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Volkswagen liquidates unit in Turkey after decision to build Slovakia plant

The VW Logo is pictured at the headquarters of German car maker Volkswagen in Wolfsburg on October 26, 2020. (Photo by Ronny Hartmann / AFP)

German automaker Volkswagen has liquidated its unit in Turkey after cancelling plans to establish its first factory in the country and an announcement last month that it would invest 1 billion euros ($1.2 billion) in a plant in Slovakia, local media reported on Tuesday.

The decision to liquidate the unit was reportedly registered with the Turkish Trade Registry, and a call to creditors was issued on Monday.

Volkswagen established the unit in October 2019 in the northwestern industrial region of Manisa with a capital of 943.5 million lira ($127 million).

A 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.

The German automaker then suspended its production plans due to a Turkish military incursion in northern Syria that began the same month and 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.

However, Volkswagen CEO Herbert Diess acknowledged for the first time in early December that concern about the political situation in Turkey was the real reason the company abandoned plans to build a new plant in the country in July.

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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