Automotive Exports December 2019

www.automotive-exports.com

Monthly automotive aftermarket magazine

December 2019

Monthly automotive aftermarket magazine

GROUP CHAIRMAN

H. FERRUH ISIK

PUBLISHER:

İstmag Magazin Gazetecilik

İç ve Dış Ticaret Ltd. Şti.

Managing Editor (Responsible)

Mehmet Söztutan

mehmet.soztutan@img.com.tr

Mehmet Soztutan, Editor-in-Chief

mehmet.soztutan@img.com.tr

Editor

Ayça Sarıoğlu

ayca.sarioglu@img.com.tr

Advertising Manager

Adem Saçın

adem.sacin@img.com.tr

Foreign Relations Manager

Yusuf Okcu

yusuf.okcu@img.com.tr

Competitive and innovative more than ever…

As known, the Turkish automotive industry has been active since the early seventies.

Since the full integration to the European Customs Union in 1994, Turkey has become a

major production platform for global automotive manufacturers. The exports by Turkish

automotive sector, which is the driving force of Turkish economy, reached remarkable

figures in the last decade.

Actually, the auto parts industry of Turkey has recorded a dynamic growth in line

with the automotive industry. From simple components in the mid-1960s, the sector

ascended to produce high-tech components currently.

The industry with its large capacity, wide variety of production and high standards,

supports automotive industry production and the vehicles in Turkey and also has ample

potential for additional exports.

The leading foreign automotive parts manufacturers have established a presence in the

country through joint-ventures, which dominate production and exports. Automotive

parts giants such as Bosch, Autoliv, Pirelli, ZF, Valeo, Denso and many others are present

in the Turkish market. There has also been substantial locally-owned investment by spare

parts manufacturers.

The effects have been that:

- Quality of production improved dramatically, especially through the establishment of

quality management systems.

- The industry has adapted to EU regulations and has established an efficient and

exemplary cooperation with public institutions in the transformation of EU regulations

to national regulations and their implementation.

- Exports have risen sharply, and Turkish production has been integrated into

manufacturers’ global planning.

The export potential of the automotive parts sector, coupled with the presence of major

international automotive manufacturers, has attracted an increasing number of foreign

investors.

The industry exhibit its full potential in major specialized fairs both at home and abroad.

Our publications remain at the service of those businesses people seeking to increase

their share in the increasingly competitive foreign markets. This month, we participate in

Automechanika Shanghai 2019 which will feature over 6,300 exhibitors and 50 fringe

events.

We are convinced that the events in which we participate have turned out to be an

ideal grounds for the business people operating in the automotive business.

We wish them lucrative trade.

Correspondent

İsmail Çakır

ismail.cakir@img.com.tr

Finance Manager

Cuma Karaman

cuma.karaman@img.com.tr

Accountant

Yusuf Demirkazık

yusuf.demirkazik@img.com.tr

Technical Manager

Tayfun Aydın

tayfun.aydin@img.com.tr

Design & Graphics

Sami aktaş

sami.aktas@img.com.tr

Subsciption

İsmail Özçelik

ismail.ozcelik@img.com.tr

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Please mention

Automotive Exports

when writing to advertisers

Seger met with its current

and potential customers in Morocco

Seger, one of the largest horn

manufacturers in Europe and supplier

of replacement parts for automotive

aftermarket and global vehicle

manufacturers, participated in the

automotive sector trade delegation held

in Morocco within the organization of

Uludağ Automotive Industry Exporters

Association between October 21-24,

2019 in Morocco. Upon the business

visit to Morocco, Seger met with its

customers including the potential ones.

During the event, Seger has become

a center of attraction with its diverse

range of competitive products.

Stating that they had a bilateral

business meeting with their distributors

in Morocco, Seger Sales and Marketing

Manager Cüneyt Coşkun said, ”Uludağ

Automotive Industry Exporters

Association organizes activities for its

members to open the doors of new

export markets and to increase their

existing export potential. As one of the

member companies of the Union, we

came together with our distributors in

Morocco within the scope of automotive

trade delegation activity and furnished

information on our new product range.

We also talked about what we can do

to gain even more competitive power in

these markets. Morocco is one of our

major markets in North Africa with its

35 million population. We have been

exporting to the North African countries

such as Morocco, Egypt, Algeria,

Tunisia and Libya since 1990s. We want

to increase our exports in the North

African market even further in 2020.

Seger provides the horns of world

giants; It exports to more than 70

countries in the world, including

America, Europe, Africa and Asia.

Seger adds new markets to its portfolio

every year with its innovative producs

in the global market according to

the countries’ own cultures, living

conditions and lifestyles as well as the

wishes of vehicle brands.

Seger Inc., with its 100 percent

domestic capital structure, has

become a well-known brand in electric

and air horn production for Tesla

Renault, Audi, Honda, Volkswagen,

Nissan, Ford, Dacia, heavy vehicles

and construction machinery, such as

MAN, DAF, Daimler, Mitsubishi, Isuzu,

Kamaz, BMC, JCB, Temsa, Otokar,

Cukurova, Erkunt, Tümosan, including

Turkish Tractor, Taral, Bozok Tractor,

Hars Tractor, and Indian Motorcyle,

Bigdog, Victory, Polaris in motorcycle

group. Seger sells to over 70 countries

around the world, including America,

Europe, Africa and Asia. In addition to

the domestic market, Seger also has

a strong presence in Japan, Palestine,

Russia, the Republic of South Africa,

Poland, Germany, Jordan, Romania

and South America. Seger adds new

markets to its portfolio every year with

its competitive products in line with

the countries’ own cultures, living

conditions and lifestyles as well as the

wishes of vehicle brands.

December 2019

6

Moody’s makes upward revision in

Turkey’s growth estimate

The U.S.-based credit ratings agency

Moody’s revised Turkey’s economic

growth forecast to 0.2% for 2019 from

a 2.0 contraction and 3% for 2020

from 2.0, citing the country’s strong

economic recovery.

In its Global Macro Outlook 2020-21,

the Moody’s said the expansion of credit

availability by Turkish banks helped

mitigate the severity of the economic

downturn, bolstered confidence and

encouraged activity in selected sectors.

The credit agency also warned that

geopolitical risks, tense relations

with the U.S. and Turkey’s security

operations in Syria, could impose

threats to economic stability.

The report also warned that the

government’s official growth target of

5% between 2020 to 2022, significantly

higher than the agency’s forecast, could

lead to overheating, widen currentaccount

deficits and exert pressure on

inflation. Turkey’s economic growth

estimates have also been revised by

the International Monetary Fund (IMF)

and the Organization for Economic

Co-operation and Development (OECD)

in September. The IMF report said the

Turkish economy may see a growth of

0.25%, reversing previous forecasts

of a 2.5% contraction while the OECD

revised 2019 forecast to 0.3% from

2.9% contraction. Meanwhile, the

Moody’s global outlook said it does not

expect the global economy to enter a

recession in 2020 or 2021, however,

persistently weak data could fuel a selffulfilling

deterioration in sentiment and

global growth.”

G-20 economies, which account for 78%

of the global economy, are expected to

collectively grow at an annual rate of

2.6% in 2020, the same rate as in 2019.

In 2020, Moody’s forecasts that G-20

emerging market countries will post

growth of 4.7%, followed by 4.8%

in 2021. Of the 10 countries in this

group, Argentina is the only one whose

economy will contract in 2020, followed

by a protracted recovery. Moody’s

expects continued deceleration for

the U.S. and China in the next year.

Although the U.S. economy is slowing,

real GDP growth in the U.S. will likely

stabilize around its potential at just

below 2.0%.

October 2019 8

Having dropped

Turkey’s automotive industry on

the way to achieve 2nd highest

exports ever

The locomotive of Turkish exports, the

automotive industry, is expected to

achieve its second-best year ever in

terms of foreign sales.

The industry’s exports will exceed $30

billion at the end of this year, according

to Baran Çelik, chairman of the

Uludağ Automotive Industry Exporters

Association (OİB), who said it will be

the second-highest value following last

year’s all-time high figure.

In the January-October period of 2019,

exports of the automotive industry

reached $25.4 billion, Çelik told.

Automotive exports last year hit an

all-time high and reached $31.6 billion.

Compared to the same period of last

year, exports are 3.5% lower in the first

10 months of this year. Çelik pointed

out that the main market for the sector

is the European Union countries and

that the exports are mostly based on

euros. “The fact that the euro-dollar

exchange rate is at a disadvantage

in 2019 compared to last year shows

that we are a bit behind because our

exports are made in euros and counted

in dollars,” he said. “If we were to hold

euro-based export statistics, we could

see an increase of 1% in euro-based

exports in 2019 as well.”

Elaborating on the performance

expectations for the rest of the year,

he noted that they see that they can

easily surpass $30 billion. “Exports

worth $30 billion are a threshold for

the automotive industry, which we

surpassed in 2018 with a recordbreaking

figure,” Çelik continued. “We

anticipate that we can surpass $30

billion, or even $31 billion this year. We

can say it will be the second-highest

export year.”

