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Automotive Sector
Turkey's Customs Union with the European Union and the rapid growth of automotive production in the country (matching increased demand starting in the 1990s)
attracted investments from Far Eastern companies. These firms were enticed by the promising local market, and the surrounding export markets, including CIS, European, and Middle Eastern markets. Toyota was
the first to invest and teamed with the Turkish Sabanci Group. Hyundai's association with the Turkish Assan Group followed the Toyota initiative. Additional alliances including Honda with Anadolu Endustri
Holding, Nichimen-Kia with Ihlas Holding, and Mazda with Mermerler have followed suit. Volvo is also planning to invest in Turkey to manufacture tractors and trailers. Motivated by increasing local demand and
competition in the market, existing manufacturers have started to increase manufacturing capacities, modernize facilities, improve production and product quality, and begin new model developments. Very recently,
Ford started a new investment to enlarge and improve its production facility, especially focusing on small and light commercial vehicles. OPIC is providing $200 million in political risk insurance for this project.
In addition to local production, 24 different brands of automobiles are imported. The market is projected to reach 600,000 in the early 2000s, and exceed one million units after 2005. There are sixteen
automotive companies, manufacturing 13 different brands in Turkey. Eleven of these are joint ventures with foreign producers, four have licensing agreements and one is a fully owned subsidiary of an international
automaker. Their production capacities total 800,000 units per year. Until the recent economic crisis, which significantly impacted the automotive sector, authorities were estimating that the local market
would support the new investments. However, these estimates were reanalyzed, and currently, authorities suggest that the current market will be around 520,000 units, of which 200,000 units will be imported.
Foreign capital in the Turkish automotive sector is estimated to be around 40 percent. The Turkish automotive parts sector has developed parallel to Turkish automotive production, whereas, the service equipment sector
grew parallel to the vehicles market. From simple components in the mid-1960s, the sector ascended to produce complex components, with some exceptions, such as spark plugs, carburetors, fuel injection systems, and
several transmission parts. There are over 1,300 companies in the sector, of which a little over 100 are foreign. The domestic market absorbs nearly 70-80 percent of the production, and the rest is
exported. This sector, which grew by 117 percent between 1990 and 1996, has attracted new investments intended to enhance international competitiveness. Turkey's spare parts exporters are expected to
increase market share in the EU countries as a consequence to Turkey's accession to the EU Customs Union. As Turkey has the lowest labor costs in the EU, analysts anticipate investments in this sector to increase
further. However, the sector, which has been heavily affected by the global crisis, needs a few years to recover. The parts sector supplying the OEM market dropped parallel with the decrease in OEM
production. However, after-market parts production grew in support of the 4.8 million unit domestic fleet and sales to export markets. European suppliers, followed by Japanese, currently dominate the
market. U.S. companies can increase market share in catalytic converters, engine bearings, radiators, mufflers, exhaust pipes, spark plugs, and service equipment, including 2-4 column lifts, die cabinets, gas
analyzers, and electronic test and diagnostic equipment. |
