Automotive Exports October 2023

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Monthly automotive aftermarket magazine<br />




İstmag Magazin Gazetecilik<br />

İç ve Dış Ticaret Ltd. Şti.<br />

Managing Editor (Responsible)<br />

Mehmet Söztutan<br />

mehmet.soztutan@img.com.tr<br />

Advertising Sales Consultant<br />

Adem Saçın<br />

+90 505 577 36 42<br />

adem.sacin@img.com.tr<br />

EDİToR<br />

Mehmet Soztutan, Editor-in-Chief<br />

mehmet.soztutan@img.com.tr<br />

Enes Karadayı<br />

enes.karadayi@img.com.tr<br />

International Marketing Coordinator<br />

Ayca Sarioglu<br />

ayca.sarioglu@img.com.tr<br />

Advisory Editor<br />

Yusuf Okçu<br />

yusuf.okcu@img.com.tr<br />

Finance Manager<br />

Cuma Karaman<br />

cuma.karaman@img.com.tr<br />

Digital Assets Manager<br />

Emre Yener<br />

emre.yener@img.com.tr<br />

Technical Manager<br />

Tayfun Aydın<br />

tayfun.aydin@img.com.tr<br />

Graphic & Design Advisor<br />

Sami aktaş<br />

sami.aktas@img.com.tr<br />

Accountant<br />

Yusuf Demirkazık<br />

yusuf.demirkazik@img.com.tr<br />

Subsciption<br />

İsmail Özçelik<br />

ismail.ozcelik@img.com.tr<br />


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İç ve Dış Ticaret Ltd. Şti.<br />

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www.ihlasmatbaacilik.com<br />

Heading to Automechanika Dubai <strong>2023</strong><br />

Turkish automotive industry, with its vehicles and auto parts manufacturing sub-sectors,<br />

is one of dynamically exporting industries of the Turkish economy. As noted earlier in this<br />

column, the auto parts industry of Türkiye has developed rapidly as a consequence of<br />

developments in the automotive industry. The autoparts industry with its large capacity,<br />

wide variety of production and high standards, supports automotive industry production<br />

and the vehicles in Türkiye and also has always ample potential for exports. Business people<br />

operating in the industry have become outward oriented more than ever before.<br />

These companies not only dominate the primary supply markets but also capture an<br />

increasing share of the replacement market. Their continued success in exports markets<br />

depend on close technical links with part makers in industrialised countries and the<br />

willingness of their foreign partners to integrate their Turkish counterparts into their<br />

production-distribution networks as regular suppliers of high quality, low-cost components.<br />

Türkiye’s auto parts industry exports are increasing steadily year by year. Türkiye is the only<br />

country within the surrounding geographical area to have established a well-advanced<br />

automotive industry. Therefore, the automotive industry is strategically important both for<br />

Türkiye and for firms that will invest in Türkiye. We think that technology will always be the<br />

key for the survival of the automotive industry. History says so.<br />

This month, we participate in Automechanika Dubai <strong>2023</strong> to convey the message of the<br />

Turkish automotive and auto spare parts exporters. The stars of the automotive world will<br />

be meeting at Automechanika Dubai as usual.<br />

Automechanika Dubai, showcasing the latest global trends, has turned out to be a<br />

remarkable automotive aftermarket platform for the Middle East and Africa.<br />

The Fair which covers the full range of automobile, truck and bus parts, equipment,<br />

components, accessories, tools, and services continues to bring world renowned<br />

manufacturers, suppliers and service providers in touch with one of the most important<br />

growing markets in the world. The markets targeted by the Fair are widely recognised as the<br />

most attractive in the world in terms of future potential.<br />

Our publications remain at the service of those business people seeking to increase their<br />

