Automotive Exports December 2019

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Monthly automotive aftermarket magazine December 2019

Monthly automotive aftermarket magazine

GROUP CHAIRMAN H. FERRUH ISIK PUBLISHER: İstmag Magazin Gazetecilik İç ve Dış Ticaret Ltd. Şti.

Managing Editor (Responsible) Mehmet Söztutan mehmet.soztutan@img.com.tr

Mehmet Soztutan, Editor-in-Chief mehmet.soztutan@img.com.tr

Editor Ayça Sarıoğlu ayca.sarioglu@img.com.tr Advertising Manager Adem Saçın adem.sacin@img.com.tr Foreign Relations Manager Yusuf Okcu yusuf.okcu@img.com.tr Correspondent İsmail Çakır ismail.cakir@img.com.tr

Competitive and innovative more than ever…

As known, the Turkish automotive industry has been active since the early seventies.

Since the full integration to the European Customs Union in 1994, Turkey has become a major production platform for global automotive manufacturers. The exports by Turkish automotive sector, which is the driving force of Turkish economy, reached remarkable figures in the last decade.

Actually, the auto parts industry of Turkey has recorded a dynamic growth in line with the automotive industry. From simple components in the mid-1960s, the sector ascended to produce high-tech components currently.

The industry with its large capacity, wide variety of production and high standards, supports automotive industry production and the vehicles in Turkey and also has ample potential for additional exports.

The leading foreign automotive parts manufacturers have established a presence in the country through joint-ventures, which dominate production and exports. Automotive parts giants such as Bosch, Autoliv, Pirelli, ZF, Valeo, Denso and many others are present in the Turkish market. There has also been substantial locally-owned investment by spare parts manufacturers.

The effects have been that: - Quality of production improved dramatically, especially through the establishment of quality management systems.

- The industry has adapted to EU regulations and has established an efficient and exemplary cooperation with public institutions in the transformation of EU regulations to national regulations and their implementation.

- Exports have risen sharply, and Turkish production has been integrated into manufacturers’ global planning.

The export potential of the automotive parts sector, coupled with the presence of major international automotive manufacturers, has attracted an increasing number of foreign investors.

The industry exhibit its full potential in major specialized fairs both at home and abroad.

Our publications remain at the service of those businesses people seeking to increase their share in the increasingly competitive foreign markets. This month, we participate in Automechanika Shanghai 2019 which will feature over 6,300 exhibitors and 50 fringe events.

We are convinced that the events in which we participate have turned out to be an ideal grounds for the business people operating in the automotive business.

We wish them lucrative trade.

Finance Manager Cuma Karaman cuma.karaman@img.com.tr Accountant Yusuf Demirkazık yusuf.demirkazik@img.com.tr Technical Manager Tayfun Aydın tayfun.aydin@img.com.tr Design & Graphics Sami aktaş sami.aktas@img.com.tr Subsciption İsmail Özçelik ismail.ozcelik@img.com.tr HEAD OFFICE: İstanbul Magazin Grubu İHLAS MEDIA CENTER Merkez Mahallesi 29 Ekim Caddesi No:11 Medya Blok Kat:1 34197 Yenibosna / İstanbul / Turkey Tel: 0212 454 22 22 Faks: 0212 454 22 93

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Seger met with its current and potential customers in Morocco

Seger, one of the largest horn manufacturers in Europe and supplier of replacement parts for automotive aftermarket and global vehicle manufacturers, participated in the automotive sector trade delegation held in Morocco within the organization of Uludağ Automotive Industry Exporters Association between October 21-24, 2019 in Morocco. Upon the business visit to Morocco, Seger met with its customers including the potential ones.

During the event, Seger has become a center of attraction with its diverse range of competitive products.

Stating that they had a bilateral business meeting with their distributors in Morocco, Seger Sales and Marketing Manager Cüneyt Coşkun said, ”Uludağ Automotive Industry Exporters Association organizes activities for its members to open the doors of new export markets and to increase their existing export potential. As one of the member companies of the Union, we came together with our distributors in Morocco within the scope of automotive trade delegation activity and furnished information on our new product range.

We also talked about what we can do to gain even more competitive power in these markets. Morocco is one of our major markets in North Africa with its 35 million population. We have been exporting to the North African countries such as Morocco, Egypt, Algeria,

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Tunisia and Libya since 1990s. We want to increase our exports in the North African market even further in 2020.

Seger provides the horns of world giants; It exports to more than 70 countries in the world, including America, Europe, Africa and Asia.

Seger adds new markets to its portfolio every year with its innovative producs in the global market according to the countries’ own cultures, living conditions and lifestyles as well as the wishes of vehicle brands.

Seger Inc., with its 100 percent domestic capital structure, has become a well-known brand in electric and air horn production for Tesla Renault, Audi, Honda, Volkswagen, Nissan, Ford, Dacia, heavy vehicles and construction machinery, such as

MAN, DAF, Daimler, Mitsubishi, Isuzu, Kamaz, BMC, JCB, Temsa, Otokar, Cukurova, Erkunt, Tümosan, including Turkish Tractor, Taral, Bozok Tractor, Hars Tractor, and Indian Motorcyle, Bigdog, Victory, Polaris in motorcycle group. Seger sells to over 70 countries around the world, including America, Europe, Africa and Asia. In addition to the domestic market, Seger also has a strong presence in Japan, Palestine, Russia, the Republic of South Africa, Poland, Germany, Jordan, Romania and South America. Seger adds new markets to its portfolio every year with its competitive products in line with the countries’ own cultures, living conditions and lifestyles as well as the wishes of vehicle brands.

Moody’s makes upward revision in Turkey’s growth estimate The U.S.-based credit ratings agency Moody’s revised Turkey’s economic growth forecast to 0.2% for 2019 from a 2.0 contraction and 3% for 2020 from 2.0, citing the country’s strong economic recovery.

In its Global Macro Outlook 2020-21, the Moody’s said the expansion of credit availability by Turkish banks helped mitigate the severity of the economic downturn, bolstered confidence and encouraged activity in selected sectors.

The credit agency also warned that geopolitical risks, tense relations with the U.S. and Turkey’s security operations in Syria, could impose threats to economic stability.

The report also warned that the government’s official growth target of

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5% between 2020 to 2022, significantly higher than the agency’s forecast, could lead to overheating, widen currentaccount deficits and exert pressure on inflation. Turkey’s economic growth estimates have also been revised by the International Monetary Fund (IMF) and the Organization for Economic Co-operation and Development (OECD) in September. The IMF report said the Turkish economy may see a growth of 0.25%, reversing previous forecasts of a 2.5% contraction while the OECD revised 2019 forecast to 0.3% from 2.9% contraction. Meanwhile, the Moody’s global outlook said it does not expect the global economy to enter a recession in 2020 or 2021, however, persistently weak data could fuel a self-

fulfilling deterioration in sentiment and global growth.”

G-20 economies, which account for 78% of the global economy, are expected to collectively grow at an annual rate of 2.6% in 2020, the same rate as in 2019.

In 2020, Moody’s forecasts that G-20 emerging market countries will post growth of 4.7%, followed by 4.8% in 2021. Of the 10 countries in this group, Argentina is the only one whose economy will contract in 2020, followed by a protracted recovery. Moody’s expects continued deceleration for the U.S. and China in the next year.

Although the U.S. economy is slowing, real GDP growth in the U.S. will likely stabilize around its potential at just below 2.0%.

Having dropped

Turkey’s automotive industry on the way to achieve 2nd highest exports ever The locomotive of Turkish exports, the automotive industry, is expected to achieve its second-best year ever in terms of foreign sales.

The industry’s exports will exceed $30 billion at the end of this year, according to Baran Çelik, chairman of the Uludağ Automotive Industry Exporters Association (OİB), who said it will be the second-highest value following last year’s all-time high figure.

In the January-October period of 2019, exports of the automotive industry reached $25.4 billion, Çelik told.

Automotive exports last year hit an all-time high and reached $31.6 billion.

