Automotive Industry: A Pioneer in Turkish Economy
In the 1960s, when it was a period of rapid global industrialization and progress, the Turkish automotive sector transformed itself from assembly-based partnerships. It became a full-fledged industry with design capability and massive production capacity. Since 2000, original equipment manufacturers have invested over 15 billion USD in their operations in Turkey. These investments significantly expanded their manufacturing capabilities, which in turn led Turkey to become a major part of the global value chain of international OEMs. Today’s Turkish automotive industry is highly efficient and competitive thanks to value-added production. It meets and exceeds the international quality and safety standards.
By 2030, Turkey's Automobile Joint Venture Group (TOGG) will produce five different models on a co-platform with fully-owned intellectual and industrial property rights. The first of these Turkish vehicles are expected to hit the market in 2022.
Turkey's Automotive Export Market
Throughout the years, OEM’s have positioned Turkey as an export center. This year, manufactured vehicles’ share in export to the target markets has also increased and showed that the same trend has continued. At the same time, manufacturers’ export capability made it possible to mitigate the impact of negative developments in the domestic market. In 2018, the industry’s export/production ratio was noted as 85%. This ratio was 78% in 2017.
The industry exported passenger cars north of $12.4 billion in 2018, particularly with a significant increase in value for sales to the markets of France, Spain, the United Kingdom, and Belgium. Turkey's passenger cars exports to Italy, where the domestic market has slowed down in terms of the number of units, maintained their previous level, and Turkish-origin vehicles reinforced their position in the United Kingdom.
Throughout 2018, partial shrinkages have been noted in the production levels of 5 brands that manufacture passenger cars in Turkey. However, Honda has achieved up to 34% growth, attributed for the most part to the manufacturing of its diesel Civic model during the same period. Fiat’s production dropped by 20%, while the average slump of the overall industry was 10%.
The 6.4-billion-dollar commercial vehicle export revenue in 2017 increased to a 7.1-billion-dollar level at the end of 2018. Meanwhile, the income from the 10 Export countries (except the UK) showed significant increases, and the most noteworthy change in the list of 10 export countries was Romania, which entered the list at number 10. The mass transportation tenders won by Turkish companies have been influential in this increase noted in exports to Romania.
Turkey's Main Market Investors and Their Growing Success
Auto manufacturers increasingly choose Turkey as a production base for their export sales. This is evidenced by the fact that 85 percent of vehicle production in Turkey was destined for foreign markets in 2018. More than 1.3 million vehicles were exported from Turkey to foreign markets in the same year. Turkey was also the number one vehicle exporter to European markets with 1.1 million units in 2018. Alongside the companies mentioned below, FIAT, HONDA, RENAULT, MERCEDES, and MAN also have an established investment history in Turkey.
Automotive sector giant, the Ford Motor Company is a global company based in Dearborn, Michigan, US. The company designs, manufactures, markets, and services a full line of Ford cars, trucks, SUVs, electrified vehicles, and Lincoln luxury vehicles, providing financial services. Ford Otosan was established as Turkey’s first automotive company in 1959 and manufactured the first Turkish automobile, Anadol, in 1969. It also produced Turkey’s first domestic diesel engine ERK, in 1986, further reinforcing its position as the leader of the domestic automotive industry in 2009, after becoming the first company to export vehicles from Turkey to the Americas.
Ford Otosan has a total capacity of production of 415,000 cars per year. Turkey is the commercial vehicle manufacturing hub of Ford Europe. Ford Otosan has the country's largest R&D center located on a single campus in Istanbul. The company has seen exports worth USD 4.8 billion in 2017 to 83 countries.
The Hyundai Motor Company was founded in 1967 and has production plants in South Korea, Turkey, the US, China, India, the Czech Republic, Russia, and Brazil. Hyundai sells vehicles in almost 200 countries and is the 5th largest carmaker in the world in terms of production and sales. Hyundai first entered Turkey in 1990. In 1995, following robust demand and high sales, the company established a factory in Izmit and started mass production in July 1997. The plant has an annual production capacity of 245,000 vehicles and is located on 1 million square meters of land in the Alikahya region of the northwestern Anatolian province of Kocaeli. 700,000 square meters is allocated for the factory and 108,000 square meters are devoted to production activities.
Japan-based Toyota Motor Corporation is one of the leading automakers in the world and, together with its subsidiaries, produces a full range of models - from compact cars to large trucks. During 2018, global sales of Toyota and Lexus brands, combined with those of Daihatsu and Hino, totaled 10.59 million units on a retail basis.
Toyota Motor Manufacturing Turkey (Toyota Turkey) is one of Toyota's top vehicle production bases in Europe. Located in the northwestern Anatolian province Sakarya, Toyota Turkey’s accumulated exports have totaled USD 37 billion since 2002. The company started production of the first 2 hybrid vehicles in Turkey, CHR and Corolla Hybrid, with an investment exceeding 630 million EUR in total.
Toyota Turkey’s cumulative production to date is over 2 million units, and more than 90 percent of its production exports to nearly 150 countries. These include Western and Eastern European countries, as well as Middle Eastern, North African, and Central Asian countries and North American countries. Today, with its annual production capacity of 280,000 units, Toyota Turkey is the largest production plant of Toyota in Europe and is also one of the largest automotive manufacturers and exporters in Turkey.