share in the increasingly competitive automotive markets.<br />

We wish lucrative business for all participants.<br />

automotiveexport<br />


Automechanika Dubai- The international trade show for the<br />

automotive aftermarket industry in the Middle East<br />

Automechanika Dubai-is the ideal onestop<br />

trade platform in the MEA region for<br />

businesses in the automotive aftermarket<br />

and service industry seeking to expand<br />

their network, explore opportunities,<br />

get updated with the latest trends and<br />

solutions while evaluating market trends<br />

and sharing expertise.<br />

20th anniversary edition which is held<br />

from 2-4 <strong>October</strong> <strong>2023</strong> promises to be<br />

bigger, better and grander with new<br />

features, and 14 halls featuring 1,800+<br />

exhibitors from 60+ countries and 20<br />

official country pavilions.<br />

With thousands of products from hundreds<br />

of exhibitors from around the world on<br />

the show floor, along with numerous show<br />

features including the Academy, Awards,<br />

AfriConnections, Modern Workshop,<br />

Tools & Skills Competition and Innovation<br />

Zone, Automechanika Dubai is a mustattend<br />

for all automotive aftermarket<br />

professionals to meet, network, learn,<br />

engage and grow your business. What<br />

makes a modern workshop? Latest tools,<br />

innovative equipment, modern machinery,<br />

advanced diagnostic devices and above<br />

all skilled people who are updated with<br />

the latest industry know-how. During<br />

Automechanika Dubai’s Modern Workshop,<br />

garage and workshop professionals can<br />

enhance their knowledge by taking part in<br />

training programmes, workshops and live<br />

presentations that will showcase the most<br />

modern, latest and innovative solutions for<br />

the garage and workshop sector.<br />

Are you interested in exhibiting at<br />

Automechanika Dubai? Whether you’re<br />

a manufacturer looking to enter the<br />

market or a well-established distributor/<br />

supplier, Automechanika Dubai is the<br />

perfect gateway for you to be part of the<br />

opportunity that the Middle East and<br />

African automotive aftermarket industry<br />

presents.<br />

To sum up:<br />

•1000+ Exhibitors<br />

•58+ Exhibiting Countries<br />

•20+ Country Pavilions<br />

•20,000+ Visitors<br />

•130+ Visiting Countries<br />

<strong>October</strong> <strong>2023</strong> 10

Türkiye seeking to lure more foreign carmakers<br />

Talks are ongoing with carmakers from<br />

Europe and Asia, including China, to lure<br />

more investments into Türkiye’s automotive<br />

sector, Industry and Technology Minister<br />

Fatih Kacır has said.<br />

“We are hoping that at least one of them will<br />

announce an investment decision by the end<br />

of the year,” he said.<br />

Those companies may produce electric and<br />

hybrid vehicles in Türkiye, and the western<br />

province of Manisa appears to be the likely<br />

candidate for possible plant investment,<br />

Kacır said.<br />

“Volkswagen made a mistake. It missed<br />

an opportunity in Manisa. I hope they<br />

reconsider their decision. The site for a plant<br />

is ready in Manisa for those that want to<br />

make an investment,” he added.<br />

The German carmaker had abandoned its<br />

plan to build a factory in Manisa with a more<br />

than $1 billion investment.<br />

“We are holding talks with almost all<br />

carmakers from Europe and the Far East,<br />

including China. We, particularly, focus on<br />

luring investments for new generation,<br />

electric and hybrid vehicle production.Talks<br />

are ongoing with companies, which currently<br />

do not have investments in Türkiye,” he told<br />

a group of reporters.<br />

Kacır also said one of the global carmakers,<br />

which already operates in Türkiye, may<br />

announce new investments. He, however,<br />

did not name the company or provide<br />

other details. The minister recalled that the<br />

government provided a substantial incentive<br />

for Ford’s electric vehicle production<br />

initiative.<br />

“Also, Toyota will begin manufacturing a new<br />

hybrid model vehicle in Türkiye. There is<br />

strong demand from companies for electric<br />

vehicle investments in the country,” he said,<br />

noting that the government will continue to<br />

provide support for EV production. Türkiye is<br />

one of the largest automotive manufacturers<br />

in Europe. Last year, 1.35 million vehicles<br />

were produced in the country, pointing to a<br />

6 percent increase compared with 2021.<br />

Passenger car production grew 3.6 percent<br />

in 2022 from the previous year to nearly<br />

811,000, according to data from the<br />

<strong>Automotive</strong> Manufacturers’ Association<br />

(OSD).<br />

In the first five months of <strong>2023</strong>, automotive<br />

production leaped 20 percent to 616,000,<br />

with passenger car output rising more than<br />

30 percent year-on-year to 386,000.<br />

The <strong>Automotive</strong> Distributors and Mobility<br />

Association (ODMD) reported earlier that<br />

556,000 passenger cars and light commercial<br />

vehicles were sold in January-June, up 56<br />

percent from the same period last year.<br />

Passenger car sales grew 55 percent to<br />

430,400.<br />

<strong>October</strong> <strong>2023</strong> 12

<strong>Automotive</strong> industry plugged into innovation<br />

Türkiye’s automotive industry dates<br />

back to the early 1960s. During a period<br />

of rapid industrialization and progress,<br />

this key sector transformed itself from<br />

assembly-based partnerships to a fullfledged<br />

industry with design capability and<br />

massive production capacity. Since 2003,<br />

original equipment manufacturers (OEM)<br />

have invested over USD 17 billion in their<br />

operations in Türkiye. These investments<br />

significantly expanded their manufacturing<br />

capabilities, which in turn led Türkiye to<br />

become an important part of the global<br />

value chain of international OEMs. Meeting<br />

and exceeding international quality<br />

and safety standards, today’s Turkish<br />

automotive industry is highly efficient<br />

and competitive thanks to value-added<br />

production.<br />

As part of its commitment to transforming<br />

its automotive industry, which has<br />

historically been a key economic driver<br />

in integrating the Turkish economy with<br />

the global value chain, and to its vision of<br />

making Türkiye an economic powerhouse,<br />

Türkiye has introduced its own locallydeveloped<br />

born-electric car built upon<br />

strength stemming from the country’s longstanding<br />

know-how in the area.<br />

Accordingly, Türkiye’s Automobile Joint<br />

Venture Group, known as Togg, will<br />

produce five different models on a joint<br />

platform with fully-owned intellectual and<br />

industrial property rights by 2030.<br />

Leveraging a competitive and highly-skilled<br />

workforce combined with a dynamic<br />

local market and favorable geographical<br />

location, the vehicle production of 8 global<br />

OEMs in Türkiye has increased by almost<br />

five times from 300,000s in 2002 to over<br />

1.3 million units in 2022. This represents a<br />

compound annual growth rate (CAGR) of<br />

around 6 percent during that period.<br />

• Significant growth posted by Türkiye’s<br />

automotive sector led to the country’s<br />

becoming the 13th largest automotive<br />

manufacturer in the world and 4th largest<br />

in Europe by the end of 2022.<br />

• Türkiye has already become a center of<br />

excellence, particularly with respect to the<br />

production of commercial vehicles. By the<br />

end of 2022, Türkiye was the number one<br />

producer of commercial vehicles (CVs) in<br />

Europe.<br />

•Proven as a production hub of excellence,<br />

the Turkish automotive industry is now<br />

aiming at improving its R&D, design, and<br />

branding capabilities. As of 2022, 156<br />

R&D and design centers belonging to<br />

automotive manufacturers and suppliers<br />

are operational in Türkiye.<br />

•Notable examples of global brands<br />

with product development, design,<br />

and engineering activities in Türkiye<br />

include Ford, Fiat, Daimler, AVL, and<br />

FEV. Ford Otosan’s R&D center is one of<br />

Ford’s three largest global R&D centers,<br />

while Fiat’s R&D center in Bursa is the<br />

Italian company’s only center serving<br />

the European market outside its home<br />

country. Meanwhile, Daimler’s R&D center<br />

in Istanbul complements the German<br />

company’s truck and bus manufacturing<br />

operations in Türkiye. AVL Türkiye, which<br />

opened up its 2nd R&D center in Türkiye,<br />

develops autonomous and hybrid vehicle<br />

technologies.<br />

•Türkiye offers a supportive environment<br />

on the supply chain side. There are around<br />

1,100 component suppliers supporting the<br />

production of OEMs. With the parts going<br />

directly to the production lines of vehicle<br />

manufacturers, the localization rate of<br />

OEMs varies between 50 and 70 percent.<br />

•Türkiye is home to many global suppliers.<br />

There are more than 250 global suppliers<br />

that use Türkiye as a production base, with<br />

30 of them ranking among the 50 largest<br />

global suppliers.<br />

•Auto manufacturers increasingly choose<br />

Türkiye as a production base for their export<br />

sales. This is evidenced by the fact that 73<br />

percent of vehicle production in Türkiye<br />

was destined for international markets in<br />

2022. Türkiye exported more than 950,000<br />

vehicles to international markets in the<br />

same year. In addition, Türkiye has been the<br />

number one vehicle exporter to European<br />

markets for around a decade.<br />

<strong>October</strong> <strong>2023</strong> 16

Auto production rises 13 percent in eight months<br />

Turkish carmakers produced more than<br />

943,000 vehicles in the first eight months<br />

of <strong>2023</strong>, a 13 percent increase from a year<br />

ago, according to the data from <strong>Automotive</strong><br />

Manufacturers’ Association (OSD).<br />

Passenger car output grew 21 percent yearon-year<br />

to nearly 600,000, but the annual<br />

increase in commercial vehicle production<br />

was lower at 2 percent to 344,000.<br />

Local carmakers boosted their exports by<br />

11 percent, shipping some 660,000 vehicles<br />

to foreign markets in the January-August<br />

period, with passenger car exports rising 26<br />

percent to 426,000.<br />

The industry’s export revenues amounted<br />

to $23.3 billion during this period, pointing<br />

to a robust 17 percent annual increase.<br />

In August alone, its export revenues rose<br />

by 21 percent to $2.7 billion.<br />

In the first eight months of the year,<br />

787,197 vehicles were sold on the local<br />

market, marking a 63 percent increase<br />

compared with the same period of 2022.<br />

Passenger car sales grew 64 percent yearon-year<br />

to nearly 583,000. Vehicle sales<br />

grew 73 percent year-on-year in August<br />

alone to 90,400, while the passenger car<br />

market expanded 88 percent to 66,000.<br />

Türkiye increased passenger car imports<br />

by 118 percent from a year ago to nearly<br />

52,000, which meant that imported cars<br />

accounted for 78 percent of all cars sold on<br />

the local market.<br />

In August, both total vehicle and passenger<br />

car production declined by 21.2 percent<br />

year-on-year. Some large carmakers<br />

suspended production due to maintenance<br />

work which could explain the drop in the<br />

industry’s output. The Turkish automotive<br />

industry has a total production capacity of<br />

2 million vehicles. In terms of production,<br />

it ranks fourth in Europe and 14th in the<br />

world, employing more than 500,000<br />

people.<br />

<strong>October</strong> <strong>2023</strong> 18

Industrial output rises 7.4 percent<br />

Industrial production increased by 7.4<br />

percent in July from a year ago, after rising<br />

at a paltry 0.2 percent in the previous<br />

two months, the official data showed<br />

on Sept. 11. Manufacturing output also<br />

expanded 7.4 percent year-on-year, while<br />

the annual increase in the capital goods<br />

sector’s production was 25.6 percent,<br />

said the Turkish Statistical Institute (TÜİK).<br />

Intermediate goods production grew 3.2<br />

percent from July 2022. The 16 percent rise<br />

in the durable goods sector was noticeable.<br />

In the energy sector, production increased<br />

by 0.9 percent in July from the same month<br />

of last year. TÜİK said industrial production<br />

fell 0.4 percent month-on-month in July,<br />

after rising 1.2 percent and 1.4 percent on<br />

a monthly basis in June and May.<br />

The growth of the Turkish manufacturing<br />

sector moderated in August as firms faced<br />

challenges in securing new business, a<br />

survey conducted jointly by the Istanbul<br />

Chamber of Industry (ISO) and S&P Global<br />

showed.<br />

The headline PMI in August stood at 49,<br />

from 49.9 in July, below the 50 no-change<br />

mark for the second month running.<br />

Meanwhile, interest rates on commercial<br />

loans climbed above the interest rates local<br />

banks charge on housing and car loans as<br />

of Sept. 1, reaching 38 percent.<br />

The interest rates on personal loans,<br />

car loans and housing loans were 53<br />

percent, 36.7 percent, and 35.7 percent,<br />

respectively. The interest rates on loans<br />

have been rising after the Central Bank<br />

started to hike its policy rate. Since June,<br />

the bank delivered a total of 1,650 bps<br />