Compared to the same period of last year, exports are 3.5% lower in the first 10 months of this year. Çelik pointed out that the main market for the sector is the European Union countries and that the exports are mostly based on euros. “The fact that the euro-dollar

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exchange rate is at a disadvantage in 2019 compared to last year shows that we are a bit behind because our exports are made in euros and counted in dollars,” he said. “If we were to hold euro-based export statistics, we could see an increase of 1% in euro-based exports in 2019 as well.”

Elaborating on the performance expectations for the rest of the year, he noted that they see that they can easily surpass $30 billion. “Exports worth $30 billion are a threshold for the automotive industry, which we surpassed in 2018 with a recordbreaking figure,” Çelik continued. “We anticipate that we can surpass $30 billion, or even $31 billion this year. We can say it will be the second-highest export year.”

Noting that 2017 was the closest year to this figure with $28.5 billion, he said in the previous years, they had exports

below $25 billion. “Reaching $31 billion in exports this year is, of course, a successful outcome. This figure covers a portion of 17% of Turkey’s overall exports,” he added.

Saying that exports to EU countries, the traditional market for the sector, shrank by 10% this year, Çelik stated that they compensated some of this with new markets and pointed to North Africa, Russia, Israel, and the Americas in this regard.

“Our exports to these countries are facing two-digit growth. In this respect, in terms of the diversification of the export market, this year is better than the previous years. However, there is still much to do about it because our dependence on EU countries is at 77% in exports. This figure went down from 80% to 77%,” Çelik further stressed, suggesting that they should increase exports to other markets as well.

Tesla gets nearly 150,000 Cybertruck orders despite launch mishap

Tesla gets nearly 150,000 Cybertruck orders despite launch mishap Tesla’s new electric pickup truck has secured almost 150,000 orders, the company’s chief executive Elon Musk boasted on Twitter, just two days after

its big reveal wentdropped embarrassingly Having wrong.

The billionaire Tesla co-founder floundered on stage in California when the vehicle’s armored glass windows cracked in a demonstration intended to

prove their indestructible design.

Shares in the company plunged 6.1% following the truck’s bumpy launch and several lackluster reviews.

Musk tweeted that Tesla had already received 146,000 orders from prospective owners. “146k Cybertruck orders so far, with 42% choosing dual, 41% tri & 17% single motor,” he wrote.

The demand comes despite the product receiving “no advertising & no paid endorsement.” The industrial-looking Cybertruck is covered in the same steel alloy Musk plans to use for his SpaceX Starship rocket and will be able to go from 0 to 100 kilometers (62 miles) per hour in about three seconds, the Tesla chief executive claimed in his presentation. He said the entry-level model will have a starting price of $39,900 and a 400-kilometer (250-mile) range, while a deluxe option will be able to travel twice the distance and will sell for $69,900.

No date has been given for its release, but analysts said it would not be ready before the end of 2021 at the earliest.

Its space-age design is unlikely to challenge top-selling models by Ford and other conventional car companies, analysts warn

Turkey can achieve greater stability in 2020 ANKARA- Turkey could experience greater stability in 2020, said the credit ratings agency Fitch .

“Fitch expects the recovery and rebalancing of the economy to continue, with growth strengthening, inflation falling and the current account deficit contained,” the agency said in report on the outlook of emerging European countries.

The report stressed that with no national elections due until 2023, 2020 provides an opportunity for Turkey to implement reforms stated in the government’s New Economy Program, tackling structural credit weaknesses.

“Nonetheless, risks remain multifaceted. Weak monetary policy credibility, economic policy, political, geopolitical and sanctions risks could provoke bouts of asset price volatility, although global interest rate policy should keep external financing conditions supportive,” it added.

It said the weak global economic growth will produce a more difficult environment for emerging European countries next year.

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Veteran executive joins Turkey’s automobile initiative Turkey’s Automobile Initiative Group (TOGG) has appointed a seasoned executive to be its new chief operating officer (COO), the group announced.

Sergio Rocha, a leading global auto industry executive, will lead several areas in the group such as product planning, program management, purchasing, supply chains, manufacturing engineering and production operations.

TOGG said in a press release that Rocha has managed numerous projects across three continents – America, Europe, and Asia.

In November 2017, Turkey ventured into a groundbreaking initiative to manufacture its own domestic automobile. The project has brought together the country’s largest manufacturers and companies in a consortium that includes Anadolu Group, BMC, Kök Group, Turkcell and Zorlu Holding, all experienced in their own areas of operation.

The five domestic firms, now with 19% shares each, and the Union of Chambers and Commodity Exchanges (TOBB), with 5% of the shares, lead the TOGG joint venture. The TOGG was established in 2018 as an nongovernmental organization (NGO) to develop electric, autonomous and connected vehicles within a mobility ecosystem that encompasses these technologies.

Rocha, educated in mechanical and industrial engineering, has experience in various positions in global auto giants Volkswagen and General Motors, where he stayed for 37 years, ending his career there as president, CEO, and chairman of the board for GM South Korea.

Before TOGG, for two years he was COO of an Indian electric vehicle initiative.

Gürcan Karakaş, the CEO of TOGG, said: “We’re working with a team of world-class competencies. In this sense it is a very important development that Sergio Rocha has brought his experience in many projects in various parts of the world to our organization.”

“Rocha will add significant layers to achieve the targets set by TOGG,” he added in the press release. TOGG’s team includes well-experienced engineers with 13-15 years’ experience, he noted.

Considered one of the most visionary projects of Turkey, the automobile is first planned to hit the market as a sport utility vehicle (SUV) in the C segment and will be innately electric. The number of models is projected to increase to five in the following years.

The project includes plans for a 15-year investment initiative consisting of three phases. The project, whose intellectual and industrial property rights will be fully owned by Turkey, is expected to contribute 50 billion euros ($55.26 billion) to the Turkish economy and 7 billion euros to the current account deficit, and produce direct and indirect employment for 4,000 and 20,000 people, respectively.

The indigenous automobile is said to be ready for mass production by 2022, with exports expected to begin two years later.

Global number of electric cars hits 5 million The number of electric cars now stands at well over 5 million vehicles, helped by 2 million new sales in 2018, according to the International Energy Agency’s (IEA) repor.

The IEA’s World Energy Outlook 2019 report shows that growth in electric two-wheelers and buses has also been impressive, albeit so far heavily concentrated in China.

Under its Stated Policies Scenario the report said that annual electric car sales will rise from the current 2 million to reach 10 million by 2025 and more than 30 million in 2040.

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The agency stated the “key factors putting electric mobility in the fast lane are subsidies, at least in the near term, increasingly strict fuel economy targets, restrictions or penalties on the sale or use of conventional cars or their circulation.”

It also said that fleet procurement decisions by public authorities and large private logistics companies, and investments in new recharging infrastructure are also key factors. For instance, Germany’s chancellor just recently said that the country should have 1 million charging stations for

electric cars by 2030. Additionally, the agency surmised that lower battery costs are an important part of the story.

“Battery costs fall to less than $100 per kilowatt-hour (kWh) by the mid2020s, down from $650/kWh five years ago, meaning that electric cars in several key markets become cost competitive on a total cost of ownership basis with conventional cars,” it said. The IEA also underlined that the speed at which battery costs decline is a critical variable for power markets as well as for electric cars.

200,000 electric vehicles predicted to be sold in Turkey in next 3 years Some 200,000 electric vehicles will be sold in Turkey in the next three years, according to Zorlu Holding Energy Group Chairman Sinan Ak, who said the driving force in this process will be the domestic electric car, which is expected to hit the market in 2022.

Speaking to a group of journalists, Ak pointed to the tax advantage granted for electric vehicles in Turkey, claiming that the number of electric cars could increase rapidly if these supports do not decrease.

Ak noted that global automotive giant companies had begun to launch their electric models quickly to the European market. “These models will also come to the Turkish market. We cannot stop this,” he further stressed, envisaging that as the tendency to drive diesel vehicles had increased rapidly in the last quarter-century, the Turkish people would display a similar trend in electric vehicles.