Noting that 2017 was the closest year

to this figure with $28.5 billion, he said

in the previous years, they had exports

below $25 billion. “Reaching $31 billion

in exports this year is, of course, a

successful outcome. This figure covers

a portion of 17% of Turkey’s overall

exports,” he added.

Saying that exports to EU countries,

the traditional market for the sector,

shrank by 10% this year, Çelik stated

that they compensated some of this

with new markets and pointed to North

Africa, Russia, Israel, and the Americas

in this regard.

“Our exports to these countries are

facing two-digit growth. In this respect,

in terms of the diversification of the

export market, this year is better than

the previous years. However, there is

still much to do about it because our

dependence on EU countries is at 77%

in exports. This figure went down from

80% to 77%,” Çelik further stressed,

suggesting that they should increase

exports to other markets as well.

December 2019

12

Tesla gets nearly 150,000

Cybertruck orders despite launch mishap

Tesla gets nearly 150,000 Cybertruck

orders despite launch mishap

Tesla’s new electric pickup truck has

secured almost 150,000 orders, the

company’s chief executive Elon Musk

boasted on Twitter, just two days after

its big reveal Having went dropped embarrassingly

wrong.

The billionaire Tesla co-founder

floundered on stage in California when

the vehicle’s armored glass windows

cracked in a demonstration intended to

prove their indestructible design.

Shares in the company plunged 6.1%

following the truck’s bumpy launch and

several lackluster reviews.

Musk tweeted that Tesla had already

received 146,000 orders from

prospective owners. “146k Cybertruck

orders so far, with 42% choosing dual,

41% tri & 17% single motor,” he wrote.

The demand comes despite the product

receiving “no advertising & no paid

endorsement.” The industrial-looking

Cybertruck is covered in the same steel

alloy Musk plans to use for his SpaceX

Starship rocket and will be able to go

from 0 to 100 kilometers (62 miles)

per hour in about three seconds, the

Tesla chief executive claimed in his

presentation. He said the entry-level

model will have a starting price of

$39,900 and a 400-kilometer (250-mile)

range, while a deluxe option will be able

to travel twice the distance and will sell

for $69,900.

No date has been given for its release,

but analysts said it would not be ready

before the end of 2021 at the earliest.

Its space-age design is unlikely to

challenge top-selling models by Ford

and other conventional car companies,

analysts warn

Turkey can achieve greater stability in 2020

ANKARA- Turkey could experience greater stability in 2020, said

the credit ratings agency Fitch .

“Fitch expects the recovery and rebalancing of the economy to

continue, with growth strengthening, inflation falling and the

current account deficit contained,” the agency said in report on

the outlook of emerging European countries.

The report stressed that with no national elections due until 2023,

2020 provides an opportunity for Turkey to implement reforms

stated in the government’s New Economy Program, tackling

structural credit weaknesses.

“Nonetheless, risks remain multifaceted. Weak monetary policy

credibility, economic policy, political, geopolitical and sanctions

risks could provoke bouts of asset price volatility, although global

interest rate policy should keep external financing conditions

supportive,” it added.

It said the weak global economic growth will produce a more

difficult environment for emerging European countries next year.

December 2019

14

Veteran executive joins

Turkey’s automobile

initiative

Turkey’s Automobile Initiative Group (TOGG) has

appointed a seasoned executive to be its new chief

operating officer (COO), the group announced.

Sergio Rocha, a leading global auto industry executive,

will lead several areas in the group such as product

planning, program management, purchasing, supply

chains, manufacturing engineering and production

operations.

TOGG said in a press release that Rocha has managed

numerous projects across three continents – America,

Europe, and Asia.

In November 2017, Turkey ventured into a

groundbreaking initiative to manufacture its own

domestic automobile. The project has brought together

the country’s largest manufacturers and companies in

a consortium that includes Anadolu Group, BMC, Kök

Group, Turkcell and Zorlu Holding, all experienced in

their own areas of operation.

The five domestic firms, now with 19% shares each,

and the Union of Chambers and Commodity Exchanges

(TOBB), with 5% of the shares, lead the TOGG joint

venture. The TOGG was established in 2018 as an

nongovernmental organization (NGO) to develop electric,

autonomous and connected vehicles within a mobility

ecosystem that encompasses these technologies.

Rocha, educated in mechanical and industrial

engineering, has experience in various positions in global

auto giants Volkswagen and General Motors, where he

stayed for 37 years, ending his career there as president,

CEO, and chairman of the board for GM South Korea.

Before TOGG, for two years he was COO of an Indian

electric vehicle initiative.

Gürcan Karakaş, the CEO of TOGG, said: “We’re working

with a team of world-class competencies. In this sense

it is a very important development that Sergio Rocha has

brought his experience in many projects in various parts

of the world to our organization.”

“Rocha will add significant layers to achieve the targets

set by TOGG,” he added in the press release. TOGG’s

team includes well-experienced engineers with 13-15

years’ experience, he noted.

Considered one of the most visionary projects of Turkey,

the automobile is first planned to hit the market as a

sport utility vehicle (SUV) in the C segment and will be

innately electric. The number of models is projected to

increase to five in the following years.

The project includes plans for a 15-year investment

initiative consisting of three phases. The project, whose

intellectual and industrial property rights will be fully

owned by Turkey, is expected to contribute 50 billion

euros ($55.26 billion) to the Turkish economy and 7

billion euros to the current account deficit, and produce

direct and indirect employment for 4,000 and 20,000

people, respectively.

The indigenous automobile is said to be ready for mass

production by 2022, with exports expected to begin two

years later.

Global number of electric cars hits 5 million

The number of electric cars now

stands at well over 5 million vehicles,

helped by 2 million new sales in 2018,

according to the International Energy

Agency’s (IEA) repor.

The IEA’s World Energy Outlook 2019

report shows that growth in electric

two-wheelers and buses has also

been impressive, albeit so far heavily

concentrated in China.

Under its Stated Policies Scenario

the report said that annual electric

car sales will rise from the current 2

million to reach 10 million by 2025 and

more than 30 million in 2040.

The agency stated the “key factors

putting electric mobility in the fast

lane are subsidies, at least in the near

term, increasingly strict fuel economy

targets, restrictions or penalties on

the sale or use of conventional cars or

their circulation.”

It also said that fleet procurement

decisions by public authorities and

large private logistics companies,

and investments in new recharging

infrastructure are also key factors. For

instance, Germany’s chancellor just

recently said that the country should

have 1 million charging stations for

electric cars by 2030. Additionally, the

agency surmised that lower battery

costs are an important part of the

story.

“Battery costs fall to less than $100

per kilowatt-hour (kWh) by the mid-

2020s, down from $650/kWh five

years ago, meaning that electric

cars in several key markets become

cost competitive on a total cost of

ownership basis with conventional

cars,” it said. The IEA also underlined

that the speed at which battery costs

decline is a critical variable for power

markets as well as for electric cars.

December 2019

16

200,000 electric vehicles predicted to

be sold in Turkey in next 3 years

Some 200,000 electric vehicles will be

sold in Turkey in the next three years,

according to Zorlu Holding Energy

Group Chairman Sinan Ak, who said the

driving force in this process will be the

domestic electric car, which is expected

to hit the market in 2022.

Speaking to a group of journalists, Ak

pointed to the tax advantage granted

for electric vehicles in Turkey, claiming

that the number of electric cars could

increase rapidly if these supports do

not decrease.

Ak noted that global automotive giant

companies had begun to launch their

electric models quickly to the European

market. “These models will also come

to the Turkish market. We cannot stop

this,” he further stressed, envisaging

that as the tendency to drive diesel

vehicles had increased rapidly in the

last quarter-century, the Turkish

people would display a similar trend in

electric vehicles.

Also, he underscored that the

production capacity of the electric

vehicle battery, which stood at 30,000

megawatts (MW) in the world five

years ago, had reached 300,000 MW.

Expressing that this increase would

also affect the production and sales

of electric vehicles, Ak said that 2020

might be a breaking year for the

electric vehicles market in the world.

He emphasized the importance of

the number of stations and battery

charging times for the spread of white

electric vehicles. Stating that 80% of

charging operations were installed in

homes and workplaces, Ak stressed

that serious additional investments

in the electricity network would be

needed. He estimated that the number

of electric vehicles in Turkey would

reach 2.2 million by 2030.

“In order to meet an additional charge

of this scale, an investment of $3

billion is required in 10 years, and $2

billion falls to distribution companies,

while about $1 billion will be met by

the companies investing in charging

stations,” he argued.

Explaining that in Europe, fast-charging

stations with a capacity of 350 kilowatts

were installed with a cost of $300,000,

Ak said that the charging time could go

down to 15 minutes with these stations

and that fast-charging stations could be

implemented together with automotive

companies in Turkey, as in Europe.

He also stated that the maintenance

and management of the charging

stations would produce a new sector.