hike in the one-week repo auction rate to<br />

25 percent. The Central Bank’s Monetary<br />

Policy Committee will meet again on Sept.<br />

21 to decide about its policy rate.<br />

<strong>October</strong> <strong>2023</strong> 24

<strong>Automotive</strong> exports expected to be $34 billion this year<br />

The Turkish automotive sector’s export<br />

revenues may climb to $34 billion this year,<br />

according to a report by KPMG.<br />

Last year, the local industry produced<br />

1.3 million vehicles and sales on the<br />

local market amounted to 827,000 while<br />

970,000 vehicles were shipped to foreign<br />

markets.<br />

Data from the <strong>Automotive</strong> Manufacturers’<br />

Association (OSD) showed that export<br />

revenues of Turkish carmakers increased by<br />

5.5 percent last year compared with 2021<br />

to stand at $31.5 billion.<br />

The industry’s exports have exceeded $20<br />

billion in the first seven months of <strong>2023</strong>,<br />

rising 16 percent from the same period<br />

of last year, according to the Turkish<br />

Exporters’ Assembly (TİM).<br />

The automotive sector accounted for 16<br />

percent of Türkiye’s total exports in the<br />

January-July period.<br />

The KPMG report noted the availability<br />

problems in the auto market due to the<br />

semiconductor shortages, coupled with<br />

the special consumption rates depressed<br />

domestic demand in 2022.<br />

However, the local auto industry appeared<br />

to have overcome this availability problem.<br />

In July, the combined sales of passenger<br />

cars and light commercial vehicles (LCV)<br />

leaped 115.4 percent from a year ago.<br />

Passenger car sales grew more than 109<br />

percent to around 86,000, while LCV sales<br />

soared almost 138 percent to 27,000.<br />

Experts said that carmakers were able<br />

to deliver the orders to their customers,<br />

which partially explained the surge in sales.<br />

Consumers also decided to buy now,<br />

anticipating that the car prices will<br />

increase in the coming months due to the<br />

depreciation of the Turkish Lira, which led<br />

to a sharp rise in vehicle demand in July,<br />

according to experts.<br />

Demand has been strong over the past<br />

months also because people purchased<br />

cars as an investment to protect their<br />

savings against inflation. Those, who<br />

cannot buy a house, which is a favorite<br />

investment among Turks, due to exorbitant<br />

property prices, turned to cars, said<br />

experts.<br />

<strong>October</strong> <strong>2023</strong> 26

Chinese EV<br />

Skywell maker<br />

agrees deal to<br />

build Türkiye<br />

battery plant<br />

China’s technology company Skyworth has reached an investment<br />

agreement with a Turkish group to build a battery factory in<br />

Türkiye, a statement said.<br />

The manufacturer of the Skywell electric vehicle (EV) brand,<br />

Skyworth said the deal was reached with Ulubaşlar Group to<br />

develop and produce batteries, without disclosing the location of<br />

the factory.<br />

The companies will invest $25 million each in the plant that is<br />

planned to be opened by the first quarter of 2024, the statement<br />

said.<br />

The factory will manufacture batteries featuring 800V+4C superfast<br />

charging technology architecture. This will enable a charging<br />

power to increase from 120 kW to 480 kW, allowing the vehicles to<br />

charge 80% in eight minutes, according to the statement.<br />

“The battery is a key element in the transformation of the<br />

automotive market, and producing this technology here will<br />

provide Türkiye with important capabilities and will make<br />

significant contributions to the economy of our country,” said<br />

Mahmut Ulubaş, CEO of Skywell Türkiye.<br />

Ulubaş also stressed on the impact the investment would have on<br />

employment and exports.<br />

Among others, the Chinese company could also launch production<br />

of Skywell’s new models that are planned to be launched on the<br />

market within three years in Türkiye, said Ulubaş.<br />

Ulubaşlar Group’s subsidiary Ulu Motor is a distributor of Skywell<br />

operating in Türkiye and 15 other countries.<br />

Ulubaş’s remarks were echoed by Wu Longba, co-founder and CEO<br />

of Skywell, who stressed the company’s close cooperation with Ulu<br />

Motor and also noted the plans to establish an assembly line in the<br />

country.<br />

“We will initiate feasibility studies for this collaboration (battery<br />

factory) as soon as possible, which will be a significant turning<br />

point in Türkiye-China relations. We are very enthusiastic about this<br />

partnership,” he noted.<br />

“Moreover, we plan to establish a vehicle production line, bring<br />

spare parts supply system to Türkiye, and manufacture certain<br />

components here,” he said.<br />

“We anticipate various future business partnerships with Ulu Motor<br />

throughout these processes. Our objective is to contribute to the<br />

development of Türkiye’s new energy vehicle industry technology<br />

and capacity.”<br />

<strong>October</strong> <strong>2023</strong> 28

BMW to invest $750M in UK Mini<br />

plants to fuel electric car output<br />

German auto giant BMW announced it will<br />

invest 600 million pounds ($750 million)<br />

at its U.K. plants to take its iconic Mini<br />

brand all-electric by 2030, a fresh boost<br />

for Britain’s car industry following years of<br />

Brexit-related uncertainty.<br />

From 2026, BMW will make two electric<br />

models at its Mini plant in Oxford – the<br />

Mini Cooper 3-door and the compact<br />

crossover Mini Aceman. The plant will<br />

make only electric models as of 2030. The<br />

same two models will also be made in<br />

China and exports of those cars will begin<br />

in 2024. British business minister Kemi<br />

Badenoch will visit the plant in Oxford for<br />

the announcement of the investment,<br />

which the government said boosted total<br />

investment in the automotive sector in<br />

recent years to over 6 billion pounds.<br />

“BMW’s investment is another shining<br />

example of how the United Kingdom is<br />

the best place to build cars of the future,”<br />

British Prime Minister Rishi Sunak said in a<br />

statement.<br />

The carmaker said the U.K. government<br />

had provided support for the investment<br />

but did not provide details.<br />

BMW will also invest in its U.K. plant<br />

in Swindon which makes parts for Mini<br />

models. The company did not say what<br />

would happen to its engine plant in Hams<br />

Hall.<br />

The small, fast and affordable original Mini<br />

went on sale in 1959 and has remained<br />

popular under BMW since it revived the<br />

brand in 2001, but its future in Britain has<br />

been uncertain for years.<br />

Still, the industry remains on edge with<br />

both Britain and Europe’s carmakers calling<br />

for a delay in the implementation of post-<br />

Brexit “rules of origin”, under which 45%<br />

of the value of an EV being sold in the<br />

European Union must come from Britain or<br />

the EU from 2024 to avoid tariffs.<br />

<strong>October</strong> <strong>2023</strong> 30

EU ignites anti-subsidy probe into China’s EV ‘market distortion’<br />

European Commission President Ursula<br />

von der Leyen announced an anti-subsidy<br />

investigation into electric vehicles coming<br />

from China.Global markets are flooded<br />

with cheap Chinese electric cars, von der<br />

Leyen said, addressing European Union<br />

lawmakers in Strasbourg, France.<br />

Their price is kept artificially low by “huge<br />

state subsidies,” she said, leading to market<br />

distortion in the EU. The EU however does<br />

not tolerate market distortions either from<br />

within the bloc or from outside of it, von<br />

der Leyen said.<br />

“Europe is open to competition, not for a<br />

race to the bottom,” she said.<br />

An anti-subsidy investigation can<br />

potentially lead to punitive duties being<br />

imposed on imports to the EU.<br />

Different efforts are currently underway<br />

in several EU economic sectors to reduce<br />

the bloc’s dependence on imports from<br />

countries like China or Russia and to<br />

protect domestic companies.<br />

In the global race for profitable clean tech<br />

industries, von der Leyen previously called<br />

for greater independence from Chinese<br />

imports and the production of more<br />

emissions-reducing technology in the bloc.<br />

In March, the European Commission<br />

presented a proposal for a law on the<br />

supply of critical raw materials needed for<br />

clean-tech technologies, including powerful<br />

batteries. The draft bill, which still needs<br />

to be approved by EU capitals and the<br />

European Parliament, aims to ensure that<br />

the bloc does not remain overly dependent<br />

on raw material imports from individual<br />

countries, including China but diversifies its<br />

suppliers.<br />

At the same time it was “vital to keep open<br />

lines of communication and dialogue with<br />

China,” she said in Strasbourg.<br />

At a planned EU-China summit later this<br />

year, von der Leyen is to advocate for<br />

reducing trade and economic risks in the<br />

EU’s relations with China while maintaining<br />

dialogue with the country, she said.<br />

Development Road project to enter implementation phase<br />

“We, at a point where three continents converge, are open to any<br />

plan that promotes cooperation.”<br />

“However, it should be known that in our region, the effective<br />

and sustainable operation of energy and transportation corridors<br />

without Türkiye’s involvement is not possible.”<br />

The Trans-Caspian International Transport Route, which<br />

connects the Turkic world to Europe via the Caspian Sea, and<br />

the Development Road that will pass through Iraq to Türkiye,<br />

underscore Türkiye’s central role, he added. Some international<br />

developments such as the Russia-Ukraine war and the COVID-19<br />

outbreak, which have deeply affected the global and geopolitical<br />

environment, have proven that the Trans-Caspian International<br />

Transport Route is a reliable alternative route, he said.<br />

The major infrastructure and transportation project planned to<br />

stretch from the Iraqi province of Basra to the Turkish border is<br />

expected to enter the implementation phase within a few months,<br />

Türkiye’s top diplomat said.<br />

“We hope to move into the implementation phase of the<br />

Development Road project, which is of great importance for<br />

prosperity and stability in the Middle East, within the next few<br />

months,” Foreign Minister Hakan Fidan told the the 10th World<br />

Turkish Business Council (DTIK) Congress in Istanbul.<br />

Türkiye and Iraq are working to build a land and railroad<br />

transportation corridor from the Iraqi province of Basra to the<br />

Turkish border. Referring to the agreement on the India-Middle<br />

East-Europe Economic Corridor signed at the G-20 summit in New<br />

Delhi, Fidan said:<br />

<strong>October</strong> <strong>2023</strong> 34

Fitch cites<br />

Türkiye’s policy<br />

shift as driver<br />

behind outlook<br />

upgrade<br />

Fitch Ratings cited a return to more<br />

conventional economic policymaking since<br />

the May election as the primary driver<br />

behind its decision to upgrade Türkiye’s<br />

credit rating outlook.<br />

The credit rating agency revised the<br />

outlook on the nation’s long-term foreigncurrency<br />

issuer default rating to “stable”<br />

from “negative.” It affirmed its debt grade<br />

at “B,” five notches below investment<br />

grade.<br />

In its assessment released, the agency said<br />

the revision reflected the return to a more<br />

conventional and consistent policy mix that<br />

reduces near-term macro-financial stability<br />

risks and eases balance of payments<br />

pressures, according to Erich Arispe<br />

Morales, a senior director in Fitch Ratings’<br />

sovereigns group.<br />

In an interview with Anadolu Agency (AA),<br />

Morales shared insights into Türkiye’s<br />

economic outlook, highlighting several key<br />

factors that have led to a more positive<br />

assessment.<br />

He also discussed the country’s growth<br />

prospects and weighed in on the possibility<br />

of an upgrade to “investment grade.”<br />

Morales explained that the country has<br />

moved away from targeted financial<br />

regulations that were perceived as<br />

“interventionist and unpredictable.”<br />

“This refers to reducing the monetary<br />

policy rate as the main mechanism to<br />

signal the central bank’s policy direction.<br />

We have also seen that policy is more<br />

consistent than before and we have a<br />

very mixed policy focused on growth and<br />

employment,” he said.<br />

This shift toward more consistent and<br />

growth-focused policies despite previous<br />

macroeconomic imbalances has helped<br />

stabilize the country’s economic outlook,<br />

he added.<br />

“We can point out also that we have<br />

seen some reduction in uncertainty after<br />

the elections, given now that the policy<br />

direction is clear,” he said.<br />

The change of policy direction since the<br />

May election, though, has seen President<br />

Recep Tayyip Erdoğan bring in two former<br />

Wall Street bankers to run the economy.<br />

Treasury and Finance Minister Mehmet<br />

Şimşek and Central Bank of the Republic<br />

of Türkiye (CBRT) Governor Hafize Gaye<br />

Erkan have shifted away from ultra-loose<br />

monetary policy and have dramatically<br />

raised interest rates in a bid to tackle the<br />

country’s long-term inflation problem.<br />

Under Erkan, the central bank has roughly<br />

