Iran's favourite car under threat

The new Samand will compete with the old Paykan

By James Whittington BBC World Service business reporter in Tehran

Iran's most popular car could be on the way out thanks to a new, modern rival.

The government-owned company that makes the Paykan is in the middle of a major transformation to modernise its facilities.

Iran Khodro Corporation is Iran's biggest firm and the largest car manufacturer in the Middle East.

We are ready and we will get more ready to compete with foreign companies that come to Iran

Adullah Rakman Gallenborg, Iran Khodro

Its modernisation could spell the end of the Paykan which is stuck in the past, like much of Iran's economy.

The car is based on 1960's technology and is incredibly inefficient.

But despite this there's a year-long waiting list for a new one from the factory.

New technology

Iran Khodro Corporation is a sprawling industrial site on the outskirts of Tehran employing about 17,000 people.

Iran Khodro wants to increase exports

The firms's deputy president of exports and international affairs, Adullah Rakman Gallenborg, says there has been a revolution at the firm.

Old technology is being replaced by new automated machines and robots.

Iran Khodro plans to move all its production to an automated production line in the next year or two.

Nevertheless, Mr Gallenborg says there is no resistance to the changes among the company's workforce.

"Our employees see that if we want to compete in the international market we have to adjust our production lines according to international norms and standards," he said.

"We are creating more jobs because we are increasing our production."

Competition

At the moment the car industry is protected in Iran, there are customs duties of over 200%.

We designed this car, now it is in the market we consider Samand as our national car

Adullah Rakman Gallenborg, Iran Khodro

Eventually those tariffs are going to come down, but Mr Gallenborg claims his company is ready for that.

"We know that sooner or later we will join the WTO and step by step import tariffs will be reduced.

"The market will be open to foreigners, therefore we are ready and we will get more ready to compete with foreign companies that come to Iran."

Global ambitions

The company is also looking to expand its exports.

Production lines will be automated in the next two years

"We are targeting our neighbouring markets such as the CIS countries and Arabic countries, but our aim is to move towards Europe and Africa in future."

Global plans such as these are ambitious by any standards.

But Iran Khodro has been operating in a country that has been largely isolated from the global economy, so there is still an enormous amount of catching up to do.

In a bid to prove its sceptics wrong, the firm has recently designed and manufactured its own new car, the Samand.

"We designed this car, now it is in the market we consider Samand as our national car," he says.

The Samand is certainly a much smoother car than the Paykan.

It's got full features, air conditioning, electric windows, power steering, ABS brakes, all the modern features you would expect.

And if Iran Khodro can export the Samand, it might soon make its way to a showroom near you.