Proton Holdings Bhd inks a deal with Zagross Khodro Industries Co. Ltd., its sole distributor in Iran, to proceed with a long-delayed plan to assemble the Proton Gen2 from complete-knocked-down kits.

Zagross Khodro, which originally announced it would begin assembly of the Gen2 in 2005, now plans to begin building the model in April at its assembly plant in Borujerd, 240 miles (400 km) south of Tehran.

The signing ceremony was held at the Iranian presidential office and witnessed by Iranian President Mahmoud Ahmadinejad and Malaysian Prime Minister Abdullah Badawi.

“This agreement signifies Proton’s continued commitment to the vast Iranian market and is part of its overall export-market strategy,” Proton Chairman Azlan Hashim is quoted as saying in the statement. “Proton will also establish an office in Iran by March 2009.”

The collaboration between Proton and Zagross began in 2001, when Zagross became the sole assembler and distributor of the Proton Wira in Iran. Zagross previously had imported completely built-up Proton vehicles.

“The presence of Proton cars in the country presents an attractive alternative for the Iranian consumer, who demands more variety from what is currently available in the country,” Proton says in the statement.

“Soon, with the CKD operation in Iran, Proton will be able to price its cars more competitively in the local market and, more importantly, improve on its aftersales services in the country.”