tripled its benchmark policy rate to 25%<br />

and pledged that monetary tightening will<br />

gradually be strengthened as needed.<br />

Regarding Türkiye’s economic growth,<br />

Morales acknowledged that the second<br />

quarter of the year saw greater policy<br />

stimulus due to the general elections.<br />

Looking ahead, Fitch Ratings predicts a<br />

growth rate of around 4.3% for this year.<br />

He said, however, that if policy consistency<br />

and tighter fiscal measures continue,<br />

growth could slow to 3% next year before<br />

recovering to approximately 3.4% in 2025.<br />

While acknowledging that credit pressures<br />

have eased due to recent policy shifts,<br />

Morales emphasized that macroeconomic<br />

and external financial challenges persist.<br />

Türkiye currently faces inflation of 59% as<br />

well as challenges related to an exploitative<br />

foreign exchange-protected Turkish lira<br />

deposit scheme, he said.<br />

Morales pointed out that achieving<br />

“investment grade” status for a country is<br />

a long-term effort and requires sustained<br />

policy improvements over time.<br />

This effort not only boosts economic<br />

resilience but also enhances predictability<br />

for investors and benefits economic actors<br />

in Türkiye, he added.<br />

Morales also commented on recent<br />

announcements, including funding from<br />

Gulf countries and the World Bank’s<br />

decision to double investments in Türkiye.<br />

He highlighted the importance of access<br />

to financing, especially concerning the<br />

country’s current account deficit.<br />

The three-year commitment of bilateral<br />

and official financing represents a positive<br />

development for Türkiye, providing a stable<br />

source of funding for external accounts, he<br />

underlined.<br />

In terms of opportunities, Morales noted<br />

that Türkiye currently enjoys a degree of<br />

credibility among investors due to recent<br />

policy adjustments.<br />

Despite past reversals, the government’s<br />

efforts to address macroeconomic<br />

imbalances and provide stability have<br />

garnered investor confidence, he<br />

underscored.<br />

However, geopolitical risks, exposure to<br />

trade shocks, and global economic patterns<br />

remain concerns for the nation.<br />

The key near-term risk, according to<br />

Morales, is policy predictability, especially<br />

with local elections on the horizon in<br />

March 2024, where additional stimulus<br />

measures could be deployed.<br />

<strong>October</strong> <strong>2023</strong> 38

Togg dominates<br />

as electric<br />

vehicle sales<br />

boom in Türkiye<br />

Sales of electric cars in Türkiye have been<br />

booming this year, capturing a market share<br />

unseen to date, dominated by the first<br />

homegrown battery-powered vehicle brand<br />

that has been adding momentum to its<br />

deliveries.<br />

Nearly 22,900 electric vehicles (EVs) have<br />

been sold from January through August<br />

of this year, according to the <strong>Automotive</strong><br />

Distributors and Mobility Association<br />

(ODMD) data.<br />

This translates into over 597% increase<br />

compared to 3,283 electric cars that were<br />

sold in the same period a year ago.<br />

Their gasoline-electric hybrid rival also<br />

maintained a robust pace and saw sales<br />

jump 65.7% in the first eight months to<br />

60,489 units.<br />

Despite having launched its deliveries<br />

just four months ago, Togg, Türkiye’s first<br />

domestically produced electric vehicle, has<br />

managed to swiftly become the bestselling<br />

brand with a top model in the electric car<br />

segment. The brand said it delivered 3,400<br />

of its T10X as of the end of August. Of this,<br />

1,965 were delivered.<br />

Mass production of the fully electric<br />

C-segment SUV was launched last <strong>October</strong>,<br />

and deliveries started in late April. The<br />

carmaker had said it planned to deliver<br />

about 20,000 units by the end of <strong>2023</strong>.<br />

Overall, passenger cars and light<br />

commercial vehicle sales in Türkiye from<br />

January through August reached 755,282<br />

units, an increase of 64.7% versus the same<br />

period a year ago.<br />

Passenger cars surged by 64.3%, totaling<br />

582,419 units, while light commercial<br />

vehicle sales witnessed a 66.4% growth,<br />

reaching 172,863 units. Demand has been<br />

notably high as depreciation in the Turkish<br />

lira and soaring prices prompted consumers<br />

to continue to opt for cars they see as a tool<br />

to safeguard themselves from high inflation.<br />

Annual inflation surged to 58.94% over the<br />

12 months ending in August. It had reached<br />

a 24-year high of 85.5% last <strong>October</strong> and<br />

stood at 47.83% this July after regressing to<br />

as low as 38.21% in June.<br />

Battery-powered and hybrid vehicles saw<br />

their market shares reach 3.9% and 10.4%,<br />

up from just 0.9% and 10.3% in the first<br />

eight months of last year, respectively.<br />

Cars powered by gasoline held a 61.6%<br />

share in the overall sales in the January-<br />

August period, down from 70% a year<br />

ago, while that of diesel vehicles fell to<br />

15.7%, from 17%. Togg’s T10X now holds<br />

an 18.2% share in the overall EV market,<br />

a 33% in electric SUV and a 55.3% in<br />

C-SUV segments. It accounted for 3%<br />

of all passenger car sales in August. The<br />

company has become the leading brand<br />

and model in the Turkish electric vehicle<br />

market, overshadowing international<br />

competitors like Tesla, which opts not to<br />

disclose country-based sales figures. In<br />

addition to Tesla, many other brands have<br />

launched sales of models they had earlier<br />

announced. Many Chinese companies have<br />

also ramped up deliveries to the country.<br />

The T10X is initially being sold with one<br />

engine type and two battery options. It will<br />

feature battery packs with 52.4 and 88.5<br />

kilowatt-hour capacities, boasting ranges<br />

of 314 and 523 kilometers (195 and 325<br />

miles). The batteries of the T10X can be<br />

recharged to up to 80% from 20% in less<br />

than 28 minutes at fast-charging stations.<br />

A consortium of five Turkish companies<br />

called the Automobile Initiative Group<br />

of Türkiye, or Togg, is manufacturing the<br />

vehicle in cooperation with the Union of<br />

Chambers and Commodity Exchanges of<br />

Türkiye (TOBB). Besides the SUV, Togg will<br />

manufacture four other models – a sedan,<br />

C-hatchback, B-SUV and B-MPV – by 2030.<br />

The sedan will follow the mass production<br />

of the SUV. The current production capacity<br />

of around 100,000 vehicles per year will<br />

reach 175,000 once Togg’s factory reaches<br />

total capacity. President Recep Tayyip<br />

Erdoğan has said some 28,000 units would<br />

be produced this year. The brand aims<br />

to manufacture 1 million vehicles across<br />

the five segments by 2030. Togg plans to<br />

begin exports as of 2025, while the initial<br />

production will be tailored for the domestic<br />

market.<br />

<strong>October</strong> <strong>2023</strong> 42

Toyota announces initiative for solid state batteries<br />

said in a statement. It plans to deliver 1.5 million EVs in 2026 by<br />

expanding its battery EV lineup and developing technology.<br />

EV owners usually have charging stations in their homes and keep<br />

their cars plugged in overnight to recharge. That’s one of the main<br />

reasons Toyota has long insisted that hybrids are a better solution.<br />

A hybrid recharges as the car runs, but it also has a gasoline engine<br />

in addition to an electric motor.<br />

Toyota President Koji Sato has said the company must play catchup<br />

after falling behind in the EV sector.<br />

In its latest announcement, Toyota said it was also working on<br />

innovating lithium-ion batteries, the battery type now in most EVs,<br />

and wants to offer new affordable options.<br />

Toyota plans to make an all solid-state battery as part of its<br />

ambitious plans for battery electric vehicles, the company said,<br />

amid mounting criticism Japan’s top automaker needs to do more<br />

to fight climate change.<br />

Toyota Motor Corp. aims for a commercial solid-state battery as<br />

soon as 2027. Charging time, one of the main drawbacks of electric<br />

vehicles, will get shortened to 10 minutes or less, the company<br />

<strong>October</strong> <strong>2023</strong> 44

Fisker announces the Fisker Ocean has the lowest<br />

published carbon footprint of any electric SUV<br />

Fisker Inc. driven by a mission to develop<br />

the world’s most emotional and sustainable<br />

electric vehicles, released its Life Cycle<br />

Assessment (LCA) report – a cradle-to-grave<br />

analysis that details the carbon footprint<br />

of the Fisker Ocean all-electric SUV. With<br />

the lowest published carbon footprint of<br />

any electric SUV in its market segment, the<br />

“world’s most sustainable vehicle” lives up<br />

to its ambitious promise, from raw material<br />

extraction to beyond “end of use.”<br />

“Since we founded Fisker Inc., building<br />

the most sustainable electric vehicles is<br />

not just a marketing slogan; its core to<br />

our culture,” Chairman and CEO Henrik<br />

Fisker said. “It means shifting antiquated<br />

thought processes from across a 100-yearold<br />

industry, challenging the supply chain<br />

down to the most minute details, working<br />

with partners to improve the way cars are<br />

assembled, the energy they are charged<br />

with, and working on the way our vehicles<br />

are recycled after they come off the road.<br />

Our LCA confirms that climate neutrality<br />

has been a priority, since well before we<br />

started building vehicles.”<br />

Unique in the industry, Fisker built<br />

sustainability into its strategy well before<br />

becoming a publicly traded company.<br />

Fisker prioritizes using the lowest possible<br />

amount of virgin materials, delivering the<br />

most energy-efficient vehicles possible,<br />

evaluating how to ensure the least amount<br />

of material goes to landfill at end of use,<br />

and developing methods for full vehicle<br />

and battery reuse and recycling. The<br />

company’s emphasis on supporting a<br />

“circular economy” includes prioritizing<br />

how battery materials may be pushed back<br />

into upstream sourcing.<br />

“The results are clear: The carbon saved<br />

by choosing a Fisker Ocean over an<br />

average gasoline vehicle equals the carbon<br />

sequestered from 39 acres of US forests,”<br />

added Fisker. “We challenge every partner<br />

and find like-minded suppliers that strive to<br />

do better. It’s no accident the Fisker Ocean<br />

is made in a factory powered by renewable<br />

energy. This is only the beginning. We will<br />

strive to improve every step of the way<br />

as we move toward the upcoming Fisker<br />

Alaska, PEAR, and Ronin vehicles.”<br />

Fisker’s LCA is unique in the industry<br />

in that it utilizes mostly primary data<br />

rather than estimates. Tier 1 suppliers<br />

are pushed to provide accurate carbon<br />

accounting, while the company’s processes,<br />

measurement, and the impact of the<br />

earth and the atmosphere are transparent<br />

at unprecedented levels. Fisker has<br />

commenced vehicle deliveries in both<br />

the United States and Europe, following a<br />

unique dual-market certification strategy<br />

as it launched simultaneously. The Fisker<br />

Ocean One is a launch edition model of<br />

the $68,999[1] Fisker Ocean Extreme,<br />

with a 113 kWh battery pack (106 kWh<br />

usable) and an EPA range of 360 miles[2]<br />

on standard 20” wheels and tires, which is<br />

the longest range of any new electric SUV<br />

in its class[3]. In Europe, the Fisker Ocean<br />

Extreme has a WLTP range of 707km/440<br />

UK miles[4] on standard 20” wheels and<br />

tires, which is the longest range of any<br />

electric SUV sold in Europe today. The<br />

all-electric SUV starts at $37,4992 for the<br />

Fisker Ocean Sport trim level in the US.<br />

[1] Estimated pricing shown applies to<br />

the continental US and excludes delivery,<br />

finance, tax, title, registration, and other<br />

government fees. Maintenance is not<br />

included. Pricing is subject to change<br />

and will be based on your final vehicle<br />

configuration. Pricing does not include<br />

government incentives you may be entitled<br />

to. [2] EPA estimated range. Actual results<br />

may vary for many reasons, including<br />

driving conditions, wheel size, state of<br />

battery charge, and how the vehicle is<br />

driven and maintained.<br />

[3] Mid-size SUVs with an MSRP under<br />

$200,000 [4] This WLTP range number<br />

applies to Fisker’s European markets. WLTP<br />

measurements conducted on Fisker Ocean<br />

Extreme with standard 20” and optional<br />

22” wheels. Actual range will vary with<br />

conditions such as external environment,<br />

vehicle configuration, wheel size and<br />

vehicle use.<br />

<strong>October</strong> <strong>2023</strong> 46

Europe’s electric car market share overtakes diesel<br />

The sales of new electric battery vehicles<br />

overtook diesel car purchases in Europe<br />

the first time , but activity is far from prepandemic<br />

levels, a lobby group said.<br />

In June, the market share for cars running<br />

on electric batteries rose to 15.1%,<br />

according to the European Automobile<br />

Manufacturers’ Association (ACEA), with<br />

over 158,000 units sold in the EU.<br />

Most EU markets recorded double or<br />

even triple-digit percentage gains, with<br />

heavyweights Germany, France and the<br />

