The European Bank for Reconstruction and Development (EBRD) is supporting car development in Turkey with a €200 million syndicated loan to the leading Turkish automaker Tofaş Türk Otomobil Fabrikası A.Ş.
A joint venture between Italy’s Fiat Chrysler Automobiles (FCA) S.p.A and Turkey’s Koç Holding A.Ş., Tofaș will use the EBRD financing to build two new models of passenger cars – a hatchback and a station wagon – both targeted for export.
The loan, of which €100 million is syndicated to HSBC Bank PLC and Bank of America Merrill Lynch, will finance research and development investments which include engineering, design and prototype development of the new models.
The process will be led by Tofaș’ own research and development centre in the north-western Turkish city of Bursa and will involve Turkish universities and the company’s suppliers sharing the latest knowledge and cutting-edge technologies across the automotive industry.
Tofaş has been investing in research and development since early 1990s and today is a strategic R&D resource for the FCA Group. It employs 600 highly-qualified staff and is the FCA’s second largest hub located in the Europe, Middle East and Africa (EMEA) region.
The EBRD financing will also cover fixed asset investments for the production of approximately 700,000 vehicles over 2016-22 at the company’s plant in Bursa. The loan will also finance investments outsourced to suppliers, creating stronger ties across the chain.
In addition, the Bank will help Tofaș provide greater employment opportunities for young people through expanded vocational training and closer partnerships with schools. They also aim to bring more women into the traditionally male-dominated automotive sector by supporting best practices in recruitment, career management and workplace practices.
Jean-Patrick Marquet, EBRD Director for Turkey, said: “Innovation is the engine of the automotive industry and we are pleased to support Tofaș as it invests in research and development but also in human capital in order to create new value-added products and stay competitive in global markets.”
Cengiz Eroldu, CEO at Tofaș, added: “We have a comprehensive approach to innovation. It relates to our products and services, business practices and organisational solutions. We are reshaping Tofaș’ employment policy and are accelerating our research and development work.”
The EBRD is an experienced investor in the automotive industries of eastern Europe and North Africa. In Turkey, it is supporting research and development at innovative companies such as Tofaș to boost the competitiveness of both the automotive sector and the country’s economy.
The EBRD started investing in Turkey in 2009 and currently operates from offices in Istanbul, Ankara and Gaziantep. In 2014 Turkey became the leading recipient country of the EBRD, with new investments worth €1.4 billion.
To date the EBRD has invested over €6 billion in Turkey through close to 160 projects in infrastructure, energy, agribusiness, industry and finance. It has also mobilised over €12 billion for these ventures from other sources of financing.
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