VW starts new plant talks with Bulgaria and Turkey

German car manufacturer Volkswagen has decided to start talks on the building of a new plant with a few cities in Bulgaria and Turkey, local media reported after a meeting of VW’s board of directors on May 14. The decision confirms the preliminary information that VW hesitates between Bulgaria and Turkey, and no longer considers neighboring Serbia and Romania in the race for a future destination of its investment. VW will announce its final decision on the location of its new plant in October. The total investment is estimated at EUR1.4bn and is expected to open 5,000 jobs. The future plant will produce Skoda Karoq and SEAT Ateca and will have capacity of 350,000 units per year. Bulgaria’s advantages for VW are most likely related to its EU membership, political and economic stability and good bilateral relations between Germany and Bulgaria, in our view. On the other hand, rising shortage of workers might be considered an impediment to the investment. To compare, Turkey can boast with more experience in being a car making location, but its volatile currency over the past year might be deterrent to long-term investment plans on part of foreign investors in our opinion.

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