“There are three companies, including

us, in the charging station market

in Turkey,” Ak continued. “As Zorlu

Energy Solutions (ZES), we have 30%

of the current market share. We will

try to increase our market share to

40% and keep it as much as possible.

The maintenance and management

of the charging stations are very

important here. We can be on this

side. Our priority is shopping centers

and airports. We also want to cover

the highways since no one has done it

yet, but our main target is homes and

businesses.”

The charging stations commissioned

by Zorlu Energy, under the ZES brand,

are currently operating in 24 cities.

With a total of 100 charging stations,

especially in the Mediterranean

and Aegean regions, the number of

ZES charging stations that provide

uninterrupted electric vehicle

transportation is targeted to reach

1,000 in the long term.

December 2019 18

Automechanica Shanghai attracts great interest

Major facts about the Fair:

-6,320 exhibitors from 43countries &

regions (expected)

-160,000 global visitors from 145

countries & regions (expected)

Major product groups are:

Parts & Components:Parts &

Components: Components for

conventional drive systems; chassis;

Automechanika Shanghai will

feature over 6,300 exhibitors

and 50 fringe events. The show

embraces the automotive

ecosystem by building upon it

strong global resources and

reputation.

body; standard mechanical parts;

interior; exterior; charging accessories

12 volt; regenerated, restored and

renewed parts for cars and utility

vehicles; external vehicle air quality and

exhaust gas treatment; new materials

Electronics & Connectivity: Engine

electronics; vehicle lighting; electrical

system; comfort electronics; human

machine interface (HMI); connectivity;

internet of things

Accessories & Customising: General

accessories for motor vehicles;

technical customising; visual

customising; infotainment and Car

IT; special vehicles, equipment,

assemblies and modifications; car

trailers and small utility vehicle

trailers, spare and accessory partsfor

trailers; merchandising

Diagnostics & Maintenance: Workshop

equipment for repair and maintenance;

tools; digital maintenance; vehicle

diagnostics; maintenance and repair

of vehicle superstructures; towing

equipment; workshop equipment for

repair and maintenance for alternative

drive concepts; fasteningand bonding

solutions; waste disposal and recycling;

workshop safety and ergonomic

workshops; workshop and dealership

equipment; oils and lubricants;

technical fluids; workshop concepts

Dealer & Workshop Management:

Workshop / dealership / filling

stationplanning and construction;

dealer, sales and service management;

digital marketing; customer data

management; online presence;

e-commerce and mobile payment;

basic and advanced training and

professional development; workshop

and dealership marketing; online

service providers and vehicle/parts/

service marts; economic regeneration,

research, consulting, cluster initiatives

Car Wash & Care:Washing; vehicle

care; vehicle preparation and detailing;

water reclamation, water treatment;

filling station equipment

Alternative Drive Systems & Fuels:

Energy storage alternative fuels;

complementary products; vehicle

concepts; resources; charging and

tank technologies and systems; new

workshop technologies

Tyres & Wheels: Tyres; wheels and

rims; tyre/wheel repair and disposal;

used tyres and wheels; tyre/wheel

management and systems; sales

equipment and storage of tyres;

accessories for tyres, wheels and

installation Body & Paint: Bodywork

repairs; paintwork and corrosion

protection; smart repairs for

paintwork,metal parts, plastic parts,

windows, headlights, rims; new

materials Mobility as a Service &

Autonomous Driving: Mobility services;

automated driving; fleet management /

leasing / corporate mobility

December 2019 22

Aluminum engine blocks to be manufactured at

Bursa plant for the first time

Renault Turkey will manufacture

aluminum engine blocks for the

first time in Turkey. In doing so, it

will become the only hybrid engine

production facility in Europe, Industry

and Technology Minister Mustafa

Varank said. Speaking at a program

at the factory’s test production

site in Bursa, Varank said engines

manufactured in Turkey will be exported

to China, Spain and the U.K.

He noted that the 10,500 square meter

facility has the latest machines and

employs more than 100 qualified

engineers and operators.

Despite facing all kinds of challenges,

the Turkish economy is on track, he

said, adding that the aluminum will be

supplied by domestic manufacturers,

meaning the facility will make sure the

efficient use of domestic resources.

“The contribution this facility has made

in reducing the current account deficit,

providing employment and improving

exports, is truly commendable,” he said.

He added that Turkey wants to see

Renault produce hybrid vehicles here in

the country and export them.

Also present at the program, Antoine

Aoun, director general of Oyak Renault

Turkey, said: “We have completed the

production center in a very short time,

as promised. We will reach the final

stage of mass production in 2020.”

The engines produced at Oyak

Renault’s plant in Bursa are sold to

15 factories in 12 different countries,

including the production centers of

brands like Nissan.

Varank said the engines produced at

the plant are exported. He added that

the factory has taken advantage of the

government’s investment incentives

and developed and expanded its engine

production capacity.

Pointing out that the company

contributes to reducing the current

account deficit with its exports, the

minister stated: “By producing and

exporting hybrid vehicles, the factory

will make further contributions

to reducing the current account

deficit. It is gratifying for us that the

capability has been developed and the

government incentives have been taken

advantage of in the most effective way.”

Renault Mechanical and Chassis

Production Director Yavuz Özbağrıaçık

said the factory in Bursa is one of

Renault’s three factories that produce

both vehicles and mechanical parts.

Özbağrıaçık pointed out that the factory,

where construction began last year,

is fully integrated. “We can produce

920,000 engines at this factory. We

have two big engine lines. Besides, we

produce four large parts, known as vital

parts.”

He underlined that they are the only

such factory in Turkey. Özbağrıaçık said

they continue to work on building hybrid

engines. The factory, which has so far

produced 200 engines, aims to increase

the local content ratio in these products

to over 50%.

December 2019

24

Kardemir begins producing train wheels

Turkish iron and steel giant Kardemir

has started producing indigenous

train wheels to prevent the use of

imports, the head of the company

said.

“Turkey will stop the import of railway

wheels in a short period. We will

produce 150,000 wheels and become

an exporter within two years,”

Hüseyin Soykan, the general manager

of the firm, told Anadolu Agency (AA).

Only 15 companies produce railway

wheels globally, which need high

technology and engineering; Kardemir

became the 16th, he underlined.

Soykan said: “A train wheel

manufactured from half-ton special

steel weighs 370 kilograms. Before

we started to produce, its cost

was around 1,000 euros [$1,112].

Currently, its cost is around 600

euros.”

He also stressed that the firm will

be able to produce 200,000 wheels

annually.

Kardemir aims to manufacture

imported products to boost the

country’s industry and economy, he

noted.

December 2019

28

AUTO SPARE PARTS

www.ge-pas.com

info@ge-pas.com

İSTANBUL OTOMOTİV SAN. TİC. LTD. ŞTİ.

Başvekil Cad. asirali İsmail Sokak No: 9/C Şehremini/İSTANBUL/TÜRKİYE

Tel: 9 – 9 aks: 9

Financial restructuring for large-scale firms

with debt over TL 25 million

Turkey’s banking association said it

would launch a restructuring program

for large-scale companies with debts to

banks and financial institutions.

Initially, the initiative will apply to

companies with debts of more than

TL 25 million to banks, the Turkish

Banking Association (TBB) said in a

statement. The new regulation targets

relief for companies that intended to

pay debts but could not because their

income-expense balance was damaged,

the statement added.

The firms that have announced

bankruptcy will not be able to benefit

from the program and approval was

pending for extending the program to

smaller companies, per the TBB.

The latest restructuring program

spearheaded by the TBB will enable

large-scale companies that are

committed to paying their debt to

sustain their production, investment

and employment activities, therefore

maintain their capability to contribute to

economic growth, the statement read.

The debtors will apply to one of

their biggest creditors with a letter

of commitment and other required

documents in accordance with the

framework agreement. Those creditors

will not be able to implement the loan

or debt tracking process or commence

execution proceedings since the

debtors whose application has been

approved will be protected. The legal

proceedings, which were initiated

before the application date, will not

undergo a restructuring process. Any

disagreement that may ensue from the

creditors’ failure to fulfill their legal

obligations will be discussed by an

arbitration committee to be assigned by

the TBB board. The TBB said it would

announce the companies that sign the

framework agreement with the lenders.

Following currency volatility last year,

banks signed a “loan restructuring

framework agreement” aiming to

restructure loans over TL 100 million.

Turkey’s banking sector’s total loans

stood at TL 2.5 trillion as of October,

more than TL 100 billion of which have

been restructured, including the Yıldız

and Doğuş Holding loans.

Last year in September Turkish banks

financial institutions signed a loan

restructuring framework agreement

aiming to help businesses with difficulty

paying off their debts, a process

mediated by the TBB.

