Automotiv_September

Monthly automotive aftermarket magazine
Turkish automotive industry
keeps its competitive power
and advantages
The foundation of Turkey’s
automotive industry dates back to
the early 1960s. During a period of
rapid industrialization and progress,
this key sector transformed itself
from assembly-based partnerships
to a full-fledged industry with design
capability and massive production
capacity. Between 2000 and 2017,
original equipment manufacturers
(OEM) invested USD 14 billion
in their operations in Turkey.
These investments significantly
expanded their manufacturing
capabilities, which in turn led
Turkey to become an important
part of the global value chain of
international OEMs. Meeting and
exceeding international quality and
safety standards, today’s Turkish
automotive industry is highly
efficient and competitive thanks to
value-added production.
• Leveraging a competitive and
highly-skilled workforce combined
with a dynamic local market and
favorable geographical location,
the vehicle production of 13 global
OEMs in Turkey increased from
374,000 in 2002 to over 1.7 million
units in 2017. This represents a
compound annual growth rate
(CAGR) of around 10 percent
during that period.
• Significant growth posted by
Turkey’s automotive sector led to
Turkey becoming the 14th largest
automotive manufacturer in the
world and 5th largest in Europe by
the end of 2017.
• Turkey has already become
a center of excellence, particularly
with respect to the production of
commercial vehicles. By the end
of 2016, Turkey was the number
one producer of light commercial
vehicles (LCV) in Europe.
• Proven as a production hub of
excellence, the Turkish automotive
industry is now aiming at
improving its R&D, design, and
branding capabilities. As of the
end of 2017, 132 R&D and design
centers belonging to automotive
manufacturers and suppliers were
operational in Turkey.
• Notable examples of global brands
with product development, design,
and engineering activities in Turkey
include Ford, Fiat, Daimler, AVL,
and Segula. Ford Otosan’s R&D
center is one of Ford’s three largest
global R&D centers, while Fiat’s
R&D center in Bursa is the Italian
company’s only center serving the
European market outside its home
country. Meanwhile, Daimler’s R&D
center in Istanbul complements
the German company’s truck and
bus manufacturing operations in
Turkey. AVL Turkey, which opened
up its 2nd R&D center in Turkey,
started to develop autonomous
and hybrid vehicle technologies.
• Turkey offers a supportive
environment on the supply chain
side. There are around 1,100
component suppliers supporting
the production of OEMs. With
the parts going directly to the
production lines of vehicle
manufacturers, the localization rate
of OEMs varies between 50 and 70
percent.
• Turkey is home to many global
suppliers. There are more than 250
global suppliers that use Turkey
as a production base, with 28 of
them ranking among the 50 largest
global suppliers.
• Auto manufacturers increasingly
choose Turkey as a production
base for their export sales. This is
evidenced by the fact that around
80 percent of production in Turkey
was destined for foreign markets
in 2017. More than 1,300,000
vehicles were exported from Turkey
to foreign markets in the same
year. In addition, Turkey was the
number one vehicle exporter to
European markets with 986,000
units in 2017.
• While Germany, France, Italy,
the UK, and Spain are currently
the major export customers of
the Turkish automotive industry,
there is a trend of diversification in
export destinations with companies
looking to break into nearby
emerging countries where there
is considerably more demand
potential for new auto sales.
• The rise of per capita income
from USD 3,000 in the first few
years of the 2000s to around USD
11,000 in 2017 led to higher sales
in the motor vehicles market. While
the average annual sale figures in
the market were around 360,000
in the early 2000s, the average
sales increased to nearly 1,000,000
by 2017.
• Despite the strong increase in the
sales, the automobile penetration
in Turkey -- 165 cars per 1,000
people-is well behind the European
average of 500. This indicates
ample opportunities for carmakers
in the domestic market. Increased
purchasing power combined with
a low automobile ownership rate
should help drive automobile sales
in the coming years.
64 SEPTEMBER 2018