manufactured by Iran Khodro, one of the largest car manufacturers in the Middle East, are on the economical scale and are among the best in the world in terms of fuel consumption.

Akbar noted that the project is planned to start with the Dena brand and good after-sales services will be offered. Asked when the assembly will start, he said that it is expected within 14 months from now.

Duqm gate

Commenting on the importance of the project, the official said that Duqm will become a major gate for exports to other countries such as African countries in the near future. According to him, the project will positively affect the trade ties between Iran and Oman and will mutually benefit both countries.

“We are going to transfer the knowledge of the production to the Omanis,” he said, adding that a number of Iranian experts will help initiate the project but Omani staff will be used in the unit.

Akbar noted that a ‘great change’ is being seen in the activities of Iran Khodro after the lifting of the economic sanctions against Iran and the company is expected to sign cooperation agreements with a number of major international companies.

The signing ceremony was attended by Ali bin Masoud Al Sunaidy, Oman’s minister of commerce and industry; Mojtaba Khosrotaj, Iranian deputy minister of industry, mine and trade; Ali Akbar Sibeveih, Iran’s ambassador to the Sultanate, and a number of other officials.

Enhanced trade

Speaking to reporters, Al Sunaidy said that the exhibition would help enhance trade between the two countries.

There are direct shipping line services between Sohar and Iran once every two weeks as the level of direct bilateral trade was still low but with this kind of exhibitions and enhanced trade of products, that particular line is going to expand, the minister said.

Al Sunaidy expressed hope that the car production project and Oman Air’s expansion plans related to Iran will help enhance ties between the business communities in Oman and Iran.

By Elham Pourmohammadi

© Muscat Media Group

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