Also, he underscored that the production capacity of the electric vehicle battery, which stood at 30,000 megawatts (MW) in the world five years ago, had reached 300,000 MW. Expressing that this increase would also affect the production and sales of electric vehicles, Ak said that 2020 might be a breaking year for the electric vehicles market in the world.

He emphasized the importance of the number of stations and battery

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charging times for the spread of white electric vehicles. Stating that 80% of charging operations were installed in homes and workplaces, Ak stressed that serious additional investments in the electricity network would be needed. He estimated that the number of electric vehicles in Turkey would reach 2.2 million by 2030.

“In order to meet an additional charge of this scale, an investment of $3 billion is required in 10 years, and $2 billion falls to distribution companies, while about $1 billion will be met by the companies investing in charging stations,” he argued.

Explaining that in Europe, fast-charging stations with a capacity of 350 kilowatts were installed with a cost of $300,000, Ak said that the charging time could go down to 15 minutes with these stations and that fast-charging stations could be implemented together with automotive companies in Turkey, as in Europe.

He also stated that the maintenance and management of the charging stations would produce a new sector.

“There are three companies, including us, in the charging station market in Turkey,” Ak continued. “As Zorlu Energy Solutions (ZES), we have 30% of the current market share. We will try to increase our market share to 40% and keep it as much as possible.

The maintenance and management of the charging stations are very important here. We can be on this side. Our priority is shopping centers and airports. We also want to cover the highways since no one has done it yet, but our main target is homes and businesses.”

The charging stations commissioned

by Zorlu Energy, under the ZES brand, are currently operating in 24 cities.

With a total of 100 charging stations, especially in the Mediterranean and Aegean regions, the number of ZES charging stations that provide uninterrupted electric vehicle transportation is targeted to reach 1,000 in the long term.

Automechanica Shanghai attracts great interest Major facts about the Fair: -6,320 exhibitors from 43countries & regions (expected) -160,000 global visitors from 145 countries & regions (expected) Major product groups are: Parts & Components:Parts & Components: Components for conventional drive systems; chassis;

Automechanika Shanghai will feature over 6,300 exhibitors and 50 fringe events. The show embraces the automotive ecosystem by building upon it strong global resources and reputation. body; standard mechanical parts; interior; exterior; charging accessories 12 volt; regenerated, restored and renewed parts for cars and utility vehicles; external vehicle air quality and exhaust gas treatment; new materials Electronics & Connectivity: Engine electronics; vehicle lighting; electrical system; comfort electronics; human

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machine interface (HMI); connectivity; internet of things Accessories & Customising: General accessories for motor vehicles; technical customising; visual customising; infotainment and Car IT; special vehicles, equipment, assemblies and modifications; car trailers and small utility vehicle trailers, spare and accessory partsfor trailers; merchandising Diagnostics & Maintenance: Workshop equipment for repair and maintenance; tools; digital maintenance; vehicle diagnostics; maintenance and repair of vehicle superstructures; towing equipment; workshop equipment for repair and maintenance for alternative drive concepts; fasteningand bonding solutions; waste disposal and recycling; workshop safety and ergonomic workshops; workshop and dealership equipment; oils and lubricants; technical fluids; workshop concepts Dealer & Workshop Management: Workshop / dealership / filling stationplanning and construction; dealer, sales and service management; digital marketing; customer data management; online presence; e-commerce and mobile payment;

basic and advanced training and professional development; workshop and dealership marketing; online service providers and vehicle/parts/ service marts; economic regeneration, research, consulting, cluster initiatives Car Wash & Care:Washing; vehicle care; vehicle preparation and detailing; water reclamation, water treatment; filling station equipment Alternative Drive Systems & Fuels: Energy storage alternative fuels; complementary products; vehicle concepts; resources; charging and tank technologies and systems; new workshop technologies Tyres & Wheels: Tyres; wheels and rims; tyre/wheel repair and disposal; used tyres and wheels; tyre/wheel management and systems; sales equipment and storage of tyres; accessories for tyres, wheels and installation Body & Paint: Bodywork repairs; paintwork and corrosion protection; smart repairs for paintwork,metal parts, plastic parts, windows, headlights, rims; new materials Mobility as a Service & Autonomous Driving: Mobility services; automated driving; fleet management / leasing / corporate mobility

Aluminum engine blocks to be manufactured at Bursa plant for the first time Renault Turkey will manufacture aluminum engine blocks for the first time in Turkey. In doing so, it will become the only hybrid engine production facility in Europe, Industry and Technology Minister Mustafa Varank said. Speaking at a program at the factory’s test production site in Bursa, Varank said engines manufactured in Turkey will be exported to China, Spain and the U.K. He noted that the 10,500 square meter facility has the latest machines and employs more than 100 qualified engineers and operators.

Despite facing all kinds of challenges, the Turkish economy is on track, he said, adding that the aluminum will be supplied by domestic manufacturers, meaning the facility will make sure the efficient use of domestic resources.

“The contribution this facility has made in reducing the current account deficit, providing employment and improving exports, is truly commendable,” he said.

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He added that Turkey wants to see Renault produce hybrid vehicles here in the country and export them.

Also present at the program, Antoine Aoun, director general of Oyak Renault Turkey, said: “We have completed the production center in a very short time, as promised. We will reach the final stage of mass production in 2020.”

The engines produced at Oyak Renault’s plant in Bursa are sold to 15 factories in 12 different countries, including the production centers of brands like Nissan.

Varank said the engines produced at the plant are exported. He added that the factory has taken advantage of the government’s investment incentives and developed and expanded its engine production capacity.

Pointing out that the company contributes to reducing the current account deficit with its exports, the minister stated: “By producing and exporting hybrid vehicles, the factory

will make further contributions to reducing the current account deficit. It is gratifying for us that the capability has been developed and the government incentives have been taken advantage of in the most effective way.”

Renault Mechanical and Chassis Production Director Yavuz Özbağrıaçık said the factory in Bursa is one of Renault’s three factories that produce both vehicles and mechanical parts. Özbağrıaçık pointed out that the factory, where construction began last year, is fully integrated. “We can produce 920,000 engines at this factory. We have two big engine lines. Besides, we produce four large parts, known as vital parts.”

He underlined that they are the only such factory in Turkey. Özbağrıaçık said they continue to work on building hybrid engines. The factory, which has so far produced 200 engines, aims to increase the local content ratio in these products to over 50%.

Kardemir begins producing train wheels Turkish iron and steel giant Kardemir has started producing indigenous train wheels to prevent the use of imports, the head of the company said.

“Turkey will stop the import of railway wheels in a short period. We will produce 150,000 wheels and become an exporter within two years,” Hüseyin Soykan, the general manager of the firm, told Anadolu Agency (AA).

Only 15 companies produce railway wheels globally, which need high technology and engineering; Kardemir became the 16th, he underlined.

Soykan said: “A train wheel manufactured from half-ton special steel weighs 370 kilograms. Before we started to produce, its cost was around 1,000 euros [$1,112].

Currently, its cost is around 600 euros.”

He also stressed that the firm will be able to produce 200,000 wheels annually.

Kardemir aims to manufacture imported products to boost the country’s industry and economy, he noted.

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Financial restructuring for large-scale firms with debt over TL 25 million

Turkey’s banking association said it would launch a restructuring program for large-scale companies with debts to banks and financial institutions.

Initially, the initiative will apply to companies with debts of more than TL 25 million to banks, the Turkish Banking Association (TBB) said in a statement. The new regulation targets relief for companies that intended to pay debts but could not because their income-expense balance was damaged, the statement added.

The firms that have announced bankruptcy will not be able to benefit from the program and approval was pending for extending the program to smaller companies, per the TBB. The latest restructuring program spearheaded by the TBB will enable large-scale companies that are committed to paying their debt to sustain their production, investment and employment activities, therefore maintain their capability to contribute to economic growth, the statement read.

