Volkswagen, the German automotive giant has virtually entered into a partnership agreement with Turkey’s Ford Otosan to manufacture minibuses in Turkey. Ford Otosan a company jointly owned by Ford, world’s second largest automaker and Koc Holdings, Turkey’s largest conglomerate, manufactures Ford’s transit models at its plants. Through the new agreement they have decided to add Volkswagen vehicles mainly minibuses to the existing assembly production.
Volkswagen and Ford, lately have been exploring the possible areas of alliance globally as the automakers move to manufacturing electric vehicles. Recent reports have suggested that the companies are looking for closer cooperation owing to the shifting landscape in automotive sector. As software companies have declared their plans to enter self-driving cars, and US-China Trade war along with a slowdown in crucial automotive markets such as USA and China, have made automakers wary of the shift and pushed them to explore possible areas of convergence to adapt in a changing automotive sector. The slowdown has forced many companies to shrink down the size of the workforce to reduce costs. Other challenges include the cost of adopting to new technology to comply with tougher emission standards for internal combustion vehicles.
Volkswagen’s Transporter and Crafter vehicles might be produced at the Yeniköy and Gölcük plants where Ford produces custom and transit models. Volkswagen’s Transporter and Crafter vehicles are equivalent to the Ford Custom and Ford Transit vehicles respectively. Volkswagen will reportedly shift 150,000 -180,000 commercial vehicle manufacturing per year to the Turkey based plants.
Chairman of the Association of Automotive Parts and Components Manufacturers (TAYSAD) Alper Kanca, believes that the partnership deal is a sign of confidence shown by the German automaker in Turkey. The two nations have a history of strained political relationship. This is owing to the waging war of words that are often exchanged between the two country’s leadership Recep Tayyip Erdogan and German premier Angela Merkel on twitter. But investor confidence in the autocratically ruled country still remains intact as German automakers make a big chunk of their revenue from Turkey.
Mr. Kanca said about the VW-Ford deal, “This would change many things, especially the perception of many Germans.’’
The volume of bilateral trade between Germany and Turkey stood at $36.4 billion in 2017 which is a 3.1 percent increase over the previous year. There are around 80,000 Turkish-German businesses running in the country which employ around 500,000 people across 50 sectors.