FRANKFURT -- Volkswagen Group will build the next-generation VW Passat and Skoda Superb midsize model lines at a new plant in Turkey.
The factory will have a maximum annual production capacity of 300,000 vehicles, according to an internal document seen by Automotive News Europe.
The factory will be located in Manisa, 40 km (25 miles) northeast of Izmir on Turkey's western coast. The production start is scheduled for 2022.
The plant will focus mostly on export markets and create around 5,000 jobs at the factory and surrounding suppliers, according to a senior Turkish official with direct knowledge, who asked for anonymity while discussing plans before they are made public
VW picked Turkey for the factory because of "positive macroeconomic conditions" including an 80 million-strong population that rivals Germany's in size and its location amid growth markets, according to the company document.
A VW spokesman would not comment on the details of the plant, saying only that the company was in the "final stages of negotiations."
The plant will cater to the domestic market and serve as an export hub for eastern Europe including Russia and the Middle East.
The VW brand will operate the factory. About two-thirds of the 300,000 production volume will be for the Passat.
The factory will allow VW to move Passat production from Emden, Germany, and turn Emden into a factory building only electric cars. It will also give Skoda much-needed extra capacity at its plant in Kvasiny, where it builds the Superb.
VW also considered sites in Bulgaria, Serbia, Romania and northern Africa as the plant's location.
Turkey has a relatively low car density of about 150 cars per 1,000 inhabitants as well as a qualified workforce and a well-developed supplier structure.
Importantly, the country also is a key destination for the Passat sedan, which struggled after a plunge in the value of the Turkish lira.
In the first seven months, Turkey's domestic car market dropped by nearly half to 212,605 vehicles. Two years earlier 481,982 vehicles were sold over the same period.
Experts say producing locally as a hedge against currency fluctuations is the most cost-effective way of servicing demand in Turkey.
VW has established a Turkish unit in Manisa, paving the way for the automaker to start making cars in the country, according to notice published on Turkey's trade registry gazette on Wednesday.
Volkswagen Turkey Otomotiv Sanayi ve Ticaret AS will design, manufacture and assembly motor vehicles, according to the notice. The company has a capital of 943.5 million liras ($164 million).
The new plant will expand VW's total number of factories worldwide to 123.
Other global automakers with an industrial footprint in Turkey include Fiat Chrysler, Renault, Ford, Toyota, Hyundai and Honda.
Bloomberg contributed to this report