The debtors will apply to one of their biggest creditors with a letter of commitment and other required documents in accordance with the

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framework agreement. Those creditors will not be able to implement the loan or debt tracking process or commence execution proceedings since the debtors whose application has been approved will be protected. The legal proceedings, which were initiated before the application date, will not undergo a restructuring process. Any disagreement that may ensue from the creditors’ failure to fulfill their legal obligations will be discussed by an arbitration committee to be assigned by the TBB board. The TBB said it would announce the companies that sign the framework agreement with the lenders.

Following currency volatility last year, banks signed a “loan restructuring framework agreement” aiming to restructure loans over TL 100 million.

Turkey’s banking sector’s total loans stood at TL 2.5 trillion as of October, more than TL 100 billion of which have been restructured, including the Yıldız and Doğuş Holding loans.

Last year in September Turkish banks financial institutions signed a loan restructuring framework agreement aiming to help businesses with difficulty paying off their debts, a process

mediated by the TBB. According to official figures, nonperforming loans in the construction industry totaled TL 15 billion as of May, but some industry specialists say the total could be closer to $10 billion. Last month, Turkey’s banking watchdog, the Banking Regulation and Supervision Agency (BDDK), told banks to write off TL 46 billion in loans by year-end and set aside loss reserves. The regulation is expected to raise the banks’ nonperforming loan (NPL) ratio to 6.3% from 4.6%, the watchdog said. The BDDK asserted that the Turkish banks’ capital adequacy ratio (CAR) would slip by 50 basis points to a still-high 17.7%, due in part to the dictate on NPLs, according to what it called a “prudent” analysis based on July data.

Studies conducted by the BDDK show that the industry as a whole maintains its healthy and strong structure, and the standing capital structure is at a level that can easily manage asset quality-based risks. The watchdog had previously estimated that the capital adequacy ratio will drop to 15.5%, while the NPL ratio will reach 6% by the end of 2019.

Automobile sales double after cheap loan campaign by Turkish public

Automobile sales in Turkey doubled in October from the previous month, thanks to the public lenders’ campaign that offers cheaper car loans to consumers buying locally-made vehicles from select manufacturers.

In a joint statement on Sept. 26, the three state lenders, Ziraat Bank, Halkbank and Vakıfbank said they were launching a campaign that offered low-interest loans for buying locally produced cars.

The three banks slashed the monthly cost of 18-36 month loans – for cars produced in Turkey and priced between TL 50,000 and TL 120,000 – to rates between 0.49% and 0.69%.

The lenders said they would also offer 30-60 months – for commercial vehicles sold for TL 72,000 and TL 120,000 – loans at monthly interest rates between 0.49% and 0.69%. The financing package will available from Oct. 1 to Dec. 31.

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Turgut İnal, the chairman of İnallar Automotive that is responsible for Citroen, Hyundai, Honda, Kia and Mazda sales and service in the northwestern province of Bursa, said the campaign brought down the interest rates below the psychological limit of 0.99%.

Sales increased by 100% compared to September, İnal told, indicating that they expect this situation to continue at the same pace until the end of the year.

He further stressed that they have difficulty meeting the demands. “There is no parking place in front of car sales dealers on weekends. We are seeing some very serious demand, which was unexpected. If demands continue at the same pace, the stocks of all brands in Turkey will run out by the end of the year,” he added.

He noted that Honda and Hyundai benefited from the campaign, while the other brands reached an agreement

with banks, explaining that brands outside the campaign had to provide appropriate conditions to compete with domestically-produced vehicles.

“There is mobility in all brands, especially Honda and Hyundai,” he continued. “There is a serious demand for B and C segment vehicles. The delivery times of the vehicles we sell are also extended. We are currently delivering in the range of 10-15 days.” İnal noted the importance of such a campaign, which comes after monthslong narrowing in the market. High volatility in foreign exchange rates, followed by a high increase in interest rates on loans led to a sharp decline in domestic demand.

“As long as inflation and interest rates fall, not only automotive but all kinds of consumption will increase,” he added.

Toyota Plaza Akkoyunlu Sales Manager Ramazan Güleryüz, on the other hand, said that the sector experienced a

recession in the first three quarters of 2019 and pointed to the mobility in the sector since the beginning of the month.

“We are currently unable to find vehicles to sell. It is the same for all brands not just for Toyota,” Güleryüz said, highlighting that most other plazas are also unable to find vehicles to sell and that that the increase in demand for new vehicles was ensured by the decline in interest rates and

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year-end price campaigns provided by distributors. He also stated that the automotive market, which could not meet its expectations in the JanuarySeptember period, seems to recover in the last quarter. “We started seeing this “ he said. “The automotive industry did not expect this and [were] therefore caught unprepared. We try not to turn away the customer as much as possible. We strive to supply the vehicles as soon as we can..”

Earlier this month, the Automotive Distributors’ Association (ODD) announced that passenger car and light commercial vehicle sales in Turkey surged 82.35% year-on-year in September. Sales totaled 41,922 during last month, the association had said. Passenger car sales doubled in the month on an annual basis – from 17,595 to 35,308 – while light commercial vehicle sales rose by 23.03% to reach 6,684.

British consul general praises Turkey’s ‘vibrant environment’ for investors Britain’s consul general in Istanbul praised Turkey’s “very vibrant environment” for British businesses.

Turkey has been facing challenges over the last few years but big names are still making money there and are enjoying being in Turkey, said Judith Slater, who is also the trade commissioner for Eastern Europe and Central Asia.

Addressing developments in the Turkish economy, Slater told Anadolu Agency: “We’re looking to see if the reform program takes off and really gets going and helps to solve some of the challenges which the economy is currently facing.”

The British side is closely watching the country’s New Economic Program, which was released in September, she said during the Great Entrepreneur Games event in Istanbul. Slater said that the U.K. organized the event in Turkey because it has “confidence in the technology sector in particular here.”

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A quite large number of Turkish technology startups are going to the U.K. to raise funds for the “fabulous ecosystem” in the U.K., according to Slater.

“So this is quite a lively movement of Turkish companies of that nature to the U.K. We’ve also seen some large investments over the years,” she said.

“My job is to help British businesses who wanted to come to Turkey to work here, to meet the right people, and to make the sort of partnerships because the event today is largely to encourage Turkish technology companies to go to the U.K.,” she stressed.

British companies, she said, are also encouraged to invest in Turkey.

“Bupa, a big U.K. private health insurance company, came out here in acquiring Acıbadem health insurance about two years ago and found some really fantastic technologies already happening here,” she said, adding that Bupa is “adopting them in its other businesses around the world.”

The British Consulate and the British Chamber of Commerce help both Turkish and British companies and give free advice to them for investing and finding partners and information, she said. Slater urged: “Work with us, we will try to help grow the £18 billion [$23 billion] bilateral trading partnership that we already have in the U.K. and Turkey.”

On the Brexit process, she cautioned that Turkey’s EU customs union membership complicates the trade between the two countries. “But we are really determined to make sure that we have what we can in place to help the £18 billion [$23 billion] bilateral trading partnership to continue and indeed grow in the future,” she said.

Turkey ranks 33rd in the World Bank’s recently released Ease of Doing Business Report, while the U.K. was named number nine. Turkey offers incentives, tax discounts, and citizenship rights for foreign investors in many areas.

Turkish SMEs should focus on e-exports, expert says Turkey should look to claim a larger share of the $1.5-trillion global e-export market, a digital communications expert said.

Nabat Garakhanova, the head of consultancy firm MEZO Digital, said Turkish small and medium-sized enterprises (SMEs) should concentrate on digitalization and target the AsiaPacific region, the leader in the e-export market with $381 billion.

The digitalization rate for Turkey’s SMEs is currently at only 4%, she said. Reminding of Turkey’s $10 billion e-commerce target for 2023, Garakhanova said: “Compared to other countries, Turkey fell behind three and a half years in the digitalization

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process.” Some 57% of 7.5-billionworld-population – or 4.4 billion people – are internet users. On average, they use the internet for 6.5 hours every day, she added.

“International trade is becoming easier and faster thanks to the internet.

People prefer e-commerce due to freeshipping, secure payment and return mechanisms. More than 2.8 billion people use e-commerce channels today,” she stressed.

