Leading Iranian vehicle manufacturer Iran Khodro Company (IKCO) expects to sign a commercial agreement with Mercedes Benz within the next six months, the company’s CEO was quoted as saying in a report.

The two sides have already reached an agreement on production of commercial vehicles and passenger cars in Iran, added the Iran Daily report.

IKCO’s chief executive Hashem Yekke-Zare revealed that the letter of intent will be signed during the first half of the next (Iranian) year.

Mercedes-Benz is a subsidiary of German-based Daimler which has announced a swift return to Iran where the race among carmakers for a share of the country’s huge market is getting intense.

In January, the German carmaker said it had signed letters of intent with local partners Iran Khodro Diesel and Mammut Group to arrange a ‘comprehensive re-entry’ into the country.

The areas of cooperation include a joint venture for local production of Mercedes-Benz trucks and power-train components plus the establishment of a sales company for the brand’s trucks and components, said the report.

Daimler also plans to return as a shareholder in the former engine joint venture Iranian Diesel Engine Manufacturing Co. (IDEM), based in Tabriz, added the report.