June 23 (Bloomberg) -- Volkswagen AG, Europe's biggest automaker, may invest 1 billion euros ($1.6 billion) in a Turkish factory with its local partner Dogus Holding, Referans newspaper said today.

Aclan Acar, chairman of Dogus Otomotiv Servis & Ticaret AS, which distributes Volkswagen cars in Turkey, said the German company would ``sooner or later'' begin production in Turkey and the minimum investment would be 1 billion euros, Istanbul-based Referans said.

Acar said the plant may be built in the northwestern town of Adapazari in the next three to four years, according to Referans. Cheap labor makes Turkey attractive for Volkswagen, he said.

Industry Minister Zafer Caglayan told reporters last week that a major carmaker planned to start production in Turkey by investing 1 billion euros, without naming the company, Referans reported.

To contact the reporter on this story: Ayla Jean Yackley in Istanbul at ayackley@bloomberg.net.

Last Updated: June 23, 2008 02:36 EDT