The Turkish e-commerce market, which started in 2010, has reached an annual volume of $6.7 billion.

E-export’s share in e-commerce, on the other hand, is only at 10%, Garakhanova said. Turkey’s SMEs, which constitute

90% of the country’s economy, are responsible for 55% of its exports.

The digitalization process should be accelerated so the SMEs can fulfill their export potential.

“Their digitalization rate can reach 20% by implementing the right strategy with the support of unions, chambers and nongovernmental organizations,” she added.

Garakhanova said Turkish SMEs are weak in website management and make certain mistakes, such as advertising in the wrong languages, offering payment and shipping options in the wrong currencies, miscalculating customs taxes and other analytical errors.

Turkey rises in World Bank’s business index Turkey has jumped up 10 places to be 33rd among 190 nations in the World Bank’s Ease of Doing Business Index released on Oct. 24, the country’s vice president said.

In a statement, Fuat Oktay, Vice President of Turkey said that Turkey has gained an important achievement in the economic field as well, along with the achievements gained both on the ground and at the table, referring to the country’s counter-terrorism operation in northern Syria and recent agreements with the U.S. and Russia.

“There is an improvement of 27 places compared to the index of two years ago, when Turkey ranked 60th on the index,” Oktay said.

He said the achievement was gained despite “manipulation attempts and attacks on the Turkish economy.”

Stating that the recent gain is “never enough” for Turkey, he added: “Our primary goal is to be ranked 20th on the index.”

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Under the leadership of President Recep Tayyip Erdoğan, Turkey will continue its works to encourage both domestic and foreign investors to do direct investment furthermore in Turkey, the vice president added.

Turkey’s doing business score was 76.8 in the report, while New Zealand ranked first with 86.8 and Somalia scored the worst, 20, to come last.

New Zealand, Singapore, and Hong Kong took the first three places in the report’s 2020 edition.

Turkey was 69th in 2017, 60th in 2018, and 43rd in the 2019 editions of the report.

The report said: “Turkey made property registration less expensive by temporarily reducing mortar charges to transfer property, and faster by reducing the time to obtain a tax assessment.”

It added that the country eased taxes by granting a value-added tax exemption for some capital investments.

Turkey’s Treasury and Finance Ministry said in a press release that Turkey jumped in the list thanks to reform studies under the leadership of the ministry.

“Reforms increased efficiency and activity in the Turkish business life by reducing costs and processing times,” it said. Berat Albayrak, the treasury and finance minister, also tweeted that Turkey will continue to make reforms.

“We will move up Turkey’s investment climate to the top level by providing productivity in business life and reducing costs more,” he said.

Rifat Hisarcıklıoğlu, the head of the Union of Chambers and Commodity Exchanges of Turkey, said the report will be a reference point for foreign investors.

“This breakthrough, in our economic conditions, is an indicator for showing that Turkey continues to make needed reforms to boost investments and employment,” he added.

Investment from Asian countries to Turkey nearly doubles in January-August period As of the end of August, foreign direct investment (FDI) mounting to $2.3 billion from Europe, $1.7 billion from Asia and $0.3 billion from other regions flowed to Turkey, while investments by Asian residents surged by 91.3%.

According to the Central Bank of the Republic of Turkey (CBRT) data, $4.2 billion in foreign direct capital investment were made in Turkey from January to August, up by 11% compared to the same period last year.

On the basis of regions, the highest investment of $2.25 billion came from Europe in the eight-month period, followed by Asia with $1.7 billion, the Americas with $306 million and Africa with $31 million.

During this period, 52.6% of direct investment in Turkey was made by European investors, 39.5% by Asian investors, 7.2% by American investors and 0.7% by African investors.

In the January-August period last year, Turkey had attracted $2.7 billion in investments from Europe, $885 million from Asia, $227 million from the Americas and $1 million from Africa.

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Asian investors’ direct investments in Turkey at the end of August rose by 91% compared to the same period last year, while European investments declined by 16.8 % during the same period, the data revealed. So, Asia closed the gap to a large extent with Europe, which has been the leader in direct investments in Turkey for years.

As of the end of August, Turkey attracted the highest direct investments from the U.K., Qatar, Azerbaijan, the Netherlands and Japan. Capital inflow from U.K. residents to Turkey amounted to $696 million, accounting for 16.3% of total direct investments.

Investments of $569 million flowed from Qatar, $564 million from Azerbaijan, $458 million from the Netherlands and $304 million from Japan.

In the same period, Italy was the country with the highest decrease in direct investments on amount basis, with Italian residents’ investment in Turkey decreasing by $394 million compared to the same period last year.

The amount of FDI from Austria fell by

$384 million and from Luxembourg by $216 million.

The wholesale and retail trade sectors had the lion’s share of investments in Turkey made by residents abroad as of the end of August. FDI by nonresidents in this sector reached $721 million, amounting to 16.8% of total investments.

The wholesale and retail trade sectors were followed by coke and refined petroleum products with $421 million, chemical products with $419 million and holding activity companies with $410 million.

Considering the main sector groups, the services sector received the highest investment with $2.8 billion in the eight-month period, while the industrial sector attracted $1.5 billion.

In the same period, electricity, gas, steam and air conditioning production and distribution sectors saw the highest decline in direct investments on an amount basis at $647 million.

The sector with the highest increase in investment was the construction sector with $347 million.

Turkey aims to surpass $20bn trade volume with China

Turkey is working intensively to surpass its current trade volume with China – approximately $20 billion – focusing on high value-added projects within a winwin framework, the head of the Turkish Exporters’ Assembly (TİM) said.

The Belt and Road Initiative was

launched by China as is a project critical both in terms of the future of global trade and the region, said Ismail Gülle during a program on Turkey – China multidimensional relations.

He said that all countries from Eurasia support China’s project, so

does Turkey. “We have to ensure that Turkey’s gastronomic skills, agricultural and food products as well as tourism are well known by our Chinese friends,” he said.

Pointing to China’s $2.1 trillion total imports and the scope of China’s investments under the Belt and Road Initiative, Gülle underlined the project’s potential not only for Turkey, but for the entire region.

For his part, Cui Wei, the Chinese consul-general in Istanbul, said despite the thousands of kilometers between the two countries, the cultural exchange has never been interrupted.

“In ancient times, the Silk Road was the bridge of friendship between the two sides,” he said, with porcelain and silk, for instance, being traded from China to Turkey.

He added that Turkey, which lies at the intersection point of Europe and Asia, combined advantageous aspects of eastern and western cultures and produced a unique cultural environment.

Manufacturing capacity utilization up in October

Turkey receives over 92,000 trademark applications

ANKARA-The Turkish Patent and Trademark Office (TurkPatent) received 92,387 trademark applications -80,938 of them domestic -- during the first three quarters of the current year, official figures showed on Oct. 22.

The number of trademark applications increased by 8.9% year-on-year in the January-July period of this year, according to the TurkPatent data.

The office received 12,761 patent applications during the same period, up by 5% compared to the first nine months of 2018.

Some 1,988 utility model and 31,162 design applications were received between January and September. 98.6% of utility models and 85.17% of the design applications were domestic, said the data report.

Last year, the office received 120,008 trademarks, 18,504 patents, 2,770 utility models, and 42,083 design applications.

Turkey’s manufacturing industry capacity utilization rate (CUR) marginally improved on a monthly basis in October, the Central Bank said on Oct. 25.

Local units operating in manufacturing industry used 76.4% capacity this month [October], up 0.1 points from September, according to the bank survey.

The CUR figures are based on business tendency survey responses of local units operating in the sector.

The Central Bank of Turkey (CBRT) said while 1,795 companies responded to the survey in October, the monthly data does not reflect the bank’s views or predictions.

This month, among the six main industrial groups, the highest capacity usage was 75.6% for intermediate goods, while the lowest CUR was 74% for durable consumer goods.

Among more than 20 sectors, the highest CUR was seen in both manufacturers of apparel and paper products at 84.5%.

