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VW holds fire on Turkish car factory

Not now: VW had planned to produce the new Passat at its new Turkish factory, but that plan is now up in the air after Turkey’s invasion of northern Syria.

“Worried” Volkswagen pulls back on new Turkish factory as sanctions bite

16 Oct 2019

VOLKSWAGEN has postponed a board of management vote to sign off on a new €1.3 billion ($A2.13b) car factory in Turkey in the wake of the Turkish invasion of Kurdish-held areas of Syria and subsequent international backlash.

 

The decision to delay a final decision on the factory project came just weeks after the German company created a new subsidiary in Turkey to build up to 300,000 VW and Skoda vehicles a year in Manisa Province, in the west of the country.

 

“The decision for the new plant was adjourned by the board of management of Volkswagen AG,” the company said in a statement. “We are monitoring the situation carefully and are worried about the current developments.”

 

The plant was to have built the VW Passat and Skoda Superb.

 

European media speculation suggests VW’s main concern is the impact on the Turkish economy of international sanctions, particularly those imposed by American president Donald Trump.

 

The motor industry is a major driver of the Turkish economy. Manufacturers such as Ford, Honda, Hyundai, Mercedes-Benz, Renault, Toyota and VW operate factories there, producing a combined 1.6 million vehicles last year. Of those, 1.3 million were exported.

 

In the first half of this year, Turkish vehicle production fell 13 per cent, while exports declined 8.0 per cent.

 

Germany is one of Turkey’s biggest trading partners, meaning decisions like those of VW are critical to the health of the Turkish economy.

 

Along with European allies, Germany has halted military exports to Turkey, while German chancellor Angela Merkel has asked Turkish president Recep Tayyip Erdogan to end the offensive.

 

An international ban on automotive exports from Turkey would not only have major consequences for that country but also for manufacturers dependent of models produced there.

 

This would mainly affect the European and Middle Eastern markets, rather than Australia. So far this year, almost 3000 vehicles made in Turkey have been sold in Australia out of a total market volume of 811,464.


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