Turkey, Volkswagen close in on production plant deal: sources

ISTANBUL (Reuters) – Turkey is more and more assured German carmaker Volkswagen (VOWG_p.DE) will construct a manufacturing plant within the nation after an “extraordinarily constructive” assembly between a senior firm official and President Tayyip Erdogan this week, three Turkish sources mentioned.

FILE PHOTO: Folks cross in entrance of a Volkswagen emblem forward of the Shanghai Auto Present, in Shanghai, China April 15, 2019. REUTERS/Aly Tune/File Photograph

Reuters reported final week that the 2 sides had been holding talks over Turkey’s automobile tax regime to conclude the 1 billion euro ($1.1 billion) funding.

The carmaker, which has additionally thought of making the funding in Bulgaria, has not introduced a ultimate resolution, however sources have mentioned Volkswagen (VOWG_p.DE) is constructive about investing in Turkey.

Erdogan and a high-ranking VW official overcame many of the issues throughout a gathering this week, one Turkish supply with information of the matter mentioned. A Volkswagen supply mentioned Erdogan had met with VW Chief Government Herbert Diess this week.

“There have been beforehand some small points, such because the tax preparations on the vehicles that might be offered. Within the assembly, an virtually full settlement was reached,” the Turkish supply mentioned. “If there isn’t a final minute drawback, the funding might be made in Turkey.”

Steep Turkish taxes on bigger vehicles restrict most consumers and native producers to smaller engine sizes. Vehicles with engines of lower than 1.6 liters made up 96% of Turkey’s new automobile market in 2018. A supply had mentioned Turkey was looking for a method to handle Volkswagen’s issues with out placing present automobile producers at an obstacle.

Main producers akin to Fiat (FCHA.MI), Renault (RENA.PA), Ford (F.N), Hyundai (005380.KS) and Toyota (7203.T) produced greater than 1.three million motor autos in Turkey final yr.

Czech Prime Minister Andrej Babis mentioned on Tuesday throughout a go to to Ankara that Volkswagen is making an enormous funding in Turkey.

A second Volkswagen supply mentioned solely minor issues nonetheless needed to be clarified, primarily on tax points. The settlement was anticipated to be reached in just a few weeks and the plant was anticipated to be constructed within the western Manisa province, the supply mentioned.

“There isn’t any drawback any longer about pondering that the funding might be made in Turkey. This resolution might be introduced in a short time after the ultimate changes are made,” a second Turkish supply mentioned.

Reporting by Orhan Coskun; Extra reporting by Jan Schwartz in Hamburg; Writing by Ali Kucukgocmen and Edmund Blair

Our Requirements:The Thomson Reuters Belief Ideas.

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