According to official figures,

nonperforming loans in the construction

industry totaled TL 15 billion as of May,

but some industry specialists say the

total could be closer to $10 billion. Last

month, Turkey’s banking watchdog, the

Banking Regulation and Supervision

Agency (BDDK), told banks to write off

TL 46 billion in loans by year-end and

set aside loss reserves. The regulation

is expected to raise the banks’

nonperforming loan (NPL) ratio to 6.3%

from 4.6%, the watchdog said. The

BDDK asserted that the Turkish banks’

capital adequacy ratio (CAR) would slip

by 50 basis points to a still-high 17.7%,

due in part to the dictate on NPLs,

according to what it called a “prudent”

analysis based on July data.

Studies conducted by the BDDK show

that the industry as a whole maintains

its healthy and strong structure, and

the standing capital structure is at

a level that can easily manage asset

quality-based risks. The watchdog had

previously estimated that the capital

adequacy ratio will drop to 15.5%, while

the NPL ratio will reach 6% by the end

of 2019.

December 2019

30

Automobile sales double after cheap

loan campaign by Turkish public

Automobile sales in Turkey doubled

in October from the previous month,

thanks to the public lenders’ campaign

that offers cheaper car loans to

consumers buying locally-made

vehicles from select manufacturers.

In a joint statement on Sept. 26, the

three state lenders, Ziraat Bank,

Halkbank and Vakıfbank said they were

launching a campaign that offered

low-interest loans for buying locally

produced cars.

The three banks slashed the monthly

cost of 18-36 month loans – for cars

produced in Turkey and priced between

TL 50,000 and TL 120,000 – to rates

between 0.49% and 0.69%.

The lenders said they would also

offer 30-60 months – for commercial

vehicles sold for TL 72,000 and TL

120,000 – loans at monthly interest

rates between 0.49% and 0.69%. The

financing package will available from

Oct. 1 to Dec. 31.

Turgut İnal, the chairman of İnallar

Automotive that is responsible for

Citroen, Hyundai, Honda, Kia and

Mazda sales and service in the

northwestern province of Bursa,

said the campaign brought down the

interest rates below the psychological

limit of 0.99%.

Sales increased by 100% compared to

September, İnal told, indicating that

they expect this situation to continue at

the same pace until the end of the year.

He further stressed that they have

difficulty meeting the demands. “There

is no parking place in front of car sales

dealers on weekends. We are seeing

some very serious demand, which was

unexpected. If demands continue at the

same pace, the stocks of all brands in

Turkey will run out by the end of the

year,” he added.

He noted that Honda and Hyundai

benefited from the campaign, while the

other brands reached an agreement

with banks, explaining that brands

outside the campaign had to provide

appropriate conditions to compete with

domestically-produced vehicles.

“There is mobility in all brands,

especially Honda and Hyundai,” he

continued. “There is a serious demand

for B and C segment vehicles. The

delivery times of the vehicles we sell

are also extended. We are currently

delivering in the range of 10-15 days.”

İnal noted the importance of such a

campaign, which comes after monthslong

narrowing in the market. High

volatility in foreign exchange rates,

followed by a high increase in interest

rates on loans led to a sharp decline in

domestic demand.

“As long as inflation and interest rates

fall, not only automotive but all kinds of

consumption will increase,” he added.

Toyota Plaza Akkoyunlu Sales Manager

Ramazan Güleryüz, on the other hand,

said that the sector experienced a

December 2019

34

recession in the first three quarters

of 2019 and pointed to the mobility in

the sector since the beginning of the

month.

“We are currently unable to find

vehicles to sell. It is the same for all

brands not just for Toyota,” Güleryüz

said, highlighting that most other

plazas are also unable to find vehicles

to sell and that that the increase in

demand for new vehicles was ensured

by the decline in interest rates and

year-end price campaigns provided by

distributors. He also stated that the

automotive market, which could not

meet its expectations in the January-

September period, seems to recover

in the last quarter. “We started

seeing this “ he said. “The automotive

industry did not expect this and [were]

therefore caught unprepared. We try

not to turn away the customer as much

as possible. We strive to supply the

vehicles as soon as we can..”

Earlier this month, the Automotive

Distributors’ Association (ODD)

announced that passenger car and

light commercial vehicle sales in

Turkey surged 82.35% year-on-year

in September. Sales totaled 41,922

during last month, the association had

said. Passenger car sales doubled

in the month on an annual basis –

from 17,595 to 35,308 – while light

commercial vehicle sales rose by

23.03% to reach 6,684.

December 2019

36

British consul general praises Turkey’s

‘vibrant environment’ for investors

Britain’s consul general in Istanbul

praised Turkey’s “very vibrant

environment” for British businesses.

Turkey has been facing challenges

over the last few years but big names

are still making money there and

are enjoying being in Turkey, said

Judith Slater, who is also the trade

commissioner for Eastern Europe and

Central Asia.

Addressing developments in the

Turkish economy, Slater told Anadolu

Agency: “We’re looking to see if the

reform program takes off and really

gets going and helps to solve some of

the challenges which the economy is

currently facing.”

The British side is closely watching

the country’s New Economic

Program, which was released in

September, she said during the

Great Entrepreneur Games event

in Istanbul. Slater said that the

U.K. organized the event in Turkey

because it has “confidence in the

technology sector in particular here.”

A quite large number of Turkish

technology startups are going to the

U.K. to raise funds for the “fabulous

ecosystem” in the U.K., according to

Slater.

“So this is quite a lively movement of

Turkish companies of that nature to

the U.K. We’ve also seen some large

investments over the years,” she said.

“My job is to help British businesses

who wanted to come to Turkey to work

here, to meet the right people, and to

make the sort of partnerships because

the event today is largely to encourage

Turkish technology companies to go to

the U.K.,” she stressed.

British companies, she said, are

also encouraged to invest in Turkey.

“Bupa, a big U.K. private health

insurance company, came out here in

acquiring Acıbadem health insurance

about two years ago and found some

really fantastic technologies already

happening here,” she said, adding that

Bupa is “adopting them in its other

businesses around the world.”

The British Consulate and the British

Chamber of Commerce help both

Turkish and British companies and give

free advice to them for investing and

finding partners and information, she

said. Slater urged: “Work with us, we

will try to help grow the £18 billion [$23

billion] bilateral trading partnership

that we already have in the U.K. and

Turkey.”

On the Brexit process, she cautioned

that Turkey’s EU customs union

membership complicates the trade

between the two countries. “But we are

really determined to make sure that we

have what we can in place to help the

£18 billion [$23 billion] bilateral trading

partnership to continue and indeed

grow in the future,” she said.

Turkey ranks 33rd in the World

Bank’s recently released Ease of

Doing Business Report, while the

U.K. was named number nine. Turkey

offers incentives, tax discounts, and

citizenship rights for foreign investors

in many areas.

December 2019

40

Turkish SMEs should focus on

e-exports, expert says

Turkey should look to claim a

larger share of the $1.5-trillion

global e-export market, a digital

communications expert said.

Nabat Garakhanova, the head of

consultancy firm MEZO Digital, said

Turkish small and medium-sized

enterprises (SMEs) should concentrate

on digitalization and target the Asia-

Pacific region, the leader in the

e-export market with $381 billion.

The digitalization rate for Turkey’s

SMEs is currently at only 4%, she

said. Reminding of Turkey’s $10

billion e-commerce target for 2023,

Garakhanova said: “Compared to other

countries, Turkey fell behind three

and a half years in the digitalization

process.” Some 57% of 7.5-billionworld-population

– or 4.4 billion people

– are internet users. On average, they

use the internet for 6.5 hours every day,

she added.

“International trade is becoming easier

and faster thanks to the internet.

People prefer e-commerce due to freeshipping,

secure payment and return

mechanisms. More than 2.8 billion

people use e-commerce channels

today,” she stressed.

The Turkish e-commerce market,

which started in 2010, has reached

an annual volume of $6.7 billion.

E-export’s share in e-commerce, on the

other hand, is only at 10%, Garakhanova

said. Turkey’s SMEs, which constitute

90% of the country’s economy, are

responsible for 55% of its exports.

The digitalization process should be

accelerated so the SMEs can fulfill

their export potential.

“Their digitalization rate can reach

20% by implementing the right

strategy with the support of unions,

chambers and nongovernmental

organizations,” she added.

Garakhanova said Turkish SMEs

are weak in website management

and make certain mistakes, such as

advertising in the wrong languages,

offering payment and shipping

options in the wrong currencies,

miscalculating customs taxes and

other analytical errors.

December 2019

44

Turkey rises in World Bank’s

business index

Turkey has jumped up 10 places to be

33rd among 190 nations in the World

Bank’s Ease of Doing Business Index

released on Oct. 24, the country’s vice

president said.

In a statement, Fuat Oktay, Vice

President of Turkey said that Turkey

has gained an important achievement

in the economic field as well, along

with the achievements gained both on

the ground and at the table, referring

to the country’s counter-terrorism

operation in northern Syria and recent

agreements with the U.S. and Russia.

“There is an improvement of 27 places

compared to the index of two years ago,

when Turkey ranked 60th on the index,”

Oktay said.

He said the achievement was gained

despite “manipulation attempts and

attacks on the Turkish economy.”

