Leading Iranian vehicle manufacturer Iran Khodro Company (IKCO) has signed a letter of understanding with an Azerbaijani company to assemble completely knocked down (CKD) vehicles in Azerbaijan, said a report.

IKCO would not make any investment in Azerbaijan but the partnership with the Azeri company is limited to technical and engineering services to establish an assembly line, Saeed Tafazzoli deputy head of IKCO for export and international affairs, was quoted as saying in an Iran Daily News report.

He further noted that studies have been conducted to assess the Azerbaijan market adding IKCO products are well-known in the country.

IKCO has produced a number of vehicles in Azerbaijan including Samand, which has been among the most popular passenger vehicles in the country given its adaptability to the cold weather of Azerbaijan.

"Iran Khodro used to export vehicles' complete built up (CBU) to Azerbaijan," Tafazzoli stated, adding that in view of the good market in Azerbaijan, IKCO has decided to set up an assembly line there.

He said that with the establishment of the assembly line, Azerbaijan will turn into IKCO's export hub in the region.

Tafazzoli cited Samand, Soren and Runna as the vehicles to be assembled in the first phase while the production of commercial vehicles for public transport fleet of Azerbaijan has also been predicted.

The line is set to be established in Neftchala city with the direct investment of Azeri side, added the report.