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New factory plans abandoned over concerns about Turkey’s political situation, Volkswagen CEO admits

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German automaker Volkswagen has acknowledged for the first time that concern about the political situation in Turkey was the reason the company abandoned plans to build a new plant in the country back in July, Euronews Turkish reported, citing German business magazine WirtschaftsWoche.

Volkswagen CEO Herbert Diess said in an interview on Friday with WirtschaftsWoche that the company’s works council was against the plant in Turkey due to the political climate in the country, adding that the project would not have received a majority vote on the executive board without the approval of the council.

Diess also said shareholders had concerns about the political situation in Turkey.

“I was and still am of the opinion that we should have gone to Turkey because we could have contributed to improving conditions there,” the CEO said.

Admitting that he has always been somewhat at odds with the position of the European Union and the German government on the issue of integrating Turkey into the EU, Diess said, “Turkey is a country that Europe should not give up on from a geostrategic point of view.”

The 1.3 billion euro ($1.6 billion) plant in Manisa was to produce the Volkswagen brand Passat and the Superb, a Skoda brand sedan, starting in 2022 with an annual output of 300,000 units.

After putting a decision about the plant on hold in October of last year due to a Turkish military incursion in northern Syria that prompted an international outcry, Volkswagen announced in early July that it was halting plans for the new factory in Turkey, citing the steep drop in demand for cars worldwide caused by the coronavirus pandemic as the primary reason.

The plan to produce 300,000 cars a year in Turkey, creating 5,000 jobs, would have expanded Volkswagen’s total number of factories worldwide to 123 and created a bridgehead to grow sales across Eastern Europe and the Middle East.

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