Stating that the recent gain is “never

enough” for Turkey, he added: “Our

primary goal is to be ranked 20th on the

index.”

Under the leadership of President

Recep Tayyip Erdoğan, Turkey will

continue its works to encourage both

domestic and foreign investors to

do direct investment furthermore in

Turkey, the vice president added.

Turkey’s doing business score was

76.8 in the report, while New Zealand

ranked first with 86.8 and Somalia

scored the worst, 20, to come last.

New Zealand, Singapore, and Hong

Kong took the first three places in the

report’s 2020 edition.

Turkey was 69th in 2017, 60th in 2018,

and 43rd in the 2019 editions of the

report.

The report said: “Turkey made

property registration less expensive by

temporarily reducing mortar charges

to transfer property, and faster by

reducing the time to obtain a tax

assessment.”

It added that the country eased taxes by

granting a value-added tax exemption

for some capital investments.

Turkey’s Treasury and Finance Ministry

said in a press release that Turkey

jumped in the list thanks to reform

studies under the leadership of the

ministry.

“Reforms increased efficiency and

activity in the Turkish business life by

reducing costs and processing times,”

it said. Berat Albayrak, the treasury

and finance minister, also tweeted that

Turkey will continue to make reforms.

“We will move up Turkey’s investment

climate to the top level by providing

productivity in business life and

reducing costs more,” he said.

Rifat Hisarcıklıoğlu, the head of the

Union of Chambers and Commodity

Exchanges of Turkey, said the report

will be a reference point for foreign

investors.

“This breakthrough, in our economic

conditions, is an indicator for showing

that Turkey continues to make needed

reforms to boost investments and

employment,” he added.

December 2019

46

Investment from Asian countries to

Turkey nearly doubles in January-August period

As of the end of August, foreign direct

investment (FDI) mounting to $2.3

billion from Europe, $1.7 billion from

Asia and $0.3 billion from other regions

flowed to Turkey, while investments by

Asian residents surged by 91.3%.

According to the Central Bank of

the Republic of Turkey (CBRT) data,

$4.2 billion in foreign direct capital

investment were made in Turkey from

January to August, up by 11% compared

to the same period last year.

On the basis of regions, the highest

investment of $2.25 billion came from

Europe in the eight-month period,

followed by Asia with $1.7 billion, the

Americas with $306 million and Africa

with $31 million.

During this period, 52.6% of direct

investment in Turkey was made by

European investors, 39.5% by Asian

investors, 7.2% by American investors

and 0.7% by African investors.

In the January-August period last

year, Turkey had attracted $2.7 billion

in investments from Europe, $885

million from Asia, $227 million from the

Americas and $1 million from Africa.

Asian investors’ direct investments in

Turkey at the end of August rose by 91%

compared to the same period last year,

while European investments declined

by 16.8 % during the same period, the

data revealed. So, Asia closed the gap

to a large extent with Europe, which has

been the leader in direct investments in

Turkey for years.

As of the end of August, Turkey

attracted the highest direct investments

from the U.K., Qatar, Azerbaijan,

the Netherlands and Japan. Capital

inflow from U.K. residents to Turkey

amounted to $696 million, accounting

for 16.3% of total direct investments.

Investments of $569 million flowed

from Qatar, $564 million from

Azerbaijan, $458 million from the

Netherlands and $304 million from

Japan.

In the same period, Italy was the

country with the highest decrease in

direct investments on amount basis,

with Italian residents’ investment in

Turkey decreasing by $394 million

compared to the same period last year.

The amount of FDI from Austria fell by

$384 million and from Luxembourg by

$216 million.

The wholesale and retail trade sectors

had the lion’s share of investments

in Turkey made by residents abroad

as of the end of August. FDI by nonresidents

in this sector reached $721

million, amounting to 16.8% of total

investments.

The wholesale and retail trade sectors

were followed by coke and refined

petroleum products with $421 million,

chemical products with $419 million

and holding activity companies with

$410 million.

Considering the main sector groups,

the services sector received the highest

investment with $2.8 billion in the

eight-month period, while the industrial

sector attracted $1.5 billion.

In the same period, electricity, gas,

steam and air conditioning production

and distribution sectors saw the

highest decline in direct investments

on an amount basis at $647 million.

The sector with the highest increase in

investment was the construction sector

with $347 million.

December 2019

48

Turkey aims to surpass $20bn trade volume with China

Turkey is working intensively to surpass

its current trade volume with China –

approximately $20 billion – focusing on

high value-added projects within a winwin

framework, the head of the Turkish

Exporters’ Assembly (TİM) said.

The Belt and Road Initiative was

launched by China as is a project

critical both in terms of the future of

global trade and the region, said Ismail

Gülle during a program on Turkey –

China multidimensional relations.

He said that all countries from

Eurasia support China’s project, so

does Turkey. “We have to ensure

that Turkey’s gastronomic skills,

agricultural and food products as well

as tourism are well known by our

Chinese friends,” he said.

Pointing to China’s $2.1 trillion total

imports and the scope of China’s

investments under the Belt and Road

Initiative, Gülle underlined the project’s

potential not only for Turkey, but for the

entire region.

For his part, Cui Wei, the Chinese

consul-general in Istanbul, said

despite the thousands of kilometers

between the two countries, the cultural

exchange has never been interrupted.

“In ancient times, the Silk Road was the

bridge of friendship between the two

sides,” he said, with porcelain and silk,

for instance, being traded from China to

Turkey.

He added that Turkey, which lies at

the intersection point of Europe and

Asia, combined advantageous aspects

of eastern and western cultures

and produced a unique cultural

environment.

Manufacturing capacity utilization

up in October

Turkey receives over 92,000

trademark applications

ANKARA-The Turkish Patent and Trademark Office

(TurkPatent) received 92,387 trademark applications --

80,938 of them domestic -- during the first three quarters

of the current year, official figures showed on Oct. 22.

The number of trademark applications increased by 8.9%

year-on-year in the January-July period of this year,

according to the TurkPatent data.

The office received 12,761 patent applications during the

same period, up by 5% compared to the first nine months

of 2018.

Some 1,988 utility model and 31,162 design applications

were received between January and September. 98.6% of

utility models and 85.17% of the design applications were

domestic, said the data report.

Last year, the office received 120,008 trademarks,

18,504 patents, 2,770 utility models, and 42,083 design

applications.

Turkey’s manufacturing industry capacity utilization rate

(CUR) marginally improved on a monthly basis in October,

the Central Bank said on Oct. 25.

Local units operating in manufacturing industry used

76.4% capacity this month [October], up 0.1 points from

September, according to the bank survey.

The CUR figures are based on business tendency survey

responses of local units operating in the sector.

The Central Bank of Turkey (CBRT) said while 1,795

companies responded to the survey in October, the monthly

data does not reflect the bank’s views or predictions.

This month, among the six main industrial groups, the

highest capacity usage was 75.6% for intermediate goods,

while the lowest CUR was 74% for durable consumer goods.

Among more than 20 sectors, the highest CUR was seen

in both manufacturers of apparel and paper products at

84.5%.

October’s lowest capacity usage was recorded by

manufacturers of leather and related products at 62.4%.

December 2019

50

Turkey, Kuwait to boost

cooperation in industry, tech

Turkey and Kuwait agreed to enhance

bilateral ties in industry and technology

sectors.

The agreement came in a meeting

between Turkish Industry and

Technology Minister Mustafa Varank

and his Kuwaiti counterpart Khaled

Nasser al-Roudan in Turkey’s capital

Ankara.

“We aim to enhance our cooperation

in fields of economy, industry

and technology as well as mutual

investments on the 55th anniversary of

our relations,” Varank said.

The minister said Turkish teams

are carrying out discussions related

to industry regions Kuwait plans

to establish, noting that bilateral

cooperation there would yield very

positive results.

He underscored Turkey’s significance in

the region with its humanitarian foreign

policy that contributes to stability in the

region as well as its efforts to resolve

the crisis in Yemen, to mend the rift

in the Gulf Cooperation Council and

support the Palestinian cause.

Varank stressed that Turkey adopted

a new policy of production that

encourages investments and can share

its experience in the industry field with

Kuwait.

Al-Roudan hailed the “distinguished

relations between Turkey and Kuwait

on all levels,” citing that Turkey has the

second largest investments in Kuwait of

any country in the world.

The Kuwaiti private sector is “the

largest in the Middle East that invests

in Turkey,” which reflects “trust” on

the level of officials and private sector,

he said. Al-Roudan pointed out that

Turkish companies operating in Kuwait

are performing “impressive” jobs on

vital projects, citing Turkish companies’

work in the construction of Terminal 2

at the international Kuwait Airport.

Kuwait can benefit from Turkey’s

experience in the industry sector which

is proven by the strength of Turkish

products, he added.

December 2019

52

Turkey’s exports to Balkans increase by

3.7%, reaching $10 billion

Turkey saw a total of $9.8 billion export

to Balkans in the first nine months of

2019, a 3.7% increase compared to the

same period last year, according to

data compiled by Anadolu Agency (AA)

from the Turkish Exporters’ Assembly

(TIM).