October’s lowest capacity usage was recorded by manufacturers of leather and related products at 62.4%.

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Turkey, Kuwait to boost cooperation in industry, tech

Turkey and Kuwait agreed to enhance bilateral ties in industry and technology sectors.

The agreement came in a meeting between Turkish Industry and Technology Minister Mustafa Varank and his Kuwaiti counterpart Khaled Nasser al-Roudan in Turkey’s capital Ankara.

“We aim to enhance our cooperation in fields of economy, industry and technology as well as mutual investments on the 55th anniversary of our relations,” Varank said.

The minister said Turkish teams are carrying out discussions related to industry regions Kuwait plans

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to establish, noting that bilateral cooperation there would yield very positive results.

He underscored Turkey’s significance in the region with its humanitarian foreign policy that contributes to stability in the region as well as its efforts to resolve the crisis in Yemen, to mend the rift in the Gulf Cooperation Council and support the Palestinian cause.

Varank stressed that Turkey adopted a new policy of production that encourages investments and can share its experience in the industry field with Kuwait.

Al-Roudan hailed the “distinguished relations between Turkey and Kuwait

on all levels,” citing that Turkey has the second largest investments in Kuwait of any country in the world.

The Kuwaiti private sector is “the largest in the Middle East that invests in Turkey,” which reflects “trust” on the level of officials and private sector, he said. Al-Roudan pointed out that Turkish companies operating in Kuwait are performing “impressive” jobs on vital projects, citing Turkish companies’ work in the construction of Terminal 2 at the international Kuwait Airport.

Kuwait can benefit from Turkey’s experience in the industry sector which is proven by the strength of Turkish products, he added.

Turkey’s exports to Balkans increase by 3.7%, reaching $10 billion Turkey saw a total of $9.8 billion export to Balkans in the first nine months of 2019, a 3.7% increase compared to the same period last year, according to data compiled by Anadolu Agency (AA) from the Turkish Exporters’ Assembly (TIM).

In the Balkan region, Turkey exported the most products to Romania with $2.9 billion, followed by Bulgaria with $1.8 billion, and Greece and Slovenia with $1.5 and $1.2 billion export volume, respectively; the data showed.

Turkey also saw an increase of 87% in its exports to Montenegro, followed by Slovenia with 18%.

While exports to countries such as Albania, Kosovo and Serbia were on the rise, exports to North Macedonia, Bulgaria and Croatia saw a decrease in the first nine months of 2019.

The figures indicated that Istanbul alone accounted for almost half of the exports to the Balkan countries with 45.6%. The sector that exports the most to the Balkan region was the automotive industry with $2.2 billion.

The increase in exports to the

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Balkans comes as monthly exports in September reached highest-ever figure of $15.2 billion, while the number of exporter companies exceeded importer companies for the first time in history, according to data previously released

by the TIM. The Balkan region is a priority for Turkey not only from the political, economic and geographical perspectives but also due to its historical, cultural and humanitarian ties with the region.

Fiat Chrysler confirms merger talks with Peugeot

Italian-American carmaker Fiat Chrysler Automobiles is confirming that it is in talks with French rival PSA Peugeot on a tie-up to produce one of the world’s largest automakers.

The statement didn’t say whether the talks were aimed at a full merger or a looser alliance. No further details were given. Fiat Chrysler has long been looking for a partner to help shoulder investments in the capital-heavy industry.

Talks this year with another French carmaker, Renault, failed over French government concerns over the role of the Japanese partner Nissan.

Fiat Chrysler Automobiles was formed in 2014 out of a merger of Italian carmaker Fiat and the American company Chrysler, which Fiat brought back from the brink of bankruptcy.

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Economic confidence reaches 15-month high

The economic confidence index increased by 14.7 points in October compared to the same month of the previous year, reaching 89.8 – the highest in the last 15 months, according to the data of the Turkish Statistical Institute (TurkStat) released.

The economic confidence index – a composite index that summarizes the general economic situation, expectations and trends of consumers and producers – stood at 105.2 at the beginning of last year. The index fell to 75.2 in June 2018 as a result of currency volatility, geopolitical risks and diplomatic developments.

Commenting on the data, Treasury and Finance Minister Berat Albayrak said on his Twitter account the strong recovery in the markets continues, as shown by the improvement in all the confidence metrics. “The momentum we have achieved in this field will be one of the driving forces of the change and sustainable growth we desire,” he added.

To restore the economic confidence, the government and relevant state agencies have introduced and implemented several measures to stabilize the tailspin in the economic activity, thereby launching an economic balancing period.

The decline in interest rates and singledigit inflation after a long break and reduced geopolitical risks increased confidence in Turkish lira assets, which was reflected in the economic confidence index.

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According to the Turkish Statistical Institute (TurkStat), the economic confidence index rose by 3.8 points in October compared to the previous month.

The recovery in the economy also manifested itself in the real sector confidence index. The real sector confidence index increased by 2.1 points to 100.9 in October compared to the previous month.

The seasonally adjusted real sector confidence index, on the other hand, saw an increase of 4.5 percentage points to 104.2 in October, reaching the highest level in 17 months.

The positive expectations for the future from both consumers and producers increased, while the sub-indices used in the calculation of the economic confidence index surged.

The index value, which represented the production volume in the next three months, reached the highest level in 20 months in October at 118.8.

Expectations that employment and export orders would increase in the next three months also improved.

Meanwhile, the impact of the housing loan interest rates, which reduced under the leadership of the public banks, on the construction sector was reflected in the construction sector confidence index. The index rose to 65.1 in October, the highest level since September 2018.

Revival in the automotive sector Integral Investment Research Director Tuncay Turşucu said the economic confidence index increased by 4.5% in October compared to the previous month and hit 89.8 points.

He said this figure was the highest since July 2018 and pointed out that there were increases in five sub-groups that formed the confidence index.

“The sharpest rise among them was seen in the construction confidence index with 8.3%,” Turşucu said. “In fact, the construction confidence index has been on the rise for the last five months. The decline in interest

rates seems to have accelerated the construction group.”

He said the retail and service sectors experienced continuous increases in the last three months. Turşucu said it was also possible to see the increase in the retail group in the balance sheet of the retail companies in the stock exchange.

He added that the volatile trend in the consumer confidence index is still underway. “If the uptrend series starts in the consumer group, we may see strengthening in the automotive and home appliance sectors,” he said. “On the other hand, consumer confidence will be the indicator of the increase in expenditures, but I can say that the general data on growth gives positive signals.” İsmet Demirkol from Bahçeşehir University said the real sector confidence index increased by 104.2, the service sector confidence index by 90.7, the retail trade confidence index by 102.3, and the construction sector confidence index by 65.1.

“In particular, the fact that the process that began with the central bank’s interest rate cut of 425 basis points in policy rate on July 25 continued on Sept. 12 with an interest rate cut of 325 basis points contributed to a 4.5% increase in consumer confidence index, and this contribution reflected positively to the manufacturing industry, services, retail trade and the construction sectors,” Demirkol said.

“It should be noted that the central bank’s interest rate cut of 250 basis points that continued on Oct. 24 and the positive effect of the interest rate cut by a total of 1,000 basis points since July 25 will also contribute to the November economic confidence index,” he said.

Auto sales more than double in October amid lower borrowing costs Sales of passenger cars and light commercial vehicles in Turkey surged 127.5% year-on-year in October, the Automotive Distributors Association (ODD), said. The surge follows an 82.35% year-on-year increase in September, both of which come amid a drop in borrowing costs since the Central Bank of the Republic of Turkey (CBRT) kicked off an easing cycle in its monetary policy in July.

The CBRT’s slashing of its benchmark

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policy rate – the one-week repo rate – was followed by a campaign initiated by public lenders to spur domestic demand and that offers cheaper loans to citizens when they buy domestically-made vehicles from select manufacturers.

Passenger car and light commercial vehicle sales in October increased to 49,075. They had plummeted 76.5% in October last year to 21,571 units.

Passenger cars constituted the

bulk of October’s sales, with 39,996 automobiles sold, rising 138%, while light commercial vehicle sales soared 91% during the same period.

