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Thursday December 25, 2008

Proton aims to sell 100,000 Campro engines in Iran

TEHERAN (Iran): Proton Holdings Bhd aims to sell 100,000 units of its Campro engines annually in Iran within the next three to four years.

Managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir said this was made possible with the completion of the deal with Zagross Khodro to assemble the Gen.2 model in completely-knocked-down (CKD) form in Iran, as well as an earlier agreement with carmaker Saipa.

Saipa is similar to Proton as it is Iran’s national carmaker and, together with another national carmaker, controls about 90% of the passenger vehicle market in the country.

Zagross has been Proton’s partner since 2001, when it became the sole assembler and distributor of the Wira model in Iran.

On Tuesday, Proton inked a parts supply agreement with Zagross to begin mass production of Gen.2s in CKD format at its plant in Borujerd, some 400km southwest of Teheran.

Syed Zainal said the plant had a capacity of 25,000 units per year.

The deal will make the Gen.2, which is currently sold in the Iranian market as completely-built-up (CBU), much cheaper, said Syed Zainal.

He said the business model in Iran would be based on CKD units, as it was not cost competitive to sell CBU units in the long term.

“So far we’ve done the CKD version for the Wira, and going forward, this will be the natural progression of our involvement in Iran. Gen.2 is thenext step. We hope to introduce the Saga, hopefully by the first half of next year and the Persona by the end of next year,” he said.

He said Iran had a huge market potential with some 1.4 million cars being sold a year.

“Iran has a population of 72 million, and with the ratio of car per population at 1:10, there is still room to grow.

“Hopefully next year we will pushing 10,000 Proton cars comprising Wira, Gen.2 and Waja,” he said, adding that he projected sales to hit 50,000 units annually in five years.

Syed Zainal said the long-term strategy was to make Iran a hub for Proton’s expansion in the Middle East.

“The plant is owned by Zagross, and right now we don’t have any investment, but we provide technical support for the assembly, training and jigs. In the long term, we can look at the opportunity to invest in Iran. Our approach is very cautious at first,” he said.

On its deal with Saipa, Syed Zainal said it was a technical collaboration which entailed Saipa using Campro engines in their cars.

“There is also a possibility to develop a Saipa model using our platform. It is a unique opportunity for Proton to be a technology provider.

“We envisage that in the next three to four years, the demand for Campro engines will hit 100,000 units per year,” he said.

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