The European Investment Bank supports Turk Otomobil Fabrikasi A.S. (TOFAS) with a loan of EUR 175 million to jointly develop and produce with PSA Peugeot Citroën and Fiat Auto small commercial vehicles for the European market. The project will assist two major EU automotive companies to consolidate their presence in a strategic pre-accession market and help Turkey to build up a modern and competitive industry, contributing to prepare the country for EU-accession.
The loan, part-financing for total investments estimated at EUR 400 million will result in an important expansion of the company's production capabilities and create some 5.000 new jobs. The vehicles will be produced at Tofas' manufacturing plant in Bursa with an additional, initial, annual capacity of 135.000 cars, due to roll off the assembly line in late 2007.
Head quartered in Istanbul, TOFAS is Turkey's car-making pioneer and is listed on the Istanbul Stock exchange. The company was established in 1968, as a Turkish-Italian cooperation venture to manufacture passenger cars and light commercial vehicles under licenses from FIAT Auto S.P.A. Co-owned by KOC Holding A.S., a major Turkish conglomerate and FIAT. TOFAS currently has an annual production capacity of 162.000 vehicles.
Turkey is developing into a dynamic emerging market and offers attractive conditions for investors wishing to manufacture high quality products, said EIB Vice-President Wolfgang Roth. He added that this additional investment reflects the dedication and commitment of the Bank's associates to work closely with Turkish counterparts in order to develop attractive financing structures for investors as well as their confidence in the Turkish automobile sector.
The Turkish Automotive Manufacturers Association (OSD) predicts that the production capacity for cars, which is currently around 920.000 units, will more than double by the year 2010 based on domestic demand as well as export opportunities. In recent years, political and economic developments in Turkey have fostered an improved business climate, which has resulted in a sharp increase in FDI in 2005 and 2006, with the Turkish car industry but one sector of the domestic economy to benefit.
Financing made available by the Bank in Turkey, since 2000, stands at over EUR 4.5 billion and relates to investments in a wide range of key economic sectors.