BYD Faces Scrutiny Over Tax Breaks and Unfulfilled Factory Pledge in Turkey

Chinese automotive giant BYD is under growing public and political scrutiny in Turkey amid allegations that the company benefited from substantial tax exemptions in exchange for a factory pledge in Manisa—a project that has yet to materialize. The controversy escalated this week as the issue was formally brought before the Turkish Grand National Assembly (TBMM).

Despite record-breaking vehicle sales in the Turkish market, BYD has not commenced construction on the promised facility, raising concerns over the implementation of investment-based incentive programs.

Factory Promised, Tax Waived—But No Ground Broken

The controversy stems from a July 2024 agreement signed between BYD and Turkey’s Ministry of Industry and Technology, which granted the company exemption from the 40% additional import duty on vehicles. In return, BYD committed to building a local automotive manufacturing plant in Manisa.

However, more than a year later, there is no public sign of construction. Meanwhile, BYD’s presence in Turkey has surged dramatically. In just the first half of 2025, the company sold over 25,000 vehicles, achieving a 784% year-over-year sales increase, making it one of Turkey’s top-selling car brands.

Parliamentary Inquiry Filed: “Where is the Factory?”

Independent MP Burak Dalgın submitted a formal parliamentary question on July 18, 2025, addressed to Industry and Technology Minister Mehmet Fatih Kacır. In his public statement, Dalgın wrote:

“The Chinese auto firm BYD pledged to build a factory in Manisa and was promptly exempted from additional import taxes. Since then, its market share has soared. But where is the factory?”

Dalgın’s inquiry calls for transparent clarification on several key issues:

• What is the current status of the Manisa factory? When is it expected to begin operations?

• Were customs duty exemptions tied to concrete commitments for production and employment?

• Has the government secured any guarantee letters to prevent delays? Are these legally enforceable?

• How much financial advantage has BYD gained from the customs exemption compared to its competitors?

• Given BYD’s major investment in Hungary, what is the realistic outlook for the promised Turkish plant?

Incentive System Under Fire

The case has reignited debate over foreign direct investment incentives in Turkey, particularly those involving tax breaks without clear accountability. Critics argue that such deals must be contingent on verified milestones, such as factory groundbreakings, local hiring, and production outputs.

Meanwhile, analysts warn that allowing multinational firms to expand market share without delivering on industrial commitments could undermine local production, distort market competition, and lead to long-term strategic vulnerabilities in Turkey’s automotive sector.

The Road Ahead: A Test of Credibility

The outcome of this investigation could set a critical precedent for how Turkey structures investment incentives moving forward. While BYD enjoys unprecedented growth in the Turkish auto market, pressure is mounting for the company to honor its commitments—or face consequences.