In the January-October period of this year, sales fell 31.9% on an annual basis to 330,384, the association said.

Amid a high surge in sales, it also went on to revise its sales forecast for this year to 450,000-500,000 vehicles from a previous forecast of 340,000-380,000.

The association revealed its first market forecast for next year at 525,000-575,000. The mid-point of forecasts indicates that the sector is projected to grow 16% in 2020.

The recent rise comes after monthslong narrowing in the market, which has been contracting since last April.

High volatility in foreign exchange rates, followed by a high increase in interest rates on loans led to a sharp decline in domestic demand.

Since July, Turkey’s central bank slashed its one-week repo auction rate by 1,000 basis points. In its July meeting, the bank cut the one-week

repo auction rate by 425 basis points, before slashing the rate further by 325 basis points in September and 250 basis points late last month to 14%, taking advantage of slower inflation and a steadier Turkish lira.

In the face of rising inflation, the CBRT had increased the interest rates to 24% in September 2018, from 17.75% at the time.

In a joint statement on Sept. 26, the three state lenders, Ziraat Bank, Halkbank and Vakıfbank, said they were initiating a campaign that offered lower interest rates on loans to purchase locally produced cars.

The three banks slashed the monthly cost of the 18-36 month loans for cars produced in Turkey and sold at a price between TL 50,000 and TL 120,000 to rates between 0.49% and 0.69%.

The lenders said they would also extend 30-60 months loans at the monthly interest rates between 0.49 percent and 0.69 percent for commercial vehicles sold for TL 72,000 and TL 120,000. The financing package is made available from Oct. 1 to Dec. 31.

In the meantime, Uludağ Automotive Industry Exporters’ Association announced that Turkey’s automotive industry exports reached $25.4 billion in the first 10 months of this year.

Exports were around $2.5 billion per month on average during the said period, the association said.

Turkish automotive industry’s exports were also $2.8 billion in October, down 3.5% versus the same month last year.

Baran Çelik, the head of the association, said the sector ranked the first by taking a 17% share from the country’s overall exports in the month, he stressed.

In October, car exports, which constituted 43% of automotive exports, rose 1% to $1.2 billion, while supply industry exports climbed 3% to $966 million. Exports of motor vehicles for goods transport saw a decline of 18% to stand at $388 million, and tow trucks’ exports dropped 64% year-on-year in the month. Germany was the top destination for automotive exports in October with $398 million, followed by France ($288 million) and Italy ($282 million).

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Istanbul tests new, larger metrobuses Istanbul municipality began testing new metrobuses with higher capacity after commuters complained about massive crowds at the rapid transit system during rush hour.

If they pass the ongoing test runs, the newer vehicles will have nearly double the capacity and replace the old fleet.

“The vehicles that are being tested right now have the capacity for 280 people, with 30 of them seated and 250 on foot.

It will also have a separate cabin for the driver,” said Arif Duran, the head of the municipality’s directorate of metrobuses.

“We want to renew our fleet with nextgeneration vehicles. We are testing vehicles that are 20 meters long and have been conducting them for 10 days. Right now, we are doing load

tests and will move on to test runs with commuters,” Duran said, adding that the municipality was willing to consider any vehicles from other manufacturers as long as they met the requirements.

He said the test vehicle was produced locally and would include additional features for commuter comfort as well as increased cost effectiveness.

Several media outlets reported that the new metrobus prototype was called “Akia” and that it was manufactured in Turkey’s Bursa province by an Iran-based company. The reports said electric motors were also being considered for the new metrobuses.

One of Istanbul’s most popular means of transit, the metrobus sees almost an endless flow of commuters during rush hours, and even though authorities

introduced more buses along the route and switched to a longer timetable with more frequent trips, the problems linger. Overcrowding is particularly evident in the first stops of the rapid transit route that takes commuters from Beylikdüzü on the far western corner of city’s European side to Söğütlüçeşme on the Asian side.

Passengers point out that the problem has worsened, particularly for Beylikdüzü, as thousands travel every day from the district and nearby districts to work in the city’s financial centers like Mecidiyeköy and Levent.

Verbal arguments are common in metrobuses and sometimes they even end in brawls as passengers complain it is “torture” to find even a small space to stand in the buses.

Engines for Renault’s hybrid vehicles to be manufactured at Bursa plant Renault Group, one of the leading brands in the production of fully electric cars, could not stay away from hybrid models. There are eight hybrid models among the plans of the French automotive giant, which is preparing to sell 12 electric models by 2022. The carmaker’s first hybrid models will be on the road as of 2020. Clio will be the first hybrid model to be offered, while the first rechargeable plug-in-hybrid model will be Captur. Megane will join the hybrid product range later.

Answering the reporters’ questions during a test drive of the new Captur in Greece’s capital Athens, Renault

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Corporate Press Officer Vincent Frappreau said that the renewed Captur will be the first Renault model with a plug-in hybrid engine. Frappreau stated that the hybrid engine, named E-TECH plug-in, was developed by the alliance. He explained that the hybrid engines to be used in Renault models will be manufactured in Turkey’s northwestern province of Bursa, recalling that they invested greatly in hybrid engines in facilities of OYAKRenault, a joint venture with Turkey’s military pension fund.

Oyak Renault, which received a TL 493 million incentive for the hybrid

car investment under the ProjectBased Incentive System announced

by President Recep Tayyip Erdoğan last year, laid the foundation of its new facility in October 2018. Hybrid engines to be manufactured at the Bursa facility will be exported for use in Renault Group brands. Thus, Turkey will become the hybrid production base of the French automotive giant.

Renault filed over 150 patents for the E-TECH plug-in engine to be introduced with the new Captur. The new Captur has two electric traction engines, a gearbox developed with the Renault F1 experience and a 9.8 kWh battery.

Captur offers a range of 45 kilometers at speed of 135 kph in mixed-use and approximately 65 kilometers in urban use.

Berk Çağdaş, general manager of Renault Mais, said that automotive is one of the key sectors for the Turkish economy, suggesting that tax simplification should be introduced in this regard. Çağdaş also pointed to the confusing taxation system in the automotive industry, saying of every 100 passenger cars sold in Turkey, around 97 are 1.6 liters and under.

“Automobiles over 1.6 liters only have a share of 3%. If a tax regulation is made with only this in mind, we can generate much more added value than the existing system,” he added.

The new Captur, which will use the hybrid engine to be manufactured in Bursa, has sold 1.5 million units since its launch in 2013. It had only one competitor in the first year of its sale, while there are over 20 competitors in its segment. Captur became the market leader in the highly competitive European B-SUV market with 215,000 units in 2018. The car’s share in the Turkish car market, on the other hand, is 3.7%. The automotive sector is demanding the extension of the incentives applied for scrap cars, which will expire at the end of 2019. Backing this demand, Çağdaş said one-third of Turkey’s vehicle park consists of 15-to-16-year-old vehicles, adding the incentive for scrap should be extended to pull out the old vehicles that are harmful to human health, traffic safety and the economy. He further explained that in Greece, a new regulation was introduced for the withdrawal of vehicles 10 years or older and the sale of hybrid and electric vehicles, underlining that a similar system should be introduced in Turkey as well.

Turkish exports hit $16.34B in October, trade minister says Turkey’s exports amounted to $16.336 billion in October according to the general trade system, the country’s trade minister said.

The exports totaled $148.84 billion in 2019, rising 2.1% in the first 10-month period of 2019, Ruhsar Pekcan told reporters in the western Denizli province. In the first 10 months of 2019, the imports have reached $172.71 billion, Pekcan said, adding that Turkey’s import rate decreased by 13.2% in the same period.

“These figures and positive

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performance in exports continue to reassure us, our economy and our exporters,” Pekcan added.

Turkey’s imports increased by 10.8% in October, reaching $18.179 billion, the minister said.

