SHANA- German auto giant, Volkswagen, has signaled keenness to ground up natural gas vehicles (NGV) in Iran, an official said.

Director of the CNG project of the National Iranian Oil Products Distribution Company Ali Mehrabi has told a press conference on Sunday that foreign companies, including Germany's Volkswagen have welcomed projects to manufacture NGV parts in Iran.

"In order to manufacture and sell car parts in Iran, foreign companies must build factories inside the country," he said.

He said for the time being, 70% of CNG equipment and machinery are built inside the country or are supplied by domestic companies.

"Most of the imported parts and items are imported from countries like Italy, Argentina, Germany, Russia and South Korea."

He further said 10 CNG stations have been recently constructed across the country bringing the country's total CNG stations to 2,360 ones.

He said Iran's CNG stations can supply over 40 million cubic meters of compressed natural gas to customers.

In April, Iran�s Ambassador to Berlin Ali Majedi said Volkswagen has been looking into the Iranian car industry for the past year and are closer than ever to a final investment decision, reported PressTV.

Majedi said the company�s management have been specifically studying the capabilities of several local carmakers and are now trying to choose between only two companies.

He did not name the companies but some reports say they could be Kerman Motor and Mammut Group.

Volkswagen announced last September that it is grooming its Skoda brand for the Iranian market.

"Iran is a very interesting market with great opportunities," VW brand R&D chief Heinz-Jakob Neusser said at the time.

VW will conclude an assessment of the country's auto market by the end of the year, Reuters quoted him as saying.

Neusser said it is still too early to say which product VW could use to go in with �but of course we see the potential".

Reuters further quoted a company source as saying that VW was considering a move into Iran with the mass-market Skoda and Seat brands.

Volkswagen�s last venture in Iran involved its production of the Gol compact with Iran�s Kerman Khodro before withdrawing under US pressures.

Other German automakers including Mercedes have already started talks to form partnerships with Iran Khodro � the leading Iranian car giant.

The media in Tehran reported in mid-March that a commercial deal between Iran Khodro and Mercedes is imminent.

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 powertrain components plus the establishment of a sales company for Mercedes-Benz trucks and components, it said then.

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

Leading carmakers are seeing a pent-up demand for cars in Iran, a country of more than 80 million people, which is emerging from years of sanctions.