French carmaker Renault is to build its Megane saloon model in Iran from 2006.
Renault has now earmarked two cars for construction in Iran
The firm's joint venture with Iran's Industrial Development and Renovation Organisation and two leading carmakers will make about 15,000 Meganes a year.
The car is the second to be introduced by Renault to Iran following the Logan, a stripped-down version of the Clio Supermini, also due for a 2006 release.
The venture is 51% owned by Renault, despite a law passed this year banning foreign firms from majority ownership.
The law, passed in September 2004, imposed a retroactive 20 March cut-off point. Renault signed its deal for Renault Pars, as the venture is known, four days earlier.
Renault said that together with Iran Khodro and Saipa, Iran's two biggest carmakers, it expected to up production of the Megane at Khodro's Tehran plant to some 50,000 units annually within a few years.
The production of the Logan, however, is to be much more high-volume. Renault has said it wants to see about 300,000 built a year.
Iran, like many other countries, has had a history of borrowing car designs from abroad.
For 40 years, its most popular car was the Paykan, a pollution-spewing copy of the 1960s British Hillman Hunter.
The Paykan was finally discontinued by Iran Khodro earlier this month.