Netherlands all posting increases of<br />

over 50%. Petrol remained the new car<br />

fuel type with the largest market share<br />

at 36.3%, while hybrid electric vehicles<br />

were second at 24.3%. Automakers and<br />

consumers are looking to steer away from<br />

vehicles running on polluting fossil fuels to<br />

reduce greenhouse gas emissions and fight<br />

climate change. The ACEA said new EU<br />

car registrations in the first six months of<br />

<strong>2023</strong> increased by 17.9%, with 5.4 million<br />

new units. But it noted that cumulative<br />

volumes for the period were 21% lower<br />

than in 2019, the final full year before the<br />

coronavirus pandemic, which upended the<br />

industry and the global economy.<br />

Lockdowns and restrictions on daily life<br />

decimated economic activity, while the<br />

reopening of economies saw the industry<br />

challenged by disrupted supply chains and<br />

inflation.<br />

A 17.8% growth of the car market in the<br />

EU in June was due to a low comparison<br />

base last year, “primarily driven by vehicle<br />

component shortages,” said the ACEA.<br />

However, “the recent month’s<br />

improvements indicate that the European<br />

automotive industry is recovering<br />

from supply disruptions caused by the<br />

pandemic,” it added.<br />

<strong>October</strong> <strong>2023</strong> 48

Lear wins 4 First-Place J.D. Power <strong>2023</strong> Awards,<br />

leads in the number of top 3 finishes<br />

Lear Corporation (NYSE: LEA), a global<br />

automotive technology leader in Seating<br />

and E-Systems, received four first-place<br />

J.D. Power <strong>2023</strong> U.S. Seat Quality and<br />

Satisfaction Study℠ awards.<br />

The company outpaced the competition in<br />

both the number of first-place awards and<br />

the number of its seats finishing in the top<br />

three of the study’s vehicle segments.<br />

The overall results showcase Lear’s<br />

dedication to quality and operational<br />

excellence for its global customers. The<br />

categories and Lear’s results include:<br />

First Place<br />

•Mass Market Small / Compact SUV –<br />

Chevrolet Equinox<br />

•Mass Market Midsize / Large SUV –<br />

Chevrolet Blazer (tie)<br />

•Premium Car – Porsche 718<br />

•Premium SUV – Land Rover Range Rover<br />

Sport<br />

Second Place<br />

•Mass Market Truck / Van – Hyundai Santa<br />

Cruz<br />

Third Place<br />

•Mass Market Small / Compact SUV – Ford<br />

Bronco<br />

•Mass Market Truck / Van – GMC Sierra HD<br />

•Premium Car – Audi A4 and Porsche 911<br />

“This recognition speaks to the steps<br />

we have taken over the past decade<br />

to consistently invest in our talent,<br />

operational excellence, and innovation,”<br />

said Frank Orsini, Executive Vice President<br />

and President, Seating. “At Lear, we will<br />

continue to work to ensure we have the<br />

best capabilities and technology to design<br />

and manufacture world-class quality seats.”<br />

Conducted from February through May<br />

<strong>2023</strong>, the Seat Quality and Satisfaction<br />

Study is based on responses from 93,380<br />

purchasers and lessees of new <strong>2023</strong> modelyear<br />

vehicles who were surveyed after 90<br />

days of ownership. Seat quality is measured<br />

by the number of problems experienced<br />

per 100 vehicles (PP 100) during the first<br />

90 days of ownership, with a lower score<br />

reflecting higher quality.<br />

Turkish economy resilient to global challenges, says VP Yılmaz<br />

The Turkish economy has remained resilient despite the shocks in<br />

the global economy, says Vice President Cevdet Yılmaz, reiterating<br />

that the government’s priority will bring down inflation to single<br />

digits. The government spent some 762 billion Turkish Liras for the<br />

earthquake-related expenditure, while at the same time increased<br />

wages and social spending, Yılmaz told lawmakers in parliament<br />

during discussions on the additional budget. “Our economy<br />

performed better in many indicators, chiefly in growth and job<br />

production compared with other countries’ economies despite the<br />

ongoing Ukraine-Russia war. All this showed that our economy’s<br />

sustainable structure remained intact despite the February<br />

earthquakes,” he added.<br />

According to leading indicators, exports climbed to $123.4 billion<br />

in the first six months, while travel revenues stood at a record<br />

high of $43.9 billion, Yılmaz said. “We are expecting record growth<br />

numbers in the upcoming period.”<br />

Bringing down inflation back to single digits will be the<br />

government’s priority in the period ahead, he reiterated.<br />

Yılmaz, however, cautioned against the risks to the current account<br />

deficit, but voiced optimism that the outlook will improve in the<br />

second half of the year. The current account deficit this year will<br />

probably be higher than the gap forecast in the government’s<br />

medium-term program, said Yılmaz, citing gold imports and<br />

imported energy bill as the largest items contributing to the deficit.<br />

The program initially forecast that the current account deficit would<br />

be 2.5 percent of GDP this year.<br />

“The rolling 12-month gold imports amounted to $29.4 billion and<br />

energy imports stood at $72.1 billion. Excluding energy and gold,<br />

Türkiye posted a current account surplus of $41.5 billion.”<br />

<strong>October</strong> <strong>2023</strong> 50

Munich car<br />

show highlights<br />

China’s lead in<br />

electric car race<br />

European carmakers must demonstrate<br />

their capability to compete with China’s<br />

lead in developing cheaper, more<br />

consumer-friendly electric vehicles (EVs),<br />

industry analysts and executives noted at<br />

Munich’s International Motor Show – IAA<br />

mobility show.<br />

“It must be a battle, they (Chinese EV<br />

makers) are very competitive in the electric<br />

car value chain,” Renault CEO Luca de Meo<br />

told RTL Radio, speaking from the car show.<br />

“I think they’re a generation ahead of us.”<br />

“We need to catch up very quickly,” he<br />

added.<br />

Chinese EV makers, including BYD, Nio, and<br />

Xpeng, are all targeting Europe’s EV market,<br />

where sales soared nearly 55% to about<br />

820,000 vehicles in the first seven months<br />

of <strong>2023</strong>, making up about 13% of all car<br />

sales.<br />

According to auto consultancy Inovev, 8%<br />

of new EVs sold in Europe this year were<br />

made by Chinese brands, up from 6% last<br />

year and 4% in 2021.<br />

The Chinese presence is also being felt<br />

at the Munich auto show. About 41%<br />

of exhibitors at this year’s event are<br />

headquartered in Asia, with double the<br />

number of Chinese companies attending,<br />

including EV makers BYD and Xpeng and<br />

battery maker CATL.<br />

“What used to be a performance for the<br />

German car industry to demonstrate<br />

its powerful position is now a meeting<br />

of equals between progressive players<br />

from around the world, especially China,”<br />

said Fabian Brandt of consultancy Oliver<br />

Wyman.<br />

The arrival of Chinese EV makers has raised<br />

concerns they will undercut local carmakers<br />

and come to dominate EV sales.<br />

The average price of an EV in China was<br />

less than 32,000 euros ($35,000) in the first<br />

half of 2022 compared with around 56,000<br />

euros in Europe, according to researchers<br />

at Jato Dynamics.<br />

“Europe needs to stop being naive from a<br />

macroeconomic point of view in the face of<br />

China,” Renault’s engineering head, Gilles<br />

Le Borgne, told journalists, pointing to the<br />

country’s control of the full battery supply<br />

chain. Chinese and German carmakers and<br />

suppliers will also speak at a Chinese EV<br />

conference to be held outside China for the<br />

first time as part of the IAA.<br />

Competition over price will be a key theme<br />

at the conference, with Tesla showcasing its<br />

upgraded Model 3 to go on sale in Europe<br />

in <strong>October</strong> at 42,990 euros ($46,400).<br />

Mercedes-Benz will present its CLA<br />

compact class and BMW its Neue Klasse,<br />

both of which target higher range and<br />

efficiency while halving production costs.<br />

Volkswagen unveiled a show car for its<br />

CUPRA brand and outlined a new designoriented<br />

approach for the company, with<br />

chief designers working more closely<br />

with its 10 brand CEOs for stronger<br />

differentiation.<br />

Mercedes CEO Ola Kaellenius told<br />

journalists it was not “unusual for new<br />

players to come in” at a time when the<br />

industry was undergoing such a huge<br />

transformation.<br />

“There’s nothing else you can do but focus<br />

on your customer,” Kaellenius said.<br />

About 41% of exhibitors at this year’s<br />

event are headquartered in Asia, with the<br />

number of Chinese companies having more<br />

than doubled, including players across<br />

batteries and EV production such as BYD,<br />

CATL and XPeng.<br />

“Europe needs to stop being naive from<br />

a macroeconomic point of view in the<br />

face of China,” Gilles Le Borgne, Renault’s<br />

engineering head, told journalists, pointing<br />

to the country’s control of the entire<br />

battery supply chain.<br />

Chinese and German players, including<br />

top German carmakers and suppliers and<br />

China’s LeapMotors and Horizon Robotics,<br />

will also speak at a Chinese EV conference<br />

set for the first time outside China as part<br />

of the IAA. Competition over price will be<br />

a key theme at the conference, with Tesla<br />

showcasing its upgraded Model 3 to go on<br />

sale in Europe in <strong>October</strong> at 42,990 euros<br />

($46,400). Mercedes-Benz will present<br />

its CLA compact class and BMW its Neue<br />

Klasse, both of which target higher range<br />

and efficiency on a halving of production<br />

costs. Volkswagen unveiled a show car<br />

for its CUPRA brand and outlined a new<br />

design-oriented approach for the company,<br />

with chief designers working more closely<br />

with its 10 brand CEOs for stronger<br />

differentiation.<br />

“What used to be a performance for the<br />

German car industry to demonstrate its<br />

extremely strong position is now a meeting<br />

of equals between progressive players<br />

from around the world, especially China,”<br />

said Fabian Brandt of consultancy Oliver<br />

Wyman.<br />

<strong>October</strong> <strong>2023</strong> 52

Türkiye pledges<br />

greater support<br />

for exporters<br />

in 2024<br />

Trade Minister Ömer Bolat said that Türkiye<br />

would continue to support exporters,<br />

stressing that the government’s efforts to<br />

increase financing in the 2024 budget “are<br />

endless.”<br />

Highlighting the significant initiative of<br />

opening loans for exporters through<br />

Türk Eximbank during their tenure, Bolat<br />

emphasized that this move had farreaching<br />

effects. Notably, private banks<br />

responded by swiftly lowering the loan<br />

interest rates from 48% to 25% overnight,<br />

immediately benefiting exporters.<br />

Bolat elaborated on the concept of<br />

the multiplier effect, showcasing this<br />

development as a prime illustration of how<br />

a single strategic action can yield positive<br />

cascading results.<br />

“Furthermore, the central bank took<br />

pivotal steps to empower exporters<br />

by increasing their rediscount credits<br />

fivefold. This strategy, while maintaining<br />

a deliberate reduction in loan volumes to<br />

alleviate demand pressures and combat<br />

inflation concerning domestic demand, has<br />

proven effective,” said the minister.<br />

“The daily limit has been expanded<br />

substantially, surging from TL 300 million<br />

($11 million) to TL 1.5 billion. Out of this<br />

sum, TL 1 billion is allocated through<br />

Eximbank, with an additional TL 500 million<br />

accessible via various banks.”<br />

Bolat said they were “steadfastly<br />

committed to extending our unwavering<br />

support to the export sector, an endeavor<br />

that remains boundless.”<br />

“Looking forward to the 2024 budget, we<br />

are firmly dedicated to augmenting export<br />

support in an unceasing pursuit,” he noted.<br />

Bolat’s remarks came at the Istanbul<br />

Fashion Connection (IFCO) apparel and<br />

fashion fair in Istanbul, during which he<br />

said Türkiye’s monthly exports have risen<br />

from around $1 billion a year to now about<br />

$1 billion every single day.<br />

Türkiye’s exports last year totaled $254<br />

billion, he said, adding that textile and<br />

apparel sector exports amounted to $32<br />

billion.<br />

The mention of Turkish goods is like<br />

mentioning a world brand, he stressed.<br />

Touching on the fair, he said the event<br />

hosts 30,000 visitors and 94 foreign buying<br />

delegates from 26 countries.<br />

He underlined that Türkiye is the thirdlargest<br />

country in Europe in the textile and<br />

apparel sector and seventh in the world.<br />

In Europe, Türkiye is the fourth-largest<br />

glass exporter, third in the white goods<br />

(home appliances) sector, and first in the<br />

agriculture sector, he said.<br />

Türkiye is also the largest carpet exporter in<br />

the world, he added.<br />

The country aims to reach a $400 billion<br />

level in goods exports and $200 billion in<br />

services exports by 2028, Bolat said.<br />

<strong>October</strong> <strong>2023</strong> 54

Turkish navy ranks 10th among world’s<br />

strongest navies listing<br />

The World Directory of Modern Military<br />

Warships (WDMMW) ranked Türkiye’s navy<br />

