Erdoğan's concession to Volkswagen: Tax relief and 40 thousand passat purchase guarantee

The German automotive giant Volkswagen (VW) decided to establish a new factory in Turkey as a result of getting some privileges from Ankara such as tax relief and purchase guarantee, according to the sources
Thursday, 25 July 2019 10:15

Volkswagen, the German automotive giant, will open a new factory in Manisa after receiving government concessions from Ankara. It is claimed that Erdoğan has given Volkswagen a tax deduction and purchase guarantee to buy 40,000 Passats a year for government use in return. 

The German automotive giant Volkswagen (VW) decided to establish a new factory in Turkey,  as a result of getting some privileges from Ankara, according to the sources. But the firm is said to find the taxes levied on new cars in Turkey "extremely high" and is considering to wait before taking steps in this regard. It is claimed that President Recep Tayyip Erdoğan is ready to give a kind of state guarantee to all agreements to be signed with VW and has accepted all VW demands. 

German reporter Von Oliver Mayer-Rüthen, the Istanbul correspondent of ARD-Studio, has reported in that, Volkswagen (VW) opted for a new car factory to be established in Turkey.

Basing his report on government circles, he stated the factory will be established in Manisa, after seeing that some steps be taken to reduce the "extremely high" taxes imposed on newly-bought cars in Turkey. Consumption tax levied on Passat model cars according to their engine power can go as high as 41 percent of the price of the car.


The big volume of Turkish market played a key role in VW's decision to establish the new factory in Turkey, albeit lower labor costs in Bulgaria. It is stated that Volkswagen accounts to sell about 40 thousand Passats per year only in Turkey. 

It is also calculated that Passat limousines are a popular model by Turkish senior officials and that a significant portion of the Passats produced will be purchased by the state. In addition to Passat, Skoda and Seat models are planned to be produced in the new factory.


The sources also report that President Recep Tayyip Erdoğan is ready to assure some sort of state guarantee to all agreements with VW. In spite of the unusual nature of such a bail request, it is reported that Ankara has accepted all of VW's demands.

According to the sources, the agreement for the new factory will be signed in late September or early October. It was assessed that the German firms were hesitant and refrained from large investments in Turkey in recent years, so VW's decision to invest in Turkey will mean a great source of prestige for Ankara.

The German government and Lower Saxony state Prime Minister Stephan Weil of the Social Democratic Party who is also on the Board of Inspectors of VW are said to support the establishment of the factory in Manisa, where Erdoğan's coalition partner MHP is strong.