According to the contract signed in Germany on Tuesday, the two firms will establish a joint company working in the field of sales and after-sales service of commercial vehicles.
IKCO and Mercedes-Benz, which is a division of the German company Daimler AG, also plan to run a second joint company, whose contract will be finalized next month.
The second company would be in charge of production of various products, including the current and future generations of the Mercedes-Benz Actros, a heavy-duty truck introduced in 1995.
Speaking at the signing ceremony of the deal on Tuesday, CEO of IKCO Hashem Yeke Zare said cooperation between IKCO and Mercedes-Benz would continue in the area of commercial vehicles.
Back in January, Yeke Zare said three cooperation agreements had been signed between IKCO and Mercedes-Benz.
He also said at the time that two more contracts between the two companies were in their final stages and would be finalized in the near future.
Iran’s automotive industry is the second largest in the country after its oil and gas industry, accounting for 10% of the country’s Gross Domestic Product (GDP).
The industry is expected to grow significantly after Iran and six world powers in July 2015 reached a conclusion over the text of a comprehensive deal on Tehran’s nuclear program and started implementing the agreement in January 2016.
The nuclear deal between Iran and the Group 5+1 (Russia, China, the US, Britain, France and Germany) terminated all nuclear-related sanctions imposed on Iran.