10th in the most recent global assessment<br />

to determine the strongest navies across 36<br />

nations.<br />

The evaluation criteria included the<br />

number of warships and submarines, as<br />

well as aspects such as fleet age, logistical<br />

support, and offensive and defensive<br />

capabilities.<br />

Furthermore, the ranking considered the<br />

overall balance of each navy, analyzing<br />

the variety of asset types they possessed<br />

and whether they focused their resources<br />

in specific areas. The assessment<br />

encompassed most ships while excluding<br />

smaller craft, survey ships, and historical<br />

ceremonial vessels.<br />

The ranking also made distinctions<br />

between various classes of combat ships,<br />

encompassing both relatively compact<br />

corvettes and frigates and larger destroyers<br />

and cruisers.<br />

Each navy was given a final “True Value<br />

Rating” to measure them against one<br />

another.<br />

According to the WDMMW report,<br />

Türkiye – which ranked 10th has most<br />

recently conducted a global assessment<br />

to determine the strongest navies across<br />

36 nations which had a fleet comprising<br />

90 active units as of April, which included<br />

one helicopter carrier, 12 submarines,<br />

16 frigates, 10 corvettes, 11 mine/<br />

countermine warships, 35 offshore-patrol<br />

vessels, and five amphibious-assault<br />

vessels.<br />

Türkiye’s navy did not possess any<br />

destroyers or cruisers.<br />

The country’s strategic significance lies<br />

in its control of the maritime chokepoint<br />

connecting the Mediterranean and the<br />

Black Sea.<br />

The WDMMW assessment indicated that<br />

<strong>October</strong> <strong>2023</strong> 56

the average age of the Turkish navy was<br />

18.8 years, and its overall force balance<br />

was considered to be “average.”<br />

Based on the True Value Rating, Türkiye<br />

scored 80.5 in the evaluation.<br />

Among the country’s neighbors, Greece<br />

ranked 22nd on the listing.<br />

The country has 11 submarines, three<br />

frigates, three mine/countermine warfare<br />

ships, and 36 offshore-patrol vessels,<br />

making up its 63 active units as of<br />

November, according to the WDMMW.<br />

It said that Greece was focused on offshore<br />

vessels and that the fleet represented<br />

“over half of all fighting strength.” The<br />

WDMMW described the rest of Greece’s<br />

fleet as “an aging fleet of submarines and<br />

frigates for the most part.”<br />

Greece has no destroyers, corvettes,<br />

cruisers, or amphibious-assault vessels and<br />

the navy’s force balance was “fair” while its<br />

median hull age was 27.5 years.<br />

The report gave Greece’s navy a True Value<br />

Rating of 47.2.<br />

Egypt, a coastal neighbor of Türkiye on the<br />

Eastern Mediterranean ranked closer to the<br />

country as it became the 13th country with<br />

the strongest navy.<br />

The WDMMW said Egypt’s navy is the<br />

largest such force in Africa or the Middle<br />

East with 107 active units as of November.<br />

Its navy includes eight submarines,<br />

12 frigates, seven corvettes, 18 mine/<br />

countermine warfare ships, 48 offshorepatrol<br />

vessels, and 12 amphibious-assault<br />

vessels.<br />

It also has two helicopter carriers, which<br />

the WDMMW said made it “the only<br />

African/Middle East power to have aircraft<br />

carriers in the force.”<br />

It has no destroyers or cruisers and only<br />

has one vessel in production.<br />

Yet, the country has an aging fleet. The<br />

WDMMW said that Egypt’s force balance<br />

was “average” and that its median hull age<br />

is 27.5 years, with the navy acquiring a True<br />

Value Rating of 72.4.<br />

According to the WDMMW report, the<br />

top ten countries with the most powerful<br />

navies worldwide are the United States,<br />

China, Russia, Indonesia, South Korea,<br />

Japan, India, France, the U.K., and Türkiye,<br />

respectively.<br />

The report pointed out that, Russia,<br />

among the top three, had a lot of aging<br />

units, including its only aircraft carrier, the<br />

Admiral Kuznetsov.<br />

Many of its 58 submarines, 12 destroyers,<br />

and four cruisers are also showing their<br />

age. The report said Russia’s median hull<br />

age was 30 years.<br />

The report highlighted Russia’s efforts<br />

to enhance its naval capabilities through<br />

a modernization initiative, involving the<br />

procurement of 82 new units. Notably,<br />

the country demonstrated significant<br />

dedication to acquiring advanced<br />

corvette warships, submarines, and mine/<br />

countermine warfare vessels. According to<br />

the WDMMW evaluation, Russia received a<br />

high True Value Rating of 242.3, indicating<br />

its substantial naval strength. Furthermore,<br />

the assessment categorized Russia’s force<br />

balance as “good,” reflecting a wellbalanced<br />

and formidable navy.<br />

During Russia’s invasion of Ukraine, its<br />

military suffered notable equipment losses,<br />

but its navy remained relatively unscathed<br />

as it did not play a significant role in the<br />

conflict. One significant setback for Russia<br />

was the destruction of its flagship in the<br />

Black Sea, the Moskva, which was targeted<br />

and taken out by a Ukrainian missile strike.<br />

For the U.S. Navy, the WDMMW gave it<br />

a True Value Rating of 323.9, its highest<br />

score. It said the U.S. scored highly because<br />

it “features a broad mix of warship and<br />

submarine types as well as balance<br />

strengthened by overall numbers (quantity)<br />

– pulling ahead by its vaunted carrier fleet.”<br />

The listing said the U.S. Navy had 243<br />

active units in November, comprising 11<br />

aircraft carriers, 68 submarines, 22 cruisers,<br />

70 destroyers, 21 corvettes, eight mine/<br />

countermine warfare ships, 10 offshorepatrol<br />

vessels, and 33 amphibious-assault<br />

vessels. It has no frigates, and its median<br />

hull age is 23.3 years. It said the U.S. had a<br />

“good” balance in its asset types.<br />

<strong>October</strong><br />

<strong>2023</strong><br />


BRD extends fresh $109M loan<br />

tailored for Türkiye quake region<br />

Europe’s development bank said it was providing a $109 million<br />

loan to the largest private lender in Türkiye for on-lending to<br />

businesses and individuals affected by the devastating earthquakes<br />

that struck the country’s southeastern region.<br />

The loan to Işbank is part of the European Bank for Reconstruction<br />

and Development’s (EBRD) Türkiye Disaster Response Framework,<br />

launched in the aftermath of the earthquakes in early February that<br />

killed over 50,000 people.<br />

The disaster toppled hundreds of thousands of buildings, left<br />

millions homeless and severely damaged the southeastern region’s<br />

infrastructure. Business groups, economists and the government<br />

have said rebuilding could cost more than $100 billion.<br />

The EBRD said proceeds of the loan will be used to remedy some<br />

of the damage to the region’s economy and seek to preserve the<br />

livelihoods and human capital of the affected cities.<br />

“By providing financial support to businesses and individuals, the<br />

loan aims to address the most immediate funding needs of the<br />

local population in those cities, bringing financial relief to the<br />

region’s private sector,” the lender said in a statement.<br />

The EBRD previously announced a 1.5 billion-euro ($1.65-billion),<br />

two-year investment plan for the region, to lessen the economic<br />

impact of the disaster.<br />

Arthur Poghosyan, EBRD deputy head of Türkiye Financial<br />

Institutions, said their rapid progress in transactions under the<br />

Türkiye Disaster Response Framework is vital for the recovery and<br />

reconstruction of the region.<br />

“We are confident that as our long-standing partner, Işbank, will<br />

disburse these funds efficiently and successfully to those in need<br />

of financial relief while they are recovering their economic wellbeing,”<br />

Poghosyan noted.<br />

The 600-million-euro Türkiye Disaster Response Framework, the<br />

first such framework deployed in the EBRD regions, aims to provide<br />

support for companies and individuals affected by the disaster.<br />

It also seeks to offer new lending for companies participating in<br />

recovery and reconstruction efforts in the area, strengthening the<br />

private sector’s role in disaster response.<br />

Close to $350 million has been allocated to the EBRD’s partner<br />

banks under this framework to date, including the loan to Işbank.<br />

Işbank Deputy Chief Executive Gamze Yalçın said the loan<br />

agreement carries great importance in terms of supporting the<br />

quake-hit region.<br />

“The EBRD’s invaluable support for the Turkish economy and the<br />

affected region under the DRF is highly appreciated. Işbank Group,<br />

with its own inclusive TL 10 billion disaster package, will also<br />

continue to support the region with this new initiative,” said Yalçın.<br />

To date, the EBRD has invested more than 18 billion euros in<br />

various sectors of the Turkish economy, largely in the private sector.<br />

<strong>October</strong> <strong>2023</strong> 62

Turkish finance<br />

minister meets<br />

dozens of int’l<br />

investors in<br />

Istanbul<br />

Treasury and Finance Minister Mehmet<br />

Şimşek met with dozens of international<br />

investors and pledged to continue hiking<br />

interest rates, even as economic growth<br />

slows.<br />

The eight-hour meeting in Istanbul included<br />

Finance Minister Mehmet Simsek and<br />

Central Bank Governor Hafize Gaye Erkan<br />

and 40 investors discussing monetary and<br />

fiscal policy and the economic outlook.<br />

The meeting marks a more transparent<br />

market turn by the authorities. It comes<br />

two months after President Tayyip Erdoğan<br />

named Şimşek, who is highly regarded<br />

by financial markets, as well as Erkan, a<br />

former senior U.S.-based bank executive,<br />

in moves seen as heralding a switch to<br />

tighter interest rate policy. According to<br />

the sources, Şimşek stressed that reducing<br />

inflation was the priority and struck a<br />

confident tone that policy was returning to<br />

more normal settings.<br />

He told investors that Erdoğan fully<br />

supported the monetary tightening and<br />

that “gradual” rate hikes would continue,<br />

pinching credit and leading to somewhat<br />

slower economic growth but not a sudden<br />

stop, one of the sources said.<br />

The central bank under Erkan has raised its<br />

key rate by 900 basis points to 17.5% since<br />

June, though the pace of tightening missed<br />

market expectations. It more than doubled<br />

its year-end inflation forecast to 58%,<br />

meeting expectations.<br />

Under the previous governor, the bank had<br />

slashed rates to 8.5% from 19% in 2021, in<br />

line with Erdoğan’s unorthodox belief that<br />

high rates fuel inflation. That sparked a<br />

currency crisis and the lira weakened 44%<br />

in 2021, 30% in 2022, and another 30% so<br />

far this year. Inflation touched a 24-year<br />

peak of 85.5% last <strong>October</strong>. It eased but<br />

rose sharply again in July to nearly 48%.<br />

The meeting was hosted by Wall Street<br />

bank JPMorgan, with the participation of<br />

Vice President Cevdet Yilmaz, Ziraat Bank<br />

CEO and Turkish Banking Association head<br />

Alpaslan Cakar and the heads of Türkiye’s<br />

wealth fund and treasury debt office were<br />

also scheduled to speak; the program<br />

showed.<br />

<strong>October</strong> <strong>2023</strong> 64

Turkish defense firms listed among world’s top 100<br />

Four Turkish defense magnates made it to<br />

the top 100 defense firms list published by<br />

the U.S.-based Defense News Magazine.<br />

Türkiye’s Aselsan was at 47th place in the<br />

annual ranking, up from 49th last year,<br />

said the outlet that describes itself as “the<br />

authoritative, independent, professional<br />

news source for the world’s defense<br />

decision-makers.”<br />

Turkish Aerospace Industry (TAI) was at<br />

58, up from 67, while missile producer<br />

Roketsan climbed to 80th place from 86th.<br />

The Military Factory and Shipyard<br />

Management Inc. (Asfat) also entered the<br />

list for the first time and took the 100th<br />

spot.<br />

Aselsan’s defense revenues totaled $2<br />

billion in 2022, while TAI’s revenues<br />

amounted to $1.48 billion, Roketsan’s<br />

$873.3 million, and Asfat’s $443.5 million.<br />

Lockheed Martin was in first place again<br />

with defense revenues of $63.3 billion on<br />

the list, followed by RTX with $39.6 billion,<br />

and Northrop Grumman with $32.4 billion.<br />

While the top three firms were from the<br />

U.S., six out of the top 10 were U.S.-based,<br />

three from China, and one from the U.K.<br />

New period of dialogue on trade begins with EU<br />

A new period of dialogue has begun between Türkiye and the<br />

European Union on trade, the Trade Ministry has said, following<br />

a virtual meeting with Trade Minister Ömer Bolat and Valdis<br />

Dombrovskis, the vice president of the European Commission.<br />

“During the meeting, we agreed on a common roadmap for the<br />

development of commercial and economic relations between<br />

Türkiye and the EU in the new period,” Bolat wrote on social media.<br />

The EU is Türkiye’s largest trading partner.<br />

The bilateral trade volume reached a record $200 billion last year.<br />

The bloc absorbed more than 40 percent of Türkiye’s exports in the<br />

first seven months of <strong>2023</strong>, with shipments to the EU amounting to<br />

