Chinese automaker BAIC plans to set up a car plant in Iran in the next year, an Iranian news agency has reported.

A representative of BAIC in Iran, whose name was not mentioned, said that the plant will be established through a joint venture between BAIC and Iranian Diar Khodro car manufacturing company.

He said that the company's long-term plan is to manufacture 100,000 passenger cars in Iran by 2020, and export a number of those cars to the Middle East countries.

Car manufacturing in Iran grew by 92.5% in the first two months of the current Iranian calendar year (March 21st-May 21st), compared to the same period in the previous year. Iran manufactured 135,901 cars in the two-month period.

Iran's car output dropped 20.2% in the past Iranian calendar year. The country manufactured 737,060 cars in the previous Iranian year.

The automobile industry, the biggest non-oil sector of the Iranian economy, constituting around 10% of gross domestic product (GDP), boomed over the decade ending in 2011 due to the backing of the government and the dearth of international competitors in the domestic market.

The administration of former president Mahmoud Ahmadinejad increased car import duties as much as 90% in 2013, a measure that experts believe led to a marked deterioration of quality in the Iranian market, which is dominated by the triopoly of the three major car manufacturers: Iran Khodro, Pars Khodro, and Saipa.