Turkey to have multiple domestic car brands as market ripens
Automotive manufacturer Karsan’s Jan Nahum (L) whose V1 vehicle may soon be exported to Canada is seen at the Uludağ Economy Summit. (Photo: AA)
Turkey can develop more than one local passenger car brand in the coming few years with market players gaining the necessary experience supported by expected government incentives, leading auto entrepreneurs told a summit in Bursa on Friday.
A government initiative to produce the country's first national car brand has been in the works for over a year, with market players exchanging ideas and developing separate projects. Representatives from the Turkish car market at the 1st Uludağ Economy Summit -- introduced as the Turkish equivalent of Davos -- discussed the pros and cons of the country's domestic car adventure so far, following the announcement of the expected incentive. With the expected local production, Turkey's annual car production could rise to 4 million from the current 1.5 million.
According to Hyundai Assan Otomotive Turkey CEO Ali Kibar, it is quite possible for Turkey to develop the first local car in the coming two or three years. He adds this is a “long-term adventure.” Kibar says Turkey needs to create a unique car brand, taking both local and global market needs into account. As regards anticipated government incentives, Kibar tells Today's Zaman that they are excited to see the package. “We [Turkish car market representatives] have refrained from making assertive statements on the local car issue so far, but expected incentives may be a reason why these people discussed it so ambitiously here today,” he explained. Recalling that the highest share in the motor vehicle market belongs to sedan models, Kibar said taxes on passenger cars could be reduced.
Automotive manufacturer Karsan's Executive Director Jan Nahum said he has faith Turkey will develop two or three car brands in the coming three to four years. “The market is going in this direction; we have our own goals now. … There will be both local firms and joint ventures with foreign producers,” he said, underlining Turkey should concentrate more on improving its infrastructure in this regard. “We need to analyze our drawbacks well and address them. Turkey, for instance, needs improved test drive facilities,” he explained.
As regards the details of the local car, Nahum said he “does not agree it has to be a cheap, middle class one.” “The first car could appeal to domestic markets, but we need to think and act globally in the next step. Turkish cars should be able to appeal to global market needs as well; we may develop a relatively more expensive car, but it will have higher added value. We could create something that is unique and has fewer rivals than a proposed passenger car,” Nahum noted.
If Turkey wants to be a global player, it should follow global customer tendencies closely while receiving feedback from potential exports markets, he added. Nahum's Karsan domestically developed its V1 car model and participated in a taxi contest early last year to select a vehicle to be used for New York City's cabs in a $1 billion deal. It lost the contest to the Japanese Nissan Motor Co. Nahum said on Friday, however, that they have received a distributorship offer from Canada recently. If a deal happens, Canada will be the first country in which the V1 will hit the road.
Own car to fuel exports in diverse markets
Automotive Industry Exporters' Union (OIB) Chairman Orhan Sabuncu joined comments that Turkey could see two or three car brands in the next five years. There are 115 research and development (R&D) centers in Turkey, with 46 of them auto centers. One critical fact that is mostly ignored in Turkey, Sabuncu underlined, is development of engine and electronic parts. “It is essential they are developed domestically. … We are encouraged to hear the government is considering incentives to this end, too,” he noted. Sabuncu said the sector exported 70 percent of production with a total value of $20.4 billion last year.
A major driving force behind the economy, auto exports were $35 million behind imports in 2010, the first deficit in the foreign car trade in five years due to the plunge in demand from the EU. The sector had to use all of 2011 to cover this gap. Making mention of recent problems, he said: “We registered a trade surplus of $12 billion in the past six years. Last year's trade deficit turned positive starting in January.” Sabuncu said they expected a government strategy draft to support exports to be approved by the Economy Coordination Council (EKK). Turkey's share of the global auto export market is expected to reach $2.5 billion by 2023, Sabuncu added.
Further elaborating on car exports, Renault Mais General Manager İbrahim Aybar told the meeting that around 50 percent of Turkey's auto exports go to the EU, but it is encouraging to see increased demand in other exports markets. “On the verge of local car production, Turkey must concentrate on diversified exports markets. After all, we do not anticipate a slump in auto exports this year.”
Some in the sector said the target export markets should in the beginning be the Middle East, North Africa and the Turkic countries, while others feel the focus should be on the domestic market.