Turkish President Recep Tayyip Erdogan has reportedly ordered senior officials in the ruling Justice and Development Party (AKP) to switch to Volkswagen’s Passat model, with the German automaker seemingly on the point of announcing Turkey as the location for a new billion-dollar factory.

Meanwhile, Automotive News Europe has reported that the Volkswagen Group will build the next-generation VW Passat and the Skoda Superb midsize model developed by Czech subsidiary Skoda Auto at the planned factory in Manisa, a western province of Turkey. It cited an internal document from the group. 

Erdogan’s order would affect the use of just 19 Audis by AKP executives at party headquarters, with the rental contracts for most of the cars due to expire in about two months, Bloomberg reported, quoting two senior AKP officials. However, the Turkish president’s endorsement of the Passat will likely set a precedent for thousands of party officials and state institutions.

At the end of August, German state media outlet ARD reported that VW finally decided to build its planned factory in Turkey rather than Bulgaria because of the size of the local auto market, even though labour costs are much lower in Bulgaria. Turkey’s population stands at around 82mn people.

VW, it said, had calculated that it could sell as many as 40,000 Passat model units annually in Turkey. The carmaker also took into account the fact that the Passat limousine version is highly popular among Turkish officials and the government might buy this model in considerable quantities for official use, the news outlet said.

The Manisa plant looks set to also produce VW subsidiary Seat models.

Turkey’s Trade Register Gazette published a notice on October 2 that Volkswagen has officially registered a subsidiary in Manisa. 

Reuters in late August reported that a pledge from Turkey for a change in the special consumer tax system at a specific date in the future would be enough to convince Volkswagen to choose Turkey over Bulgaria for the multi-brand auto production plant.

To meet the request, Turkey was apparently trying to come up with a formula that would meet Volkswagen's concerns while not putting existing car producers at a disadvantage, they added.

Turkey’s tax regime charges from 45% to 60% for engines up to 1.6 litres and from 100% to 110% for engines up to 2 litres. Vehicles with engines of less than 1.6 litres constituted 96% of all car sales last year, with the steep Turkish taxes on larger cars limiting most buyers and local producers to smaller engine sizes.

Major producers including Fiat, Renault, Ford, Hyundai and Toyota produced more than 1.3mn motor vehicles in Turkey last year.