The history of the automotive sector in Turkey goes back to the mid-1950s. The first vehicle assembly plant in Turkey was established in 1954 for jeep manufacturing. Trucks have been produced since 1955 and buses since 1963. In the late 1950s, Vehbi Koç, the founder of one of the important family-owned Turkish business conglomerates, set up the Otosan joint venture with Ford for the production of passenger cars. Further joint ventures followed, notably between Toyota and the Sabanci family.
Today, about 20 international corporations are present in Turkey, including GM, Fiat, Mercedes-Benz, Renault, Toyota and Hyundai. One of the latest market entrants is China’s Chery Group, with an output target of 100,000 cars per year. Many companies manufacture different types of vehicles, such as passenger cars, trucks, buses, tractors, minibuses, pick-ups and trailers.
Turkey is the world’s 17th-largest car manufacturer and the automotive industry plays an increasingly important role in the Turkish economy. It is the leading European manufacturer of passenger buses and is also strong in trucks and commercial vehicles. In 2007, Ford Otosan was the biggest manufacturer, with some 286,000 units of light commercial vehicles, followed by Oyak-Renault with some 263,500 units of passenger cars and Tofas-Fiat with some 212,500 units of light commercial vehicles.
According to the Turkish Automotive Producers Association, the automobile sector was regularly breaking its own records with 1.1m units in 2007 and 1.15m units in 2008 (excluding tractors). The latest increase was due to the strong commercial vehicle segment, which grew by 13 per cent in 2008 while the passenger car segment decreased by 2 per cent. Generally, however, the worldwide economic crisis has hit the Turkish automobile industry quite hard and production in December 2008 was down by 62 per cent against the December 2007 output.
Besides car manufacturing, the automotive component and spare parts industry has developed even more quickly in the past years. Among 200 foreign investors, most of the global automotive leaders have set up joint ventures with Turkish companies and about 70 per cent of the 4,000 automotive components manufacturers in Turkey are SMEs working for the big automotive companies.
The Turkish automobile sector is predominantly export orientated, with the major part of the output going to Russia, the Middle East and the EU. The total number of vehicle exports reached approximately 820,000 units in 2007 and 910,000 units in 2008. Exports to the US, however, were relatively insignificant at only $210m-worth of cars and spare parts in 2008 and the industry has made an increase of its US exports a priority for the future.
In summary, the Turkish automotive industry has benefited from the country’s liberal and reformist investment climate and foreign investors have been attracted by incentives such as free land allocation and income tax relief. However, after years of impressive growth the sector has been severely affected by the global economic crisis and it remains to be seen how the export-orientated industry will respond to the challenges of the new market climate.