In the Balkan region, Turkey exported

the most products to Romania with $2.9

billion, followed by Bulgaria with $1.8

billion, and Greece and Slovenia with

$1.5 and $1.2 billion export volume,

respectively; the data showed.

Turkey also saw an increase of 87% in

its exports to Montenegro, followed by

Slovenia with 18%.

While exports to countries such as

Albania, Kosovo and Serbia were on

the rise, exports to North Macedonia,

Bulgaria and Croatia saw a decrease in

the first nine months of 2019.

The figures indicated that Istanbul

alone accounted for almost half of

the exports to the Balkan countries

with 45.6%. The sector that exports

the most to the Balkan region was the

automotive industry with $2.2 billion.

The increase in exports to the

Balkans comes as monthly exports in

September reached highest-ever figure

of $15.2 billion, while the number of

exporter companies exceeded importer

companies for the first time in history,

according to data previously released

by the TIM. The Balkan region is a

priority for Turkey not only from the

political, economic and geographical

perspectives but also due to its

historical, cultural and humanitarian

ties with the region.

December 2019

54

Fiat Chrysler confirms

merger talks with

Peugeot

Italian-American carmaker Fiat

Chrysler Automobiles is confirming

that it is in talks with French rival PSA

Peugeot on a tie-up to produce one of

the world’s largest automakers.

The statement didn’t say whether the

talks were aimed at a full merger or

a looser alliance. No further details

were given. Fiat Chrysler has long been

looking for a partner to help shoulder

investments in the capital-heavy

industry.

Talks this year with another French

carmaker, Renault, failed over French

government concerns over the role of

the Japanese partner Nissan.

Fiat Chrysler Automobiles was formed

in 2014 out of a merger of Italian

carmaker Fiat and the American

company Chrysler, which Fiat brought

back from the brink of bankruptcy.

December 2019

56

Economic confidence reaches 15-month high

The economic confidence index

increased by 14.7 points in October

compared to the same month of the

previous year, reaching 89.8 – the

highest in the last 15 months, according

to the data of the Turkish Statistical

Institute (TurkStat) released.

The economic confidence index – a

composite index that summarizes

the general economic situation,

expectations and trends of consumers

and producers – stood at 105.2 at the

beginning of last year. The index fell

to 75.2 in June 2018 as a result of

currency volatility, geopolitical risks

and diplomatic developments.

Commenting on the data, Treasury

and Finance Minister Berat Albayrak

said on his Twitter account the strong

recovery in the markets continues, as

shown by the improvement in all the

confidence metrics. “The momentum

we have achieved in this field will be

one of the driving forces of the change

and sustainable growth we desire,” he

added.

To restore the economic confidence,

the government and relevant state

agencies have introduced and

implemented several measures to

stabilize the tailspin in the economic

activity, thereby launching an economic

balancing period.

The decline in interest rates and singledigit

inflation after a long break and

reduced geopolitical risks increased

confidence in Turkish lira assets,

which was reflected in the economic

confidence index.

According to the Turkish Statistical

Institute (TurkStat), the economic

confidence index rose by 3.8 points

in October compared to the previous

month.

The recovery in the economy also

manifested itself in the real sector

confidence index. The real sector

confidence index increased by 2.1

points to 100.9 in October compared to

the previous month.

The seasonally adjusted real sector

confidence index, on the other hand,

saw an increase of 4.5 percentage

points to 104.2 in October, reaching the

highest level in 17 months.

The positive expectations for the future

from both consumers and producers

increased, while the sub-indices used

in the calculation of the economic

confidence index surged.

The index value, which represented the

production volume in the next three

months, reached the highest level in 20

months in October at 118.8.

Expectations that employment and

export orders would increase in the

next three months also improved.

Meanwhile, the impact of the housing

loan interest rates, which reduced

under the leadership of the public

banks, on the construction sector was

reflected in the construction sector

confidence index. The index rose to

65.1 in October, the highest level since

September 2018.

Revival in the automotive sector

Integral Investment Research Director

Tuncay Turşucu said the economic

confidence index increased by 4.5%

in October compared to the previous

month and hit 89.8 points.

He said this figure was the highest

since July 2018 and pointed out that

there were increases in five sub-groups

that formed the

confidence index.

“The sharpest

rise among them

was seen in the

construction

confidence index

with 8.3%,” Turşucu

said. “In fact,

the construction

confidence index

has been on the

rise for the last

five months. The

decline in interest

rates seems to have accelerated the

construction group.”

He said the retail and service sectors

experienced continuous increases in

the last three months. Turşucu said it

was also possible to see the increase

in the retail group in the balance sheet

of the retail companies in the stock

exchange.

He added that the volatile trend in the

consumer confidence index is still

underway. “If the uptrend series starts

in the consumer group, we may see

strengthening in the automotive and

home appliance sectors,” he said. “On

the other hand, consumer confidence

will be the indicator of the increase

in expenditures, but I can say that the

general data on growth gives positive

signals.”

İsmet Demirkol from Bahçeşehir

University said the real sector

confidence index increased by 104.2,

the service sector confidence index by

90.7, the retail trade confidence index

by 102.3, and the construction sector

confidence index by 65.1.

“In particular, the fact that the process

that began with the central bank’s

interest rate cut of 425 basis points

in policy rate on July 25 continued

on Sept. 12 with an interest rate cut

of 325 basis points contributed to a

4.5% increase in consumer confidence

index, and this contribution reflected

positively to the manufacturing

industry, services, retail trade and the

construction sectors,” Demirkol said.

“It should be noted that the central

bank’s interest rate cut of 250 basis

points that continued on Oct. 24 and the

positive effect of the interest rate cut by

a total of 1,000 basis points since July

25 will also contribute to the November

economic confidence index,” he said.

December 2019

58

Auto sales more than double in

October amid lower borrowing costs

Sales of passenger cars and light

commercial vehicles in Turkey surged

127.5% year-on-year in October, the

Automotive Distributors Association

(ODD), said. The surge follows an

82.35% year-on-year increase in

September, both of which come amid

a drop in borrowing costs since the

Central Bank of the Republic of Turkey

(CBRT) kicked off an easing cycle in its

monetary policy in July.

The CBRT’s slashing of its benchmark

policy rate – the one-week repo

rate – was followed by a campaign

initiated by public lenders to spur

domestic demand and that offers

cheaper loans to citizens when they buy

domestically-made vehicles from select

manufacturers.

Passenger car and light commercial

vehicle sales in October increased to

49,075. They had plummeted 76.5% in

October last year to 21,571 units.

Passenger cars constituted the

bulk of October’s sales, with 39,996

automobiles sold, rising 138%, while

light commercial vehicle sales soared

91% during the same period.

In the January-October period of this

year, sales fell 31.9% on an annual

basis to 330,384, the association said.

Amid a high surge in sales, it also went

on to revise its sales forecast for this

year to 450,000-500,000 vehicles from a

previous forecast of 340,000-380,000.

The association revealed its first

market forecast for next year at

525,000-575,000. The mid-point of

forecasts indicates that the sector is

projected to grow 16% in 2020.

The recent rise comes after monthslong

narrowing in the market, which

has been contracting since last April.

High volatility in foreign exchange

rates, followed by a high increase in

interest rates on loans led to a sharp

decline in domestic demand.

Since July, Turkey’s central bank

slashed its one-week repo auction

rate by 1,000 basis points. In its July

meeting, the bank cut the one-week

December 2019

62

December 2019 64

repo auction rate by 425 basis points,

before slashing the rate further by

325 basis points in September and 250

basis points late last month to 14%,

taking advantage of slower inflation

and a steadier Turkish lira.

In the face of rising inflation, the

CBRT had increased the interest

rates to 24% in September 2018, from

17.75% at the time.

In a joint statement on Sept. 26, the

three state lenders, Ziraat Bank,

Halkbank and Vakıfbank, said they

were initiating a campaign that

offered lower interest rates on loans

to purchase locally produced cars.

The three banks slashed the monthly

cost of the 18-36 month loans for cars

produced in Turkey and sold at a price

between TL 50,000 and TL 120,000 to

rates between 0.49% and 0.69%.

The lenders said they would also

extend 30-60 months loans at the

monthly interest rates between

0.49 percent and 0.69 percent for

commercial vehicles sold for TL

72,000 and TL 120,000. The financing

package is made available from Oct. 1

to Dec. 31.

In the meantime, Uludağ Automotive

Industry Exporters’ Association

announced that Turkey’s automotive

industry exports reached $25.4 billion

in the first 10 months of this year.

Exports were around $2.5 billion per

month on average during the said

period, the association said.

Turkish automotive industry’s exports

were also $2.8 billion in October,

down 3.5% versus the same month

last year.

Baran Çelik, the head of the

association, said the sector ranked

the first by taking a 17% share from

the country’s overall exports in the

month, he stressed.

