German carmaker VW set to make factory investments in Turkey

German carmaker Volkswagen is reportedly preparing to carry out a major investment in Turkey.

As a result of efforts to convince the German car giant to invest in Turkey for more than a decade, Volkswagen has decided to open a factory in the country that will employ 5,000 people annually and produce Skoda and Seat models.

Volkswagen made a choice between Bulgaria and Turkey for factory investment, a report in the Habertürk newspaper explained.

AutomobilWoche, the German car journal, reported that Turkey's fund of knowledge in automobile production played a part in Volkswagen's decision. The Volkswagen plant in Turkey, which will become operational in 2022, will undertake the production of two of their car brands, Skoda and Seat.

Volkswagen has long been in need of a new production facility to make room for electric models in their existing plants. The German manufacturer had been eyeing investment opportunities abroad and preferred Turkey for its experience in automobile production, the report by the AutomobilWoche said.

Volkswagen's decision to invest in Turkey followed the normalization of relations between Turkey and Germany. The tension in bilateral relations abated following President Recep Tayyip Erdoğan's visit to Germany in September, bringing momentum to investments. Volkswagen's investment decision was made as a result of the normalization.

Once complete, the factory will produce the models of more than one brand within the group and it will start with producing the Skoda Karoq and the Seat Ateca models. The two models are being produced by Skoda, one of Volkswagen group's brands, at the Kvasiny facility in the Czech Republic. After the shifting of production to Turkey from Kvasiny, Volkswagen will dedicate its Emden and Hanover factories in Germany to electric models and move the production of Passat models to Kvasiny.

Having accelerated the transition to electric models, Volkswagen announced some time ago that it could cooperate with the U.S. automotive giant Ford Motor Company. Reports suggested that the companies were in talks for a strategic partnership that would see the latter move the production of some of its commercial vehicle models to Turkey. Reports also suggested that the two companies may also produce electric and autonomous vehicles at each other's plants to cut costs.

As part of the partnership, it was reported that Volkswagen's commercial vehicles Crafter and Transporter might be produced at the Ford Turkey plant in the Marmara district Gölcük, where Ford manufactures its Transit and Custom models.

Ford Otosan General Manager Haydar Yenigün was quoted as saying that the two giants have been negotiating joint vehicle development and production for a while. He said the two sides have not finalized a deal yet, adding that they will make an announcement very soon once negotiations are done.

Sources in the sector have said that the VW Transporter, which is the equivalent of Ford Custom, and Ford Transit's VW equivalent Crafter, will be manufactured on the Ford assembly line. VW is expected to shift the manufacturing of 150,000 to 180,000 commercial vehicles per year to Turkey.

In 2017, Turkish car making plants manufactured 552,825 commercial vehicles and produced 439,644 vehicles between January and October this year.

Ford Turkey is Europe's largest commercial vehicle production base, making around 440,000 vehicles and 75,000 engines last year. The company has a 67 percent share in Turkey's total commercial vehicle production.