Turkey highlights advantages, incentives in negotiations for VW's new plant investment

Published 18.06.2019 00:00

With the date for German automotive giant Volkswagen's announcement on where it will be building its new plant fast approaching, Turkey is conducting negotiations with the automaker in an effort to draw the investment to the country. Turkey and Bulgaria are standing out as the two strongest candidates for the company's investment. VW will make the final decision on where to build its new plant at the supervisory board meeting at the end of November, according to reports. In an interview with Germany's leading newspaper Frankfurter Allgemeine Zeitung (FAZ), Presidential Investment Office head Arda Ermut explained the advantages of Volkswagen choosing Turkey for the new factory investment.

Last November, VW announced that it would make an investment of 44 billion euros ($49.45 billion) in electric vehicles, autonomous driving and digital technologies for the next five years, disclosing that about 30 billion euros of this investment would be allocated for the development of electric vehicles. The company also revealed that the Skoda Karoq and Seat Ateca model vehicles under VW will be produced in the new factory planned to be opened in Eastern Europe.

Turkey has been said to have a high chance of being chosen in terms of the factors that direct the industry investment of an automotive brand, such as qualified human resources, sub-industry capacity, logistics solutions, the total market size and the export opportunities to the neighboring country. In addition, in mid-January, VW had agreed to produce minibuses at Ford factories in Turkey.

Ermut spoke of the ongoing competition between Turkey and Bulgaria for the new production facility. Conducting the ongoing negotiations with Volkswagen, Ermut highlighted Turkey's advantages and suggested Opel's land for sale in in the Aegean province of İzmir's Torbalı district, which has created a stir in the region.

It is unclear where the new factory to manufacture Skoda and Seats will be built, but talks are still in progress on a 40-hectare land near İzmir, which was occupied by Opel until 2001.

Stating that the land's connection with the İzmir railway network was also on the agenda, the newspaper wrote that the Turkish government's incentive plan of approximately 100 million euros was also discussed during the meetings.

Striving to ensure that Opel's facilities did not remain idle and that domestic cars came to the district, Torbalı Chamber of Commerce (TTO) President Abdulvahap Olgun said Torbalı was the most attractive place in the region with port, airline, and railway connections.

"We have experience in automobile manufacturing. We are in a unique position both in Turkey and in the Balkans in terms of logistics, labor, and supply industry," he said.

He noted that the land in Torbalı had many advantages in terms of both equipment and transportation for an investment of this scale.

"Currently, 750 production facilities, 54 of which are foreign capital, operate in our city. Torbalı, which hosts international giants such as Philip Morris, Groupe Atlantic, MSC Group, JTI, Oetker, and SFS Intec, has $1 billion in exports and a logistics network with more than 100 countries," Olgun continued. "Previously hosting the most productive period of Opel, Torbalı is also the most suitable investment region for Volkswagen as well. Highways and motorways pass through our city. It is located on the high-speed railway line, and is 25 kilometers from Adnan Menderes Airport and 40 kilometers from Alsancak Port. In addition, our district is connected to the ongoing Istanbul-İzmir Motorway project. Sufficient workforce and the availability of suitable areas for industrialization are a major attraction for investments. İzmir is also a pioneer region in the automobile industry."

Opel Turkey was founded in 1989 as a 100 percent foreign capital firm with an investment of around $23 million. The Opel plant was one of the most prestigious brand companies hosted by Torbalı. It was the third car factory in Turkey after Renault and Tofaş. In 1990, the year the plant was commissioned, Opel assembled 1,156 cars in these facilities. This amount exceeded 6,000 a year later, reaching 9,000 in 1992 and rising to over 12,000 in 1993. In 1993, Opel Turkey started importing. In the first year, 6,630 cars were imported. The economic crisis that emerged a year later also hit Opel. The number of assembled cars in Torbalı facilities fell to 6,626, half of the previous year. Imports, on the other hand, declined to one third, standing at 802,000. In 1995, these figures remained almost the same. With an annual production capacity of 10,000 units, the factory could not withstand the economic crisis any longer and was forced to shut down in 2000. Opel, Turkey's only automotive brand headquartered in İzmir, turned its assembly plant in Torbalı into a spare parts warehouse.

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