Plans by Japan's Honda Motor Company and South Korea's Hyundai Motor Company to build two new car plants have been approved by the treasury and foreign trade undersecretariat.

The total value of the plants, to be located in the western Kocaeli province, is about $400 million. The factories, each capable of producing 100,000 cars a year, would target both the domestic and European markets, and capitalise on the customs union to be established with the EU in 1995. Each plant will employ about 3,000 workers on completion in late 1998.

Both companies have joined up with local partners which will take a 50 per cent share, Hyundai with the Assan Group, and Honda with Anadolu Endustri Holding. The Hyundai project is costed at about $208 million, and the Anadolu Endustri scheme at $188 million.

Honda and Hyundai are the latest foreign manufacturers seeking to capitalise on rapidly rising domestic demand for cars. Domestic car production rose by 28 per cent in the first 10 months of 1993 compared with January-October 1992 to 270,111 units.

Long-established companies such as market leader and Fiat licensee Tofas, Oyak-Renault, and Ford licensee Otosan are rapidly expanding capacities along with the introduction of newer models (MEED 1:10:93). Production of Ford Escorts by Otosan started in December following a $25 million investment programme in new facilities including a robot welding line at the company's Istanbul plant. Output will be about 15,000 cars in 1994, rising to 21,000 in 1995.

Of the new entrants, the US' General Motors Corporation started production at Torbali near Izmit in the early 1990s, while construction is under way of a plant near Istanbul making Toyota cars for Toyotasa, a venture of Japan's Toyota Motor Company and the local Sabanci Holding. However, in February, French automobile group PSA Peugeot Citroen suspended plans for a plant of a similar size (MEED 5:3:93).