Turkey might have a new auto manufacturing facility in the coming years as it nears an agreement with the German carmaker Volkswagen. If the outcome is positive, the construction of facility in Manisa will start at the end of 2020 with production beginning in 2022. The investment is for production of around 300,000 cars per year at a total cost of $1.09 billion.
The new auto making facility is potentially a source of additional demand for flat steel in Turkey to the benefit of local producers, re-rollers in particular. Currently, local players are suffering from the significant slowdown of demand from the key consuming industries. In particular, Turkey’s local car sales decreased by 46 percent year on year during the January-August period this year to 246,161 units, according to Turkey’s Automotive Manufacturers’ Association (OSD). Production fell by 10.9 percent year on year in the first eight months to 921,187 units. Overall, total flat steel consumption in Turkey decreased by 14.3 percent year on year to 9.73 million mt in the same period, as reported previously.
The new VW plant, however, according to the preliminary information, will be aiming to export its products to eastern Europe and is to rely less on domestic demand in Turkey, which is foreseen to remain subdued. Exports took almost 90 percent of the total Turkish automotive production, or 806,666 units, in the first eight months this year, the OSD data show.