Volkswagen announced the cancellation of Turkey’s plant construction plan
On July 1, according to “European Automotive News”, Volkswagen has decided not to build a multi-brand plant in Turkey because of the plummet of car sales under the influence of the coronavirus, making it difficult for its existing plants to operate at full capacity.
As early as November 2018, Volkswagen announced plans to build a new plant in Eastern Europe to produce Volkswagen models such as the Skoda Karoq and SEAT Ateca.
After multiple evaluations, Volkswagen finally chose Manisa, located 40 kilometers northeast of Izmir, on the west coast of Turkey, as the location of the factory. It is reported that the company originally planned to start production in 2022, with an annual output of up to 300,000 units and employing 4,000 workers.
Once completed, the Turkish plant will greatly alleviate the production capacity restrictions of Skoda’s local Czech plant and enable Volkswagen to release its production capacity at the Emden plant in Germany, which is used to produce Passat, and thus transform the production of electric vehicles.
However, in October last year, Volkswagen postponed its plan to build a factory in Turkey for the first time due to fears that the international community would condemn the Turkish military actions. This move has also attracted strong interest from the three Balkan countries of Bulgaria, Romania and Serbia, and they are vying to introduce this project worth 1.3 billion euros (about 10.2 billion yuan).
Although the decision was postponed, Volkswagen emphasized that it has no plans to find alternative destinations for the new factory.
According to sources, the Turkish plant will be Volkswagen’s 133rd plant in the world, but under the epidemic, this plant will only become the automaker’s excess capacity.
In this regard, Volkswagen also stated that the decision to stop building the factory was due to the decline in global sales caused by the new coronavirus epidemic.
Data show that as the global market continues to be affected by the pandemic, the Volkswagen Group sold a total of 609,000 vehicles worldwide in May, a year-on-year decrease of 34%. In the first five months of this year, the Volkswagen Group’s cumulative global sales reached 3.09 million vehicles, a year-on-year decline of 30%.
Specifically, in Western Europe, Volkswagen Group’s sales in May fell 57% year-on-year; in Central and Eastern Europe, it fell by 51%; and in North America and South America, it also plummeted by 39% and 69%.
In contrast, in the Chinese market where the epidemic is basically under effective control, Volkswagen Group’s sales in China rebounded 5.7% in May. At the same time, as of the beginning of June this year, the production capacity of all Volkswagen Group factories in China has been close to 100%.
According to Volkswagen CEO Herbert Diess, “demand has fallen to the bottom” because of the new crown epidemic. As a result, Volkswagen lowered its liquidity. The current weekly liquidity is less than 2 billion euros, compared with 21.3 billion euros at the end of the year.
“Volkswagen started planning to build a plant when the economic conditions (especially in Eastern Europe and the Middle East market) were generally improving.” The company said in an e-mail statement to “European Automotive News”, “But as far as it is concerned, , The situation is not as expected.”
It is reported that in 2018, Volkswagen’s core strategic goal is to increase global production and sales to 10 million vehicles, so building or expanding factories around the world has become a key content.
In fact, due to the sudden epidemic, many multinational auto companies have changed their original expansion strategies.
On May 14, Nissan Motor Co. plans to cut its global production capacity by about 20% from the current 7 million vehicles by 2022, including withdrawing from the Korean market by the end of 2020; in addition, BMW and Honda are also in the global scope. A large number of 6,000 and 3500 employees were laid off.