In October, car exports, which

constituted 43% of automotive

exports, rose 1% to $1.2 billion, while

supply industry exports climbed 3%

to $966 million. Exports of motor

vehicles for goods transport saw

a decline of 18% to stand at $388

million, and tow trucks’ exports

dropped 64% year-on-year in

the month. Germany was the top

destination for automotive exports in

October with $398 million, followed by

France ($288 million) and Italy ($282

million).

Istanbul tests new, larger metrobuses

Istanbul municipality began testing new

metrobuses with higher capacity after

commuters complained about massive

crowds at the rapid transit system

during rush hour.

If they pass the ongoing test runs, the

newer vehicles will have nearly double

the capacity and replace the old fleet.

“The vehicles that are being tested right

now have the capacity for 280 people,

with 30 of them seated and 250 on foot.

It will also have a separate cabin for

the driver,” said Arif Duran, the head

of the municipality’s directorate of

metrobuses.

“We want to renew our fleet with nextgeneration

vehicles. We are testing

vehicles that are 20 meters long and

have been conducting them for 10

days. Right now, we are doing load

tests and will move on to test runs with

commuters,” Duran said, adding that

the municipality was willing to consider

any vehicles from other manufacturers

as long as they met the requirements.

He said the test vehicle was produced

locally and would include additional

features for commuter comfort as well

as increased cost effectiveness.

Several media outlets reported that

the new metrobus prototype was called

“Akia” and that it was manufactured

in Turkey’s Bursa province by an

Iran-based company. The reports

said electric motors were also being

considered for the new metrobuses.

One of Istanbul’s most popular means

of transit, the metrobus sees almost

an endless flow of commuters during

rush hours, and even though authorities

introduced more buses along the route

and switched to a longer timetable

with more frequent trips, the problems

linger. Overcrowding is particularly

evident in the first stops of the rapid

transit route that takes commuters

from Beylikdüzü on the far western

corner of city’s European side to

Söğütlüçeşme on the Asian side.

Passengers point out that the

problem has worsened, particularly

for Beylikdüzü, as thousands travel

every day from the district and nearby

districts to work in the city’s financial

centers like Mecidiyeköy and Levent.

Verbal arguments are common in

metrobuses and sometimes they even

end in brawls as passengers complain

it is “torture” to find even a small space

to stand in the buses.

Engines for Renault’s hybrid vehicles

to be manufactured at Bursa plant

Renault Group, one of the leading

brands in the production of fully

electric cars, could not stay away from

hybrid models. There are eight hybrid

models among the plans of the French

automotive giant, which is preparing

to sell 12 electric models by 2022. The

carmaker’s first hybrid models will be

on the road as of 2020. Clio will be the

first hybrid model to be offered, while

the first rechargeable plug-in-hybrid

model will be Captur. Megane will join

the hybrid product range later.

Answering the reporters’ questions

during a test drive of the new Captur

in Greece’s capital Athens, Renault

Corporate Press Officer Vincent

Frappreau said that the renewed

Captur will be the first Renault model

with a plug-in hybrid engine. Frappreau

stated that the hybrid engine, named

E-TECH plug-in, was developed by the

alliance. He explained that the hybrid

engines to be used in Renault models

will be manufactured in Turkey’s

northwestern province of Bursa,

recalling that they invested greatly in

hybrid engines in facilities of OYAK-

Renault, a joint venture with Turkey’s

military pension fund.

Oyak Renault, which received a TL

493 million incentive for the hybrid

car investment under the Project-

Based Incentive System announced

by President Recep Tayyip Erdoğan

last year, laid the foundation of its

new facility in October 2018. Hybrid

engines to be manufactured at the

Bursa facility will be exported for use

in Renault Group brands. Thus, Turkey

will become the hybrid production base

of the French automotive giant.

Renault filed over 150 patents for the

E-TECH plug-in engine to be introduced

with the new Captur. The new Captur

has two electric traction engines, a

gearbox developed with the Renault

F1 experience and a 9.8 kWh battery.

Captur offers a range of 45 kilometers

at speed of 135 kph in mixed-use and

approximately 65 kilometers in urban

use.

Berk Çağdaş, general manager of

Renault Mais, said that automotive

is one of the key sectors for the

Turkish economy, suggesting that tax

simplification should be introduced

in this regard. Çağdaş also pointed to

the confusing taxation system in the

automotive industry, saying of every

100 passenger cars sold in Turkey,

around 97 are 1.6 liters and under.

“Automobiles over 1.6 liters only have a

share of 3%. If a tax regulation is made

with only this in mind, we can generate

much more added value than the

existing system,” he added.

The new Captur, which will use the

hybrid engine to be manufactured in

Bursa, has sold 1.5 million units since

its launch in 2013. It had only one

competitor in the first year of its sale,

while there are over 20 competitors

in its segment. Captur became the

market leader in the highly competitive

European B-SUV market with 215,000

units in 2018. The car’s share in the

Turkish car market, on the other

hand, is 3.7%. The automotive sector

is demanding the extension of the

incentives applied for scrap cars, which

will expire at the end of 2019. Backing

this demand, Çağdaş said one-third

of Turkey’s vehicle park consists of

15-to-16-year-old vehicles, adding the

incentive for scrap should be extended

to pull out the old vehicles that are

harmful to human health, traffic safety

and the economy. He further explained

that in Greece, a new regulation

was introduced for the withdrawal

of vehicles 10 years or older and the

sale of hybrid and electric vehicles,

underlining that a similar system

should be introduced in Turkey as well.

December 2019 66

Turkish exports hit $16.34B in October, trade minister says

Turkey’s exports amounted to $16.336

billion in October according to the

general trade system, the country’s

trade minister said.

The exports totaled $148.84 billion in

2019, rising 2.1% in the first 10-month

period of 2019, Ruhsar Pekcan told

reporters in the western Denizli

province. In the first 10 months of

2019, the imports have reached

$172.71 billion, Pekcan said, adding

that Turkey’s import rate decreased

by 13.2% in the same period.

“These figures and positive

performance in exports continue to

reassure us, our economy and our

exporters,” Pekcan added.

Turkey’s imports increased by 10.8%

in October, reaching $18.179 billion,

the minister said.

“Turkey’s foreign trade deficit

decreased by 55.6% [in the 10-month

period], totaling $23.22 billion,” she

said. The top destination for Turkish

goods last month was Germany with

$1.4 million, followed by the U.K.

with $982 million and Iraq with $978

million. The biggest source of Turkish

imports was Russia with goods worth

$1.8 billion. Russia was followed by

China with $1.7 billion and Germany

with $1.6 billion. To calculate foreign

trade data, two different methods are

used – the special trade system and

the general trade system. Calculations

based on the special trade system

do not include free zones or customs

warehouses. The general trade

system is a wider concept, including

customs warehouses, all types of

free zones, free circulation areas and

premises for inward processing.

December 2019 68

Turkish economy to record positive growth

by year-end, Albayrak says

The Turkish economy will close this

year with positive growth figures,

Treasury and Finance Minister

Berat Albayrak said, in reference to

improvement in macroeconomic trends

and rising economic confidence.

During a meeting with businesspeople

titled “Change is Beginning,” held

in the eastern Anatolian province of

Malatya, Albayrak underscored the

falling inflation, interest rates and

risk premiums as well as increasing

economic confidence and modest

improvement in industrial production.

The minister’s estimates have recently

been corroborated by the latest report

of the International Monetary Fund

(IMF). The report said last month that

the Turkish economy may see a growth

of 0.25%, reversing previous forecasts

of a 2.5% contraction.

Following the release of the secondquarter

data, experts also predicted

that the economy will register positive

growth in the third quarter. Turkey’s

economy shrank by 1.5% in the April-

June period, compared to the same

period last year. In the first quarter, the

revised data of the Turkish Statistical

Institute (TurkStat) revealed that the

economy shrank by 2.4%.

In reference to the positive trends in the

Turkish economy, Albayrak recalled,

“The $5.1 billion surplus in the current

account was a record in the history of

the Turkish Republic.” The drastic fall

in the current account surplus came

as a result of falling imports and a

set of measures by the government,

alleviating the burden of external

financing.

The annualized deficit climbed to $57.9

billion in May 2018 before it kicked

off a dramatic decline along with the

rebalancing period in the Turkish

economy that started after Albayrak

announced the new economic program

(NEP) in September last year. Measures

taken within this scope led to narrowing

in the foreign trade deficit, while a high

increase was observed in the rate of

exports meeting imports.

The new economic program unveiled in

December 2019

70

September expects a current account

surplus-to-GDP ratio of 0.1% for 2019.

It forecasts the current account to post

a deficit of 1.2% next year and 0.8% in

2021 before reaching 0% in 2022.

In 2010 and 2011, when the Turkish

economy was seeing high growth, the

annualized current account deficit

had increased gradually and reached

its historic peak in October 2011 with

$76.1 billion. It went on to fall below

$50 billion in November 2012 with

the measures taken by the economic

administration.