$60.54 billion, according to the latest data from the Trade Ministry.<br />

“Within the scope of the Trade Working Group between Türkiye<br />

and the EU, we will discuss our current technical issues and<br />

cooperation opportunities before the start of negotiations for the<br />

modernization of the Customs Union, and then we will be in close<br />

contact for a strong dialogue in all areas of our trade,” Bolat said.<br />

Bolat and Dombrovskis also agreed to further meetings in Brussels<br />

in September, according to the statement from the Trade Ministry.<br />

“A constructive first discussion with the Trade Minister Bolat<br />

on how to re-invigorate our cooperation and EU-Türkiye trade<br />

relations,” wrote Dombrovskis on a social media post. The two also<br />

discussed the global challenges of food security and the need to<br />

continue the Black Sea Grain Initiative, said the EU official.<br />

<strong>October</strong> <strong>2023</strong> 66

Türkiye aims to reach $400B level in goods<br />

exports and $200B in services exports<br />

The mention of Turkish goods is like<br />

mentioning a world brand, the Turkish<br />

trade minister said.<br />

Speaking at the Istanbul Fashion<br />

Connection (IFCO) apparel and fashion<br />

fair in Istanbul, Omer Bolat said Türkiye’s<br />

monthly exports have risen from around $1<br />

billion a year to now about $1 billion every<br />

single day.<br />

Türkiye’s exports last year totaled $254<br />

billion, he said, adding that textile and<br />

apparel sector exports amounted to $32<br />

billion.<br />

Touching on the fair, he said the event<br />

is hosting 30,000 visitors and 94 foreign<br />

buying delegates from 26 countries.<br />

He underlined that Türkiye is the thirdlargest<br />

country in Europe in the textile and<br />

apparel sector, and seventh in the world.<br />

In Europe, Türkiye is the fourth-largest<br />

glass exporter, third in the white goods<br />

(home appliances) sector, and first in the<br />

agriculture sector, he said.<br />

Türkiye is also the largest carpet exporter in<br />

the world, he added.<br />

The country aims to reach $400 billion<br />

level in goods exports and $200 billion in<br />

services exports by 2028, Bolat said.<br />

<strong>October</strong> <strong>2023</strong> 68

China reports<br />

biggest drop in<br />

exports since<br />

2020<br />

China suffered its biggest drop in exports<br />

for more than two years, according to<br />

official figures, as the world’s secondlargest<br />

economy struggles with sluggish<br />

global demand and a domestic slowdown.<br />

The data will likely ramp up calls for leaders<br />

to do more to revive growth, having laid<br />

out a series of stimulus measures.<br />

Sales of Chinese products to foreign<br />

markets plunged 14.5 percent on-year, a<br />

third consecutive drop, according to the<br />

customs authority.<br />

The decline was bigger than expected and<br />

the heaviest since a 17.2 percent drop in<br />

January-February 2020, when the economy<br />

came to a standstill in the early weeks of<br />

the COVIC-19 pandemic.<br />

Apart from a brief rebound in March and<br />

April, exports have been in constant decline<br />

since <strong>October</strong>. The threat of recession in<br />

the United States and Europe, combined<br />

with high inflation, has contributed to<br />

weakening international demand for<br />

Chinese products in recent months.<br />

<strong>Exports</strong> dived 12.4 percent on-year in June.<br />

Shipments to the European Union in the<br />

first seven months of the year came to<br />

2.08 trillion yuan ($288.9 billion), down<br />

2.6 percent, Meanwhile, imports fell for<br />

the ninth month in a row in July, shrinking<br />

12.4 percent in a sign of sluggish domestic<br />

demand.<br />

The trade figures are the latest indicators<br />

that China’s post-COVID recovery has run<br />

out of steam. The economy grew just 0.8<br />

percent on-quarter in April-June, while<br />

youth unemployment has reached record<br />

highs of more than 20 percent.<br />

July’s official manufacturing purchasing<br />

managers’ index -- a key measure of factory<br />

output -- came in at 49.3, below the<br />

50-point mark that separates expansion<br />

and contraction. And the property sector<br />

remains in turmoil, with major developers<br />

failing to complete housing projects,<br />

triggering protests and mortgage boycotts<br />

from homebuyers. The country’s top<br />

leaders, known as the Politburo, have<br />

warned that the economy faces “new<br />

difficulties and challenges” as well as<br />

“hidden dangers in key areas”.<br />

<strong>October</strong> <strong>2023</strong> 70

China tags Türkiye safe for post-pandemic tourism<br />

Beijing lifted a COVID-19 era ban on<br />

outbound group tours to dozens of<br />

countries including Türkiye, the United<br />

States and Japan, a move that could<br />

see crowds of Chinese tourists return to<br />

destinations around the world.<br />

China cut itself off from the world in 2020<br />

as part of a strict zero COVID-19 strategy,<br />

using visa suspensions and lengthy<br />

quarantines to curb the import of virus<br />

cases into the country.<br />

The announcement is the latest move<br />

towards reopening, after the Chinese<br />

government dropped its containment<br />

measures abruptly in December.<br />

“From now on, travel agencies across the<br />

country and online travel companies will<br />

resume operating outbound group tours”<br />

to more than 70 countries, including<br />

Türkiye, the United States, United Kingdom,<br />

Japan and South Korea, the Chinese<br />

Ministry of Culture and Tourism said in a<br />

statement.<br />

Among numerous others, the list also gave<br />

the green light for trips to most European<br />

Union member states, India, Pakistan,<br />

and Australia. The inclusion of Australia<br />

coincides with a thawing in the frostiness<br />

between Canberra and Beijing that has<br />

dominated relations over the last few<br />

years. China announced it was removing<br />

extra tariffs on Australian barley imposed in<br />

2020 at the height of a bitter dispute with<br />

the then-conservative government over<br />

issues including China’s overseas influence<br />

operations. Chinese tour groups had<br />

already received permission to visit a small<br />

number of countries earlier this year under<br />

a trial program, including tourist magnets<br />

Thailand, Italy and France.<br />

The tourism ministry said outbound<br />

tourism had been developing in a stable<br />

manner since the start of the trial period,<br />

“playing a positive role in promoting<br />

tourism exchanges and cooperation”.<br />

China had the largest outbound tourism<br />

market in the world in 2019, with mainland<br />

Chinese residents taking 155 million trips<br />

abroad that year, according to consulting<br />

firm McKinsey.<br />

That outflow narrowed to a trickle in the<br />

past three years as Chinese authorities<br />

restricted passport renewals and cut<br />

international flights in a bid to deter travel.<br />

“Currently, international passenger flights<br />

continue to resume, and the desire<br />

of Chinese people to travel abroad is<br />

increasing,” the foreign ministry said in<br />

a statement. In early December, Chinese<br />

authorities effectively ended the country’s<br />

regime of mass testing, lockdowns and long<br />

quarantines – but the abrupt reversal led to<br />

a spike in COVID-19 cases.<br />

Beijing announced in late December that<br />

inbound travelers to the country would no<br />

longer need to quarantine from January<br />

8, but kept in place visa restrictions on<br />

foreigners. China resumed issuing a range<br />

of visas to foreigners in March, but inbound<br />

tourism remains at a fraction of prepandemic<br />

levels.<br />

<strong>October</strong> <strong>2023</strong> 72

Türkiye’s tourist<br />

arrivals, revenue<br />

surge reaffirm<br />

buoyant season<br />

Foreign arrivals in Türkiye jumped by<br />

nearly 20% in the first half of the year,<br />

according to official data that also showed<br />

tourism revenues surged by almost a third,<br />

maintaining a strong trend in the industry<br />

that is a vital economic source.<br />

Nearly 19.62 million foreigners arrived<br />

from January through June, Culture and<br />

Tourism Minister Mehmet Nuri Ersoy said,<br />

marking a 19.88% increase from some<br />

16.37 million a year ago. Arrivals in June<br />

alone jumped 11.35% year-over-year to<br />

more than 5.58 million.<br />

This year’s momentum has been driven by<br />

an influx of holidaymakers from Europe,<br />

particularly Germany and the United<br />

Kingdom, besides arrivals from Russia,<br />

mainly due to flight restrictions imposed by<br />

Western nations over Moscow’s invasion of<br />

Ukraine. The first-half figure reaches nearly<br />

22.95 million when visitors from abroad<br />

of Turkish origin are taken into account,<br />

marking a 17.5% increase from some<br />

19.53 million in 2022, Ersoy told a news<br />

conference to announce the data.<br />

Arrivals from Russia reached 2.61 million<br />

in January-June, the Culture and Tourism<br />

Ministry data showed, compared to nearly<br />

1.46 million in the same period a year<br />

ago. They were followed by 2.27 million<br />

tourists from Germany and 1.49 million<br />

from the U.K. About 1.3 million Bulgarians<br />

and over 1 million Iranians visited Türkiye<br />

in the first half. Tourism revenues surged<br />

27% year-over-year to $21.7 billion in the<br />

first six months, Ersoy said, noting a more<br />

than 11% jump to almost $100 per capita<br />

overnight income.<br />

“The per capita overnight income, which<br />

was $89.2 in the first six months of 2022,<br />

was realized as $99.9 in the first six months<br />

of <strong>2023</strong>. In other words, there is an<br />

increase of 11.9%,” the minister noted.<br />

“Our income per person per night had<br />

dropped to $62. Currently, Türkiye has<br />

started to see $100s.”<br />

Revenues in the second quarter jumped<br />

23.1% year-over-year to $12.98 billion,<br />

Turkish Statistical Institute (TurkStat) data<br />

showed. Ersoy said the average length of<br />

stay had decreased, driven mainly by the<br />

intensive housing purchases by Russian<br />

citizens and seasonal rental of these<br />

residences to other tourists. He also cited<br />

the recession challenges plaguing the world<br />

and the contraction in purchasing power,<br />

leading to hotel stays falling.<br />

“The duration of stay decreased from<br />

10.5 overnight stays to an average of 9.9<br />

overnight stays. There is a contraction of<br />

5.7%,” said the minister.<br />

Ersoy also acknowledged occupancy rates in<br />

hotels catering to high-income groups came<br />

in below expectations in the first half of<br />

the year. The devastating earthquakes that<br />

struck southeastern Türkiye in early February<br />

and the presidential and parliamentary<br />

elections coincided with the early booking<br />

period, said Ersoy.<br />

“The fact that the cool weather extended<br />

until mid-July causes last-minute bookings<br />

to slip,” he added. Tourism revenue is critical<br />

as President Recep Tayyip Erdoğan and his<br />

government focus on reducing the current<br />

account deficit to tackle stubborn inflation.<br />

Last year’s complete rebound from the<br />

pandemic fallout saw the number of tourists<br />

near a record, generating all-time high<br />

revenues and prompting the government to<br />

raise its annual estimates.<br />

The government sees foreign arrivals<br />

reaching 60 million this year, which it<br />

estimates will hit 90 million in 2028. For the<br />

income, it sees it rising to $56 billion this<br />

year and $100 billion five years from now.<br />

Foreign visitors surged 80.33% to 44.6<br />

million in 2022, just shy of the peak of 45.1<br />

million in 2019. The figure is compared to<br />

the 24.71 million arrivals in 2021 and 12.73<br />

million in 2020. Income in 2022 climbed<br />

53.4% to a record high of nearly $46.3 billion<br />

as the lingering effects of the coronavirus<br />

pandemic dissipated and Russian arrivals<br />

rocketed after Moscow invaded Ukraine<br />

on Feb. 24. Last year’s income blew past<br />

the previous high of $38.4 billion in 2019<br />

before the pandemic hit. The figure stood<br />

at $30.2 billion in 2021 after the outbreak<br />

more than halved it to just $14.8 billion in<br />

2020. Tourism contributes about 10% to<br />

Türkiye’s gross domestic product (GDP). In<br />

addition, around 1.7 million people worked<br />

in accommodation and food services in 2022<br />

– about 5% of total employment.<br />

<strong>October</strong> <strong>2023</strong> 74

Türkiye ramps up financing by 10-fold to help boost exports<br />

Türkiye’s central bank doubled the banks’<br />

daily limit to extend rediscount credits to<br />

support exporters’ access to financing,<br />

in a move that officials say reflects the<br />

government’s determination to prioritize<br />

outbound shipments.<br />

The government has been seeking ways<br />

to curb the stubborn trade imbalance by<br />

lowering dependence on imports and<br />

boosting exports.<br />

The Central Bank of the Republic of Türkiye<br />

(CBRT) said it lifted banks’ daily limit to<br />

extend rediscount credits to TL 3 billion<br />

($111 million) from TL 1.5 billion.<br />

In July, the authority decided to increase<br />

the limit for extending these loans to TL 1.5<br />

billion from TL 300 million.<br />

“We have increased the daily credit limit to<br />

our exporters by tenfold in a three-month<br />

period,” said Treasury and Finance Minister<br />

Mehmet Şimşek.<br />

“This shows how serious we are about<br />

prioritizing exports,” Şimşek wrote on<br />

social media platform X, formerly known as<br />

Twitter.<br />

Türkiye needs to make more exportoriented<br />

investments for a permanent<br />

increase in prosperity, the minister<br />

stressed. “By ensuring price stability in<br />

the medium term, we will ensure that our<br />

companies can access subordinated credit<br />

in global markets.”<br />

CBRT Governor Hafize Gaye Erkan echoed<br />

Şimşek’s view.<br />

“We prioritize access to financing for<br />

our exporters who contribute to the<br />

current account balance,” Erkan said in a<br />

statement. We will continue to support<br />

practices to increase the share of SMEs<br />

(small- and medium-sized enterprises) in<br />

rediscount loans.”<br />

She emphasized the central bank’s<br />

commitment to its roadmap, which<br />

includes selective credit tightening<br />

measures to expedite the establishment of<br />

price stability.<br />

Erkan cited a priority focus on ensuring<br />

financial access for exporters contributing<br />

to the country’s current account balance<br />

during the transition to a lower inflation<br />

rate.<br />

“We are diligently implementing our<br />

roadmap in conjunction with selective<br />

credit tightening measures to achieve price<br />

stability as quickly as possible. During the<br />

transition to lower inflation, we prioritize<br />

facilitating access to finance for exporters<br />

who contribute to the current account<br />

balance,” she said.<br />

Official data showed Türkiye’s current<br />

account swung back to a deficit in July after<br />

a rare surplus a month earlier, propelled<br />

mainly by the trade imbalance.<br />

The current account registered a nearly<br />

$5.5 billion shortfall versus a revised<br />

surplus of $651 million in June. The figure<br />

came in higher than market expectations.<br />

The gap for the January-July period<br />

reached $42.3 billion, nearly matching<br />

the government’s year-end forecast of<br />

$42.5 billion that was outlined in the new<br />

medium-term program, unveiled.<br />

The forecasts in the new economic<br />

roadmap see the current account deficit<br />

falling to around $34.7 billion, or 3.1% of<br />

gross domestic product (GDP), in 2024,<br />

down from about 4% projected for this<br />

year.<br />

Şimşek earlier said the shortfall is<br />

expected to shrink to around $40 billion in<br />

December due to a slowdown in consumer<br />

loan growth and a sharp rise in tourism<br />

revenues.Data revealed that the 12-month<br />

rolling gap surged to $58.5 billion,<br />

equivalent to approximately 6% of GDP,<br />

according to economists’ calculations.<br />

Türkiye’s foreign trade deficit shrank by<br />

21.2% year-over-year to $8.9 billion in<br />

August, according to official data. <strong>Exports</strong><br />

rose 1.6% to $21.6 billion, the best August<br />

