Volkswagen abandons Turkey factory plan after car sales slump

Volkswagen AG canceled plans to build a car factory in Turkey after the coronavirus pandemic jolted auto markets.

The slump in global car demand makes adding more capacity “unnecessary from today’s perspective," Volkswagen said Wednesday in an emailed statement. The German company will instead produce new cars at existing sites, it said.

The world’s largest automaker put the project on hold last year after political tensions in the region escalated following the withdrawal of US troops from Syria. The Covid-19 outbreak added to obstacles as sales tanked and the exact shape of a potential recovery remains unclear.

The factory in Turkey was supposed to make around 300,000 cars a year and provide a base for Volkswagen’s expansion in the Middle East. The project would have marked a milestone in attracting foreign investment for the country that has been plagued by economic woes even before the pandemic.