Volkswagen revisits Turkey plans

Volkswagen, the largest carmaker in Europe, has shown renewed interest in producing vehicles in Turkey, a country it had previously abandoned. This move comes as the company faces financial challenges, including significant losses and a need to cut costs.

Official letter of intent signed

On October 30, Turkish company Doğuş Otomotiv signed a letter of intent with Volkswagen to explore the possibility of manufacturing cars in Turkey. This document is not a binding contract but indicates both parties are committed to discussing the project seriously.

Doğuş’s long-term relationship with Volkswagen

Doğuş has been importing and distributing Volkswagen brands like Audi, Skoda, Seat, and Porsche in Turkey for over 30 years. The company now seeks to move beyond distribution and into production, aiming to offer advanced, technology-driven vehicles to the Turkish market.

Past attempt to establish in Turkey

Volkswagen had previously planned to build a plant in Turkey near Manisa in 2019. The facility was intended to produce 300,000 cars annually, but the project was frozen in 2019 and officially abandoned in 2020 due to the pandemic and reduced demand.

Why Turkey remains appealing

Despite past setbacks, Turkey offers advantages for carmakers, including a customs union with the European Union that allows duty-free trade of industrial goods. The country also has a well-established automotive industry and a growing market, with Volkswagen already among the top-selling brands.

Volkswagen’s current financial state

Volkswagen reported a loss of 5.9 billion euros in the third quarter of 2023, with revenue declining by 6% to 75.3 billion euros. The company is also reconsidering its electric vehicle development, making a new production project seem unusual at this time.

EU policy affects Turkey’s role

A recent EU agreement gives preference to cars assembled within the Union, offering benefits in emissions calculations. This excludes Turkey and Morocco, which are major car assembly sites for European automakers. Volkswagen has opposed this exclusion, emphasizing Turkey’s importance to the European supply chain.