level ever, while imports dropped 6.3% to<br />

$30.5 billion.<br />

The January-August trade shortfall is still<br />

12.1% higher than a year ago and reached<br />

$82.4 billion. Outbound shipments in the<br />

eight-month period slipped 0.4% to $164.9<br />

billion. Imports rose 3.5% to $247.3 billion.<br />

The increase in rediscount loan limits<br />

should encourage new endeavors by<br />

exporters, Trade Minister Ömer Bolat said.<br />

Bolat said ensuring growth in exports is<br />

the government’s biggest goal on its path<br />

to a lower foreign trade gap and current<br />

account deficit.<br />

“Financing support provided to exporters<br />

has been increased by tenfold in 1.5<br />

months. We now also expect them<br />

(exporters) to make new moves in exports<br />

now,” the minister told an event in the<br />

Aegean province of Izmir.<br />

The decision will promote increased<br />

production and exports without the burden<br />

of financing constraints, said Turkish<br />

Exporters Assembly Chair Mustafa Gültepe.<br />

Gültepe highlighted that exporters have<br />

faced difficulties accessing affordable<br />

financing for an extended period. But he<br />

said the new economic management has<br />

taken significant steps to prioritize access<br />

to financing for exporters.<br />

“This starts a process where SMEs receive a<br />

larger share of loans, and high-performing<br />

exporters are prioritized,” Gültepe said in a<br />

statement.<br />

“Increasing rediscount loan limits allows us<br />

to overcome a significant hurdle, enabling<br />

our exporters to focus more on production<br />

and exports without wasting time seeking<br />

financing.”<br />

<strong>October</strong> <strong>2023</strong> 76

Electric car makers race for supplies of lithium for batteries<br />

Threatened by possible shortages of lithium<br />

for electric car batteries, automakers are<br />

racing to lock in supplies of the onceobscure<br />

“white gold” in a politically and<br />

environmentally fraught competition from<br />

China to Nevada to Chile.<br />

General Motors and the parent company<br />

of China’s BYD Auto went straight to the<br />

source and bought stakes in lithium miners,<br />

a rare step in an industry that relies on<br />

outside vendors for copper and other raw<br />

materials.<br />

Others are investing in lithium refining or<br />

ventures to recycle the silvery-white metal<br />

from used batteries.<br />

A shortfall in lithium supplies would be<br />

an obstacle for government and industry<br />

plans to ramp up sales to tens of millions of<br />

electric vehicles a year.<br />

It is fueling political conflict over resources<br />

and complaints about the environmental<br />

cost of extracting them.<br />

Ford Motor has signed contracts stretching<br />

up to 11 years into the future with lithium<br />

suppliers on two continents. Volkswagen<br />

and Honda are trying to reduce their need<br />

for freshly mined ore by forming recycling<br />

ventures.<br />

Global lithium output is on track to triple<br />

this decade, but sales of electric SUVs,<br />

sports cars and sedans that rose 55 percent<br />

last year threaten to outrun that.<br />

Each battery requires about eight kilograms<br />

of lithium, plus cobalt, nickel and other<br />

metals.<br />

Adding to uncertainty, lithium has emerged<br />

as another conflict in strained U.S.-Chinese<br />

relations.<br />

Beijing, Washington and other<br />

governments see metal supplies for<br />

electric vehicles as a strategic issue and are<br />

tightening controls on access.<br />

Other governments including Indonesia,<br />

Chile and Zimbabwe are trying to maximize<br />

their return on deposits of lithium, cobalt<br />

and nickel by requiring miners to invest in<br />

refining and processing before they can<br />

export.<br />

GM is buying direct access to lithium by<br />

investing $650 million in the Canadian<br />

developer of a Nevada mine. In return, GM<br />

says it will get enough for 1 million vehicles<br />

a year.<br />

BYD Auto’s parent company, battery maker<br />

BYD Co., has announced more than $5<br />

billion in investments in lithium mining and<br />

refining over the past 18 months.<br />

Despite rising output, the industry may face<br />

shortages of lithium and cobalt as early as<br />

2025 if enough isn’t invested in production,<br />

according to Leonardo Paoli and Timur Gul<br />

of the International Energy Agency.<br />

“Supply side bottlenecks are becoming<br />

a real challenge,” said Paoli and Gul in a<br />

report last year.<br />

Alastair Bedwell of GlobalData said miners<br />

are reluctant to “go all out” on lithium until<br />

they are sure the industry won’t switch to<br />

batteries made with other metals.<br />

Developing lithium sources is a yearslong<br />

process.<br />

Mines that came online in 2010-19 took on<br />

average more than 16 years from discovery<br />

to the start of production, according to<br />

Paoli and Gul of the IEA.<br />

“These long lead times raise questions<br />

about the ability of supply to ramp up,”<br />

they wrote.<br />

Worldwide lithium resources are estimated<br />

at 80 million tons by the U.S. Geological<br />

Survey.<br />

Bolivia’s are the biggest at 21 millions tons,<br />

followed by Australia with 17 million and<br />

Chile with 9 million. China has 4.5 million<br />

tons of known reserves and the United<br />

States has 1 million.<br />

Forecasts of annual global production<br />

range as high as 1.5 million tons by 2030.<br />

But demand, if EV sales keep rising at<br />

double-digit annual rates, is forecast to<br />

increase to up to 3 million tons.<br />

<strong>October</strong> <strong>2023</strong> 78

Türkiye eager to<br />

avoid recession<br />

while fighting<br />

inflation<br />

Amid the ongoing battle against<br />

stubborn inflation, Türkiye’s top economy<br />

officials emphasized the necessity of<br />

simultaneously maintaining production and<br />

exports, which they say will be crucial in<br />

preventing a potential slip into recession.<br />

“While fighting inflation we are making an<br />

effort to sustain production and exports<br />

so as not to fall into recession. We must<br />

do both at the same time,” Vice President<br />

Cevdet Yılmaz told reporters after meeting<br />

bankers in Istanbul.<br />

Further underscoring the government’s<br />

determination, Treasury and Finance<br />

Minister Mehmet Şimşek stressed<br />

consolidation of macro-financial stability<br />

as the administration’s top priority in the<br />

coming period.<br />

Şimşek added that they are moving toward<br />

a rationalization in monetary policy for this<br />

purpose.<br />

“For sustainable high growth, investment,<br />

employment, production and export cycles<br />

must be prioritized. We are extremely<br />

committed to this issue,” he told an event<br />

in the southeastern Batman province.<br />

“Our tax, credit, and incentive policies will<br />

be shaped accordingly,” Şimşek affirmed.<br />

Since the May elections, President<br />

Recep Tayyip Erdoğan’s government<br />

orchestrated a U-turn away from policies<br />

based on interest rate cuts that had been<br />

accompanied by a steep fall in the Turkish<br />

lira and soaring inflation.<br />

Since June, the country’s central bank has<br />

reversed and hiked its policy rate by 900<br />

basis points to address inflation, which<br />

leaped to a 25-year high above 85% last<br />

year but subsequently eased to as low as<br />

38.21% in June.<br />

It rose again to nearly 48% due to the lira’s<br />

decline and various tax hikes and officials<br />

have acknowledged it would rise further<br />

toward the year-end.<br />

Erdoğan said after a Cabinet meeting that<br />

the government would lower inflation to<br />

single digits but will not sacrifice economic<br />

growth and employment, comments which<br />

were echoed by Yılmaz.<br />

The vice president stressed Türkiye must<br />

sustain its push on production and exports<br />

to prevent the economy from falling into<br />

recession even as it fights inflation.<br />

“We need to follow the right policies with<br />

patience,” Yılmaz said.<br />

The central bank doubled its year-end<br />

inflation forecast to 58% and vowed to<br />

continue gradual monetary tightening. The<br />

end-2024 inflation prediction has been<br />

raised to 33% from 8.8%. The forecast for<br />

the end of 2025 stands at 15%.<br />

Şimşek said Türkiye aims to lower soaring<br />

inflation permanently after a transitional<br />

period where prices remain high.<br />

“As you can see from the central bank’s<br />

projections, inflation will continue to rise<br />

temporarily due to certain factors in the<br />

coming months,” the minister said.<br />

In the meeting with the finance sector,<br />

the issue of new financial instruments<br />

came onto the agenda with sector<br />

representatives having spoken of<br />

difficulties in financing long-term projects<br />

given the short-term deposits in the sector,<br />

Yılmaz said.<br />

He also underscored that the meeting also<br />

addressed the issue of encouraging firsttime<br />

house buyers, adding that the central<br />

bank and regulator were working on the<br />

issue and that the housing supply needed<br />

to be increased.<br />

Yılmaz said the government’s new<br />

medium-term program (MTP), setting<br />

out its economic plans in detail, would be<br />

announced in the first half of September.<br />

Şimşek said the MTP will feature key<br />

structural reforms and will serve as a<br />

“crucial” guide and road map for both the<br />

private and public sectors.<br />

He further stated that Türkiye’s budgetary<br />

balances were being shaped according<br />

to specified criteria. Simultaneously, he<br />

said fiscal discipline was reinstated and<br />

stressed efforts to drive inflation down<br />

to single digits through monetary policy<br />

adjustments.<br />

<strong>October</strong> <strong>2023</strong> 80

China’s army<br />

media hails<br />

progress of<br />

Turkish defense<br />

industry<br />

The official news outlet of China’s Peoples’<br />

Liberation Army (PLA) has praised the<br />

rapid advancement of the Turkish defense<br />

industry, in particular Turkish drone<br />

magnate Baykar, highlighting how it surged<br />

ahead using indigenous resources.<br />

In a full-page story, the PLA Daily covered<br />

the Istanbul-based Baykar’s milestones,<br />

which inked the largest export deal in<br />

Türkiye’s history with Saudi Arabia, which<br />

has reverberated globally.<br />

It noted that Türkiye boasted powerful<br />

defensive capabilities in the past but that<br />

its dependence on foreign arms and other<br />

hardware had increased after World War II.<br />

The new model of unmanned warfare<br />

that emerged in the 1990s opened new<br />

opportunities in the defense field, it added.<br />

As one of the defense companies<br />

established in Türkiye during this period,<br />

Baykar made significant strides in the<br />

development of unmanned flight systems<br />

despite its short history of 20 years.<br />

Türkiye announced a plan to develop<br />

domestic UAV systems in the 2000s and<br />

encouraged private enterprises to work in<br />

the field, the PLA Daily said.<br />

This call was heeded by Baykar’s founder<br />

and aviation enthusiast Özdemir Bayraktar,<br />

who, seeking to contribute to the Turkish<br />

industry, raised his son, Selçuk, to lead<br />

Baykar’s technology research.<br />

Selçuk Bayraktar graduated from Istanbul<br />

Technical University and was educated in<br />

the field of UAV technologies in the United<br />

States, the story said, adding that he<br />

completed his Ph.D. at the Massachusetts<br />

Institute of Technology in 2007.<br />

Highlighting his accomplishment of<br />

assembling a youthful team of thousands<br />

of engineers and experts spanning<br />

13 distinct fields at Baykar, the story<br />

emphasized that the armed UAVs<br />

developed by Baykar have significantly<br />

bolstered Türkiye’s counterterrorism<br />

endeavors.<br />

Pointing to the performance of the<br />

Bayraktar TB-2 during recent conflicts<br />

as a UAV used for both reconnaissance<br />

and attack, the report highlighted that<br />

the drone proved to be not only effective<br />

<strong>October</strong> <strong>2023</strong> 82

against tanks but also posed a significant<br />

challenge to conventional air systems.<br />

Baykar later upgraded the TB-2 and<br />

developed the Akinci unmanned combat<br />

aerial vehicle (UCAV), rooted in the<br />

principles of simplicity, user-friendliness<br />

and robustness, spanning from design<br />

and production to flight control. This<br />

endeavor has led to the emergence of<br />

one of the premier heavy UAVs on the<br />

market, boasting a wingspan of up to 20<br />

meters (over 65 feet) and a takeoff weight<br />

exceeding 5 tons, the article highlighted.<br />

Referencing Türkiye’s recently launched<br />

warship, the TCG Anadolu, the article noted<br />

that Baykar is also conducting tests of its<br />

new unmanned fighter jet, Kızılelma, which<br />

holds the distinction of being the only such<br />

aircraft capable of carrier-based landings<br />

on a warship.<br />

The article also underscored the significant<br />

role played by Baykar’s UAVs in the<br />

aftermath of the earthquakes that struck<br />

Türkiye in February <strong>2023</strong>.<br />

Operating for over 1,500 hours over the<br />

disaster zone, the UAVs diligently relayed<br />

up-to-date data to rescue teams, aiding<br />

in damage assessment and facilitating<br />

the coordination of search and rescue<br />

operations, the report further stated.<br />

Pointing out that Baykar’s UAVs, which<br />

have shown superior performance on and<br />

off the battlefield, have experienced a<br />

sales boom in recent years, the article said<br />

the drones have been sold to nearly 20<br />

countries.<br />

<strong>October</strong> <strong>2023</strong> 84

World Bank grants $1 bln for<br />

Türkiye’s post-quake recovery<br />

The World Bank has allocated a substantial<br />

sum of $1 billion to aid the recovery<br />

efforts in earthquake-affected provinces in<br />

Türkiye’s south, Environment, Urbanization<br />

and Climate Change Minister Mehmet<br />

Özhaseki has announced.<br />

Özhaseki noted that this loan would play<br />

a pivotal role in advancing reconstruction<br />

initiatives in the earthquake-stricken<br />

region. A substantial portion of the loan<br />

package amounting to $684.8 million has<br />

been allocated to the ministry. Özhaseki<br />

outlined the distribution of these funds,<br />

stating that “$296.5 million [of this]<br />

will be directed towards the ministry’s<br />

housing projects in rural areas within the<br />

earthquake zone, while $388.3 million<br />

will be channeled into [ministry-owned]<br />

İlbank’s infrastructure projects in the<br />

earthquake-affected area.”<br />

Furthermore, the minister detailed<br />

how the loan earmarked for rural areas<br />

will be utilized to restore essential<br />

infrastructure and social facilities in the<br />

villages. This includes the renewal of<br />

water and rainwater networks, solid waste<br />

management facilities, municipal fire<br />

stations, as well as damaged emergency<br />

response and municipal equipment.<br />

Additionally, fire and rescue vehicles<br />

and solid waste collection vehicles in the<br />

earthquake region will also be upgraded<br />

and renewed.<br />

The announcement followed a prior<br />

World Bank project aimed at preventing<br />

the closure of viable micro, small and<br />

medium enterprises (MSMEs) impacted<br />

by the economic shocks resulting from the<br />

earthquakes.<br />

This project, with a budget of $450<br />

million, seeks to ensure the continuity and<br />

sustainable growth of these enterprises in<br />

the 11 provinces affected by the quakes.<br />

Under the guarantee of the Treasury and<br />

Finance Ministry, the Small and Medium<br />

Enterprises Development Organization of<br />

Türkiye (KOSGEB) implements this project<br />

to alleviate liquidity pressures on MSMEs,<br />

enabling them to resume their operations<br />

and gradually restore employment levels to<br />

those seen before the earthquakes.<br />

The project offers reimbursable financing<br />

to eligible MSMEs to cover their operating<br />

expenses, with 10 percent of the total<br />

funds earmarked to support womenowned<br />

or led MSMEs, emphasizing<br />

inclusivity in the recovery process.<br />

<strong>October</strong> <strong>2023</strong> 86

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