Turkish incentive scheme attracts foreign carmakers

ISTANBUL- Hürriyet Daily News

Employees work on a Volkswagen car at an assembly plant in Wolfsburg, Germany. The German carmaker has been interested in investing in Turkey since 2005. AP photo

German carmaker Volkswagen (VW) is considering investing in production facilities in Turkey, after the Turkish government expressed its commitment to an incentives scheme to bolster the Turkish auto sector.

Similarly, Korean carmaker Hyundai is augmenting its production capacity in the Turkish market.

“Volkswagen is very interested in investing in the Turkish market and will release its preliminary investment report in March,” said Doğuş Otomotiv Executive Board Director Aclan Acar in an interview with daily Hürriyet. Acar hinted that a VW production plant in Turkey would produce around 200,000 to 250,000 vehicles and that this could include more than one particular model.

Doğuş Otomotiv Chairman Ali Bilaloğlu told daily Sabah that they had formed a working group with VW as well as the Prime Ministry’s Investment Agency to work out investment options.

VW is seriously interested
“Ever since the government’s decision to incentivize investment programs in the automotive industry, we have started working even harder. I don’t know what this report will lead to, but I can definitely say that we are seriously working on investment options,” said Bilaloğlu. He added that VW has been interested in investing in the Turkish market since as far back as 2005.

Korean carmaker Hyundai has also said it will increase the production capacity of its İzmit plant to 200,000 vehicles by the end of 2013, with a 400 million euro investment. In addition to revamping its existing i20 model, it will also begin producing the smaller i10 vehicle. In 2012, Hyundai plans to produce 84,000 new i20 vehicles and will increase this number to 120,000 in 2013. This will bring Hyundai’s total investment in the Turkish market in 15 years to $1 million. When the i10 model goes into production, Hyundai’s total investment figure will exceed $1.5 million, according to daily Hürriyet.

Meanwhile, however, Turkey’s luxury automobile market is expected to shrink by 15 percent in 2012 due to the increase in the special consumption tax, which was hiked in October 2011 from 84 percent to 130 percent for vehicles whose motors exceed 2 liters. The tax is expected to affect car prices this year.

The expected 15 percent shrinkage will be the first drop in luxury car sales in the last four years, according to NTV. The number of luxury cars, which registered sales figures of 49,000 vehicles in 2011, is expected to drop to 42,000 in 2012.