Turkish Automotive Industry as a Significant Global Actor

Cengiz EROLDU

The Automotive Manufacturers Association, Chairman

 

 

The automotive eco-system is like a driving force that enables the steady growth of the country's economies, accelerates technological developments, and helps the growth of many industries. While it is the buyer of the products of several industries such as iron and steel, plastics, glass, petro-chemistry, textile, and electronics, it is the supplier of the motor land vehicles needed by industries such as agriculture, tourism, construction, infrastructure, transportation, and defense. Moreover, it has close contacts with several industries such as finance, insurance, and fuel as well as the authorized dealers and maintenance & repair services network that ensures the delivery of its final products to the consumer... In short, the automotive industry has its own ecosystem due to its connections with many industries and has a strategic structure that contributes directly and indirectly to the national economy in several areas.

 

Electric vehicles will have a significant role in the transformation

Recently, we have seen that the transformation to the electric vehicle has gained momentum in the world due to the effect of global environmental policies. It is quite clear that electric vehicles will be the future of the industry. The European Green Deal, which was announced by the EU, our most important export market, as the new growth strategy for Europe to become a carbon-neutral continent by 2050, marks an important transformation in all areas such as transportation, buildings, agriculture, industry, finance, and foreign trade. Considering the EU's emissions by industries, transport accounts for a quarter of the EU's greenhouse gas emissions, while road transport accounts for 95% of greenhouse gas emissions in transportation. From this point of view, the significance of the steps to be taken in the area of transportation to achieve the carbon neutral goal is very clear.

 

Considering the European Green Deal and the "Fit for 55" law package, which is a roadmap to achieve these goals, from the perspective of the automotive industry, several topics such as product standards and transformation in the market, new rules in foreign trade and access to finance, transition to the circular economy, climate adaptation, and decarbonization of the manufacturing and supply chain come to the fore. We encounter the issues of stricter emission standards for the products, schedule for the transition to zero-emission, alternative-fuel vehicles, and infrastructure transformation. There are two critical dates for our industry. These dates are 2035 and 2050. As of 2035, all new light vehicles to be sold shall have zero emissions. As of 2050, the machine park shall be modernized in line with the climate-neutral goal.

 

About 75% of the total automotive production of Turkey is exported while about 80% of the export is performed to the European market. Therefore, we must perform the production in a way that meets these requirements in the EU to maintain our competitiveness and to continue our contribution to the national economy. Our industry closely follows up with these developments and carries on its works to manage them simultaneously. Electric vehicles will have a significant role in this transformation. Currently, some members of the Automotive Manufacturers Association (OSD) have started to produce and export their electric vehicles. Many of them carry on their projects and investments in alternative-fuel vehicles. Moreover, the investments in battery systems continue.

We continue our collaboration with our supply industry for the localization of critical technology at top speed.

 

We see that climate-oriented goals have been increasing worldwide and the EU has been leading this issue with its ambitious goals. As the main industry, we closely follow up with this serious transformation process that the EU has been going through due to the effect of environmental policies, and we have been preparing our roadmap to adapt to these goals. 

 

One of the most significant factors for maintaining our competitiveness in this transformation process is to maintain and improve the high domestic contribution rate in our products and to contribute to the national economy at the highest level with high added value production. With the contributions of our strong and competitive supply industry, the percentage of the domestic contribution in some products is about 80%, although this figure varies depending on the vehicle group. However, considering that vehicle structures undergo a serious change due to the effect of transformative technologies such as electrification and alternative fuel technologies, we face the risk that the current domestic contribution rates might decrease in the future. With this transformation, it is very important for us to localize the critical technology that comes or will come into our lives. We continue our collaboration with our supply industry for the localization of critical technology at top speed. In this transformation, we are pleased to observe very positive developments in the supply industry; however, we should not ignore that the speed of transformation of our supply industry seems as a significant opportunity and risk.

 

Strengths of the automotive industry

The qualified and advanced labor force, domestic market potential, strong supply industry, geographical location, and customs union with the EU are the strongest features of the Turkish automotive industry. In the transformation process that the global automotive industry has been going through, our top priority should be to further develop our strengths beyond maintaining them. It is important to develop policies that support the transformation of our supply industry, to create approaches that enable the domestic market to demonstrate its potential, to put forward effective foreign trade policies for the development of new export markets, and to increase the efficiency of logistics networks. In summary, it is of great importance to increase our exports, to create a predictable and growing domestic market, and to create the necessary environment for attracting more investment to our country with an approach considering long-term plans aiming to maintain and develop the current competitiveness of our country in the changing automotive ecosystem. 

 

The qualified and advanced labor force, domestic market potential, strong supply industry, geographical location, and customs union with the EU are the strongest features of the Turkish automotive industry. In the transformation process that the global automotive industry has been going through, our top priority should be to further develop our strengths beyond maintaining them. 

 

We are the largest commercial vehicle manufacturer in the EU

Besides vehicle manufacturing, our main industry performed engineering export of about USD 125 million in 2021, thanks to its 16 R&D centers and more than 4,500 employees. With its quality and flexible production approach, and value-added products, our supply industry exports significant quantities of products to global OEMs, as well as supplying our main industry.