“The shaky plans for a new VW plant in Turkey are finally off the table. Now, however, it was not criticism of the Erdogan government that was decisive, but the slump in sales in the viral crisis.
“From today’s point of view, it is not necessary to build up additional capacities,” Volkswagen said in a statement on Wednesday. Global car demand is currently too weak for the planned billion-dollar investment in Manisa near Izmir to be worthwhile.
In fact, the project was almost decided – after a long site competition, in which Bulgaria and Romania also played a part in the beginning. VW wanted to supply the markets of Eastern Europe and the Middle East from western Turkey, which initially still had a “very positive macroeconomic environment”. Now the picture is very different: the decline in demand in the pandemic is immense, there is overcapacity, red numbers are looming.
EU parliamentarians built pressure on
But the VW project was already under no good star, at least in part. After growing criticism last year over the human rights situation in Turkey and the military offensive of President Recep Tayyip Erdogan in northern Syria, the Wolfsburgers postponed the final “Go” for the factory construction several times. Most recently, it was on hold – chances of implementation are unclear. EU parliamentarians had asked the Commission in Brussels to examine whether the project was compatible with EU rules.
The Turkish car lobby had put pressure on the investor. And VW has already established its own subsidiary in the country. The company was entered in the commercial register and equipped with a capital of approximately 164 million US dollars. The Group operates more than 120 plants worldwide, and the Turkish government had seen a possible new building at Izmir as an important prestige project.
The Turkish government did not initially comment on the end of the project. The business newspaper “Dünya” merely wrote that, according to its information, those responsible in Turkey had been informed. The opposition newspaper “Sözcü” headlined: “The huge investment has escaped.” Turkey could have used the project well, because even before the Corona crisis, the economy was struggling.
Initially, at least 4000 jobs were to be created in the region. Meanwhile, the economic consequences of Corona are hitting the balance so much that Volkswagen apparently could no longer prevent the pullback. “All planned vehicle projects will be manufactured within the existing network of production facilities,” the official statement said. This means that the VW Passat and the sister model Skoda Superb from the Czech Republic, which were mainly intended for Manisa, have to be accommodated elsewhere.
Even before the end of the Turkish factory, the Bratislava plant was in discussion. In the Slovak capital, the Group is already building several SUVs such as the VW Touareg, the large Q-models from Audi and the Porsche Cayenne, as well as small cars such as the VW Up, Seat Mii and Skoda Citigo. According to the trade journal “Automobilwoche”, an additional half a billion euros could be invested in the settlement of the Passat and Superb.
The future of the Passat, which recently performed worse in the traditional Western markets, is of great importance especially for the workforce in Emden. Volkswagen wants production of the sedan to be phased out here. The factory in East Frisia will be completely converted to the production of electric cars. Volkswagen had stated that if it did not end up being Manisa, it would expand an existing plant – but would not start a new location search.