Meanwhile, the economic confidence

index increased by 14.7 points in

October compared to the same month

of the previous year, reaching 89.8 – the

highest in the last 15 months, according

to the TurkStat data released.

Albayrak emphasized the significance

of protecting economic gains and

ensuring a sustainable growth trend

in the rebalancing period. He recalled

that the capacity utilization rates are

higher in the third quarter compared to

the previous quarter. “The contracting

automobile and home appliance sectors

also saw an increase of 100.7% and

7.2% in September,” he said, adding

that, “The Purchasing Manufacturer

Index (PMI) edged over 50 points in

September after 17 months.”

During his meeting with the

businesspeople, Albayrak also

announced an employment-oriented

financing package to be provided by

three public lenders, namely Ziraat

Bank, Halkbank and Vakıfbank.

The banks have introduced four

new instruments to facilitate longterm

loans for companies that have

the potential to produce additional

employment. The manufacturing

enterprises that pledge additional

jobs will be able to benefit from a loan

package of TL 100,000 to TL 200,000.

Albayrak confirmed that a new era

of financial support for the real

economy has started as the banks

have decreased interest rates on

commercial loans from 13% and 15.5%

to 11% and 13.5%, respectively.

Turkey’s central bank went on to lower

its inflation forecast for the end of

this year to 12% in its latest quarterly

inflation report, down from 13.9% in

the previous report, attributing it to

changing food inflation expectations

and improvement in the underlying

trend. Unveiling the last quarterly

inflation report of the year in Istanbul,

Murat Uysal, the governor of the


(CBRT), said significant improvement in

the underlying trend of inflation and the

downward revisions to import prices

and food prices had a positive impact

on the year-end inflation forecast

compared to the previous reporting

period.

However, Uysal noted, the moderate

recovery in the output gap and the

tax hikes for alcoholic beverages and

tobacco product pushed the year-end

inflation forecast upward, putting it at

12%. He added that the projections for

next year and 2021 were left unchanged

at 8.2% and 5.4%, respectively.

The governor stressed the focus of

eventually bringing down inflation to

below 5% over the medium term.

Annual inflation dropped to 9.26% in

September, reaching single digits for

the first time since July 2017, when

consumer prices came in at 9.79%. It

went down 5.75 percentage points from

15.1% in August.

After topping 25% in September last

year, inflation has been gradually

falling, from 20.3% this January to

9.26% in September.

In the face of rising inflation, the CBRT

had hiked its benchmark policy rate

– the one-week repo auction rate – to

24% in September 2018, from 17.75%

at the time. However, the disinflation

trend has paved the way for the central

bank to kick off an easing cycle in its

monetary policy and slash the oneweek

repo auction rate by 1,000 basis

points since July.

In its July meeting, the bank cut the

one-week repo auction rate by 425

basis points, before slashing the

rate further by 325 basis points in

September and 250 basis points to 14%,

taking advantage of slower inflation and

a steadier lira.

At the point reached, Uysal

acknowledged that the bank has used

a significant part available for a loose

monetary policy, but did not rule out

further easing in the near term.

Uysal said the latest rate cut was due

not only to base effects but also to

improvements in inflation expectations

and pricing behavior. He said the bank’s

future policy steps would depend on

further developments in inflation.

According to the governor, the

disinflation process continues, with

base effects, tight monetary policy and

domestic demand also contributing to

a fall in inflation, while the monetary

policy implementation will ensure the

forecast is achieved.

Under the new economic program

released last month, Turkey’s inflation

target for this year is 12%, followed by

8.5% in 2020, 6% in 2021 and 4.9% in

2022.

December 2019

72

Annualized current account widens to highest surplus ever

Having dropped dramatically since

last year before recording a monthly

surplus two times in a row in June and

July, Turkey’s current account balance

has also posted a surplus in August and

led to the annualized current account

surplus widening to a record in the

month.

The balance posted a surplus of $2.6

billion in the month, the Central Bank

of the Republic of Turkey (CBRT)

announced. The increase brought the

12-month rolling surplus to $5.1 billion,

the highest surplus ever. The surplus

was up $554 million year-on-year, the

bank said in a statement. The balance

posted a surplus of $1.01 billion in the

January-August period, the bank said.

“We will protect our gains with export

and value-added production priority

policies and ensure that our resources

remain in our country,” was the first

evaluation of the data by Treasury

and Finance Minister Berat Albayrak,

who underscored that the successful

performance in the current account

balance continues.

“We have recorded a surplus of $5.1

billion in August with another record,

after the record in July,” Albayrak said

over his social media account.

The central bank said the development

in the current account is mainly

attributable to an $848 million increase

in the services item recording net

inflow of $5.2 billion, as well as a $73

million increase in secondary income

surplus to $100 million.

A survey showed economists’ current

account surplus estimates range for

August stood at $2.76 billion. A group

of 14 economists’ surplus estimated

the end-2019 current account balance

to show a deficit of $700 million. The

median of 10 estimates in a Bloomberg

survey was for a monthly surplus of

$2.85 billion.

Gold and energy excluded current

account surplus was $5.7 billion, rising

$1.1 billion from August 2018. Travel

items under services saw a net inflow

of $4.1 billion in the month, up $737

million year-on-year.

The country’s new economy program

unveiled last month expects a currentaccount-surplus-to-GDP

ratio of

0.1% for 2019. It forecasts the current

account to post a deficit of 1.2% next

year and 0.8% in 2021 before reaching

0% in 2022.

In 2010 and 2011, when the Turkish

economy was seeing a high growth,

the annualized current account deficit

had increased gradually and reached

its historic peak in October 2011 with

$76.1 billion. It went on to fall below

$50 billion in November 2012 with

the measures taken by the economic

administration.

The annualized deficit climbed to $57.9

billion in May 2018 before it kicked

off a dramatic decline along with

the rebalancing period in the Turkish

economy that started after Treasury and

Finance Minister Albayrak announced

the new economic program (NEP) in

September last year. Measures taken

in this scope led to narrowing in the

foreign trade deficit, while a high

increase was observed in the rate of

exports meeting imports.

December 2019

74

The annualized trade deficit gradually

declined for the 12 months between

June 2018 and May 2019 from $57.9

billion down to just $1.2 billion. The

annualized balance has since then been

recording surplus. It posted a surplus of

$1.2 billion, $4.5 billion and $5.1 billion

in June, July and August, respectively

Thus, the $5.1 billion surplus in August

is the highest-ever annualized current

account surplus considering the data

released by the CBRT and that goes

back to 1991. In his evaluation of the

data, AA finance analyst and economist

Haluk Bürümcekçi told AA that foreign

trade data for September pointed to

a higher foreign deficit compared to

last year, which, he said, makes them

think that an end in the rise in the

current account surplus is approaching.

Besides improvement in the headline

data, Bürümcekçi said the non-energy

current balance, which is followed

in terms of the basic tendency of the

current balance, posted a surplus of

$41.2 billion, while the core current

balance recorded a surplus of $46.8

billion. Bürümcekçi emphasized that the

surplus in the current account balance

has reached its strongest level in history

as an absolute value and said it may

remain below the 2% of the GDP level

achieved in the 2001 crisis.

December 2019

76

Fitch affirms Turkey’s debt rating as

‘BB’ changing outlook to ‘stable’

The international credit rating agency,

Fitch affirmed Turkey’s long-term

foreign and local currency Issuer

Default Ratings (IDR) as “BB,” changing

the outlook to “stable” from “negative.”

The agency also revised up its GDP

forecast for 2019 by 0.8 percentage

points to 0.3% on the back of stronger

second-quarter outturns.

Fitch maintained its GDP growth

forecast of 3.1% for 2020 and 3.6% in

2021. Earlier in September, an expert

from Fitch had said Turkey executed a

“very impressive” bounce back from the

challenges it faced last summer.

“Turkey has shown a very impressive

resilience, flexibility, and recovered and

stabilized from the financial crisis of

last summer,” Ed Parker, Fitch Ratings

managing director for Europe, Middle

East, and Africa EMEA region, told a

global conference in London.

Pointing to Turkey’s strong

fundamentals, Parker said the

country’s sovereign balance sheet, low

government debt and private banks are

in relatively good shape.

He also praised the dynamism and

flexibility of the Turkish private sector.

Economists expect fall in interest rates

Economists surveyed predicted that the


(CBRT) will further reduce interest

rates. The Monetary Policy Committee

(MPC) will hold a meeting for the

seventh time this year to determine the

bank’s decision on interest rates.

A group of 14 economists expect an

average drop of 100 basis points in

the one-week repo rate – the lowest

estimate at 50 basis points and the

highest at 200.

In the previous meeting, the MPC

decided to cut interest rates by 325

basis points from 19.75% to 16.50%.

After meeting, the bank will hold one

more committee meeting this year.

In 2018, the CBRT held nine MPC

meetings as interest rates climbed

from 8% to 24% over the course of the

year.

December 2019

78

Automotive Exports December 2019

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