DUBAI (Reuters) - Iran's car industry must be privatized to meet the government's goal of turning it into a global competitor, the president said on Tuesday, sending a strong signal of his intention to open up the country's economy to world markets.
Hassan Rouhani said Iranian carmakers, which form the second biggest sub-sector of the economy behind oil, should cooperate closely with foreign companies to improve the quality of their products.
"The car industry must be completely privatized, it must be competitive," Rouhani said in a televised address to an international carmakers' conference in Tehran.
The state currently controls roughly half of the sector.
Rouhani's allies made gains in parliamentary elections on Friday that should give the president more scope to push through ambitious plans to modernize Iran's economy.
The large but outdated car sector is one of the most attractive industries to foreign investors, who have flocked to Tehran since international sanctions were lifted in January following Iran's nuclear deal with world powers.
France's PSA Peugeot Citroen (PEUP.PA) signed a joint venture agreement with Iran's largest carmaker Iran Khodro in January. The two companies had an existing relationship that was suspended in 2012 due to sanctions.
"Our manufacturers must be world-class, and we will cooperate with foreign companies so our manufacturers have a presence in world markets," Rouhani added.
Reporting by Sam Wilkin; editing by John Stonestreet