PERUSAHAAN Otomobil Nasional Bhd (Proton) believes its new factory in Iran, which is scheduled to begin CKD (completely-knocked-down) car manufacturing operations next month, will further strengthen its position in the West Asia market.

The factory in Borujed, 400 km south of the Iranian capital Tehran, will have an initial production run of 90 units.

Proton international business division general manager Anuar Rozhan said Proton had very positive projections for Iran as it was an important market for the company, given its strategic location in a region that holds tremendous potential.

"In fact, Iran has a passenger car market in excess of 300,000 units per year, the biggest in the region, with demand strongly outgrowing supply," he said during a visit to Proton's main plant in Shah Alam by a delegation of businessmen accompanying Iranian President Seyed Mohammad Khatami.

Proton and its Iranian partner Zagross Khodro Car Industries Co Ltd expect to produce and sell 3,000 cars in the first year and gradually build up the business to more than 25,000 cars per year in the medium term.

The first model to be assembled and sold in Iran would be the proven Proton Wira, as it already has a strong and established manufacturing and support system. Proton plans to go all out to make the Wira among the premium models in Iran.

"We believe that Wira will pave the way for Proton to build its brand strongly in Iran. With an annual growth of more than 20% per year, Iran will be an extremely exciting market for us," Anuar said, adding that it would not be surprising if Iran became Proton's leading market outside the Asia Pacific region.

Anuar said Iran also offered Proton a potential source of quality parts and components as it already had some 40 years of automotive industry experience. He said Proton's operation in Iran was a win-win situation for both countries as it was a channel for the transfer of technology, expansion of markets and enhanced bilateral relationships.

Proton was invited by the Industrial Development and Renovation Organization of Iran in 1999 to study the feasibility of assembling Proton cars in that country. Subsequent progress saw Proton entering into a relationship with Zagross Khodro.

The first Proton team went to Iran in 2000 and 2001, signing various agreements, such as for distribution, technical licensing and parts supply, with Zagross Khodro.