“Turkey’s foreign trade deficit decreased by 55.6% [in the 10-month period], totaling $23.22 billion,” she said. The top destination for Turkish goods last month was Germany with $1.4 million, followed by the U.K. with $982 million and Iraq with $978 million. The biggest source of Turkish

imports was Russia with goods worth $1.8 billion. Russia was followed by China with $1.7 billion and Germany with $1.6 billion. To calculate foreign trade data, two different methods are used – the special trade system and the general trade system. Calculations based on the special trade system do not include free zones or customs warehouses. The general trade system is a wider concept, including customs warehouses, all types of free zones, free circulation areas and premises for inward processing.

Turkish economy to record positive growth by year-end, Albayrak says

The Turkish economy will close this year with positive growth figures, Treasury and Finance Minister Berat Albayrak said, in reference to improvement in macroeconomic trends and rising economic confidence.

During a meeting with businesspeople titled “Change is Beginning,” held in the eastern Anatolian province of Malatya, Albayrak underscored the falling inflation, interest rates and

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risk premiums as well as increasing economic confidence and modest improvement in industrial production.

The minister’s estimates have recently been corroborated by the latest report of the International Monetary Fund (IMF). The report said last month that the Turkish economy may see a growth of 0.25%, reversing previous forecasts of a 2.5% contraction.

Following the release of the second-

quarter data, experts also predicted that the economy will register positive growth in the third quarter. Turkey’s economy shrank by 1.5% in the AprilJune period, compared to the same period last year. In the first quarter, the revised data of the Turkish Statistical Institute (TurkStat) revealed that the economy shrank by 2.4%.

In reference to the positive trends in the Turkish economy, Albayrak recalled, “The $5.1 billion surplus in the current account was a record in the history of the Turkish Republic.” The drastic fall in the current account surplus came as a result of falling imports and a set of measures by the government, alleviating the burden of external financing.

The annualized deficit climbed to $57.9 billion in May 2018 before it kicked off a dramatic decline along with the rebalancing period in the Turkish economy that started after Albayrak announced the new economic program (NEP) in September last year. Measures taken within this scope led to narrowing in the foreign trade deficit, while a high increase was observed in the rate of exports meeting imports.

The new economic program unveiled in

September expects a current account surplus-to-GDP ratio of 0.1% for 2019.

It forecasts the current account to post a deficit of 1.2% next year and 0.8% in 2021 before reaching 0% in 2022.

In 2010 and 2011, when the Turkish economy was seeing high growth, the annualized current account deficit had increased gradually and reached its historic peak in October 2011 with $76.1 billion. It went on to fall below $50 billion in November 2012 with the measures taken by the economic administration.

Meanwhile, the economic confidence index increased by 14.7 points in October compared to the same month of the previous year, reaching 89.8 – the highest in the last 15 months, according to the TurkStat data released.

Albayrak emphasized the significance of protecting economic gains and ensuring a sustainable growth trend in the rebalancing period. He recalled that the capacity utilization rates are higher in the third quarter compared to the previous quarter. “The contracting automobile and home appliance sectors also saw an increase of 100.7% and 7.2% in September,” he said, adding that, “The Purchasing Manufacturer Index (PMI) edged over 50 points in September after 17 months.”

During his meeting with the businesspeople, Albayrak also announced an employment-oriented financing package to be provided by three public lenders, namely Ziraat Bank, Halkbank and Vakıfbank.

The banks have introduced four new instruments to facilitate longterm loans for companies that have the potential to produce additional employment. The manufacturing

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enterprises that pledge additional jobs will be able to benefit from a loan package of TL 100,000 to TL 200,000.

Albayrak confirmed that a new era of financial support for the real economy has started as the banks have decreased interest rates on commercial loans from 13% and 15.5% to 11% and 13.5%, respectively.

Turkey’s central bank went on to lower its inflation forecast for the end of this year to 12% in its latest quarterly inflation report, down from 13.9% in the previous report, attributing it to changing food inflation expectations and improvement in the underlying trend. Unveiling the last quarterly inflation report of the year in Istanbul, Murat Uysal, the governor of the Central Bank of the Republic of Turkey (CBRT), said significant improvement in the underlying trend of inflation and the downward revisions to import prices and food prices had a positive impact on the year-end inflation forecast compared to the previous reporting period.

However, Uysal noted, the moderate recovery in the output gap and the tax hikes for alcoholic beverages and tobacco product pushed the year-end inflation forecast upward, putting it at 12%. He added that the projections for next year and 2021 were left unchanged at 8.2% and 5.4%, respectively.

The governor stressed the focus of eventually bringing down inflation to below 5% over the medium term.

Annual inflation dropped to 9.26% in September, reaching single digits for the first time since July 2017, when consumer prices came in at 9.79%. It went down 5.75 percentage points from 15.1% in August.

After topping 25% in September last year, inflation has been gradually falling, from 20.3% this January to 9.26% in September.

In the face of rising inflation, the CBRT had hiked its benchmark policy rate – the one-week repo auction rate – to 24% in September 2018, from 17.75% at the time. However, the disinflation trend has paved the way for the central bank to kick off an easing cycle in its monetary policy and slash the oneweek repo auction rate by 1,000 basis points since July.

In its July meeting, the bank cut the one-week repo auction rate by 425 basis points, before slashing the rate further by 325 basis points in September and 250 basis points to 14%, taking advantage of slower inflation and a steadier lira.

At the point reached, Uysal acknowledged that the bank has used a significant part available for a loose monetary policy, but did not rule out further easing in the near term.

Uysal said the latest rate cut was due not only to base effects but also to improvements in inflation expectations and pricing behavior. He said the bank’s future policy steps would depend on further developments in inflation.

According to the governor, the disinflation process continues, with base effects, tight monetary policy and domestic demand also contributing to a fall in inflation, while the monetary policy implementation will ensure the forecast is achieved.

Under the new economic program released last month, Turkey’s inflation target for this year is 12%, followed by 8.5% in 2020, 6% in 2021 and 4.9% in 2022.

Annualized current account widens to highest surplus ever Having dropped dramatically since last year before recording a monthly surplus two times in a row in June and July, Turkey’s current account balance has also posted a surplus in August and led to the annualized current account surplus widening to a record in the month.

The balance posted a surplus of $2.6 billion in the month, the Central Bank of the Republic of Turkey (CBRT) announced. The increase brought the 12-month rolling surplus to $5.1 billion, the highest surplus ever. The surplus was up $554 million year-on-year, the bank said in a statement. The balance posted a surplus of $1.01 billion in the January-August period, the bank said.

“We will protect our gains with export and value-added production priority policies and ensure that our resources remain in our country,” was the first evaluation of the data by Treasury and Finance Minister Berat Albayrak, who underscored that the successful performance in the current account balance continues.

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“We have recorded a surplus of $5.1 billion in August with another record, after the record in July,” Albayrak said over his social media account.

The central bank said the development in the current account is mainly attributable to an $848 million increase in the services item recording net inflow of $5.2 billion, as well as a $73 million increase in secondary income surplus to $100 million.

A survey showed economists’ current account surplus estimates range for August stood at $2.76 billion. A group of 14 economists’ surplus estimated the end-2019 current account balance to show a deficit of $700 million. The median of 10 estimates in a Bloomberg survey was for a monthly surplus of $2.85 billion.

Gold and energy excluded current account surplus was $5.7 billion, rising $1.1 billion from August 2018. Travel items under services saw a net inflow of $4.1 billion in the month, up $737 million year-on-year.

The country’s new economy program

unveiled last month expects a currentaccount-surplus-to-GDP ratio of 0.1% for 2019. It forecasts the current account to post a deficit of 1.2% next year and 0.8% in 2021 before reaching 0% in 2022.

In 2010 and 2011, when the Turkish economy was seeing a high growth, the annualized current account deficit had increased gradually and reached its historic peak in October 2011 with $76.1 billion. It went on to fall below $50 billion in November 2012 with the measures taken by the economic administration.

The annualized deficit climbed to $57.9 billion in May 2018 before it kicked off a dramatic decline along with the rebalancing period in the Turkish economy that started after Treasury and Finance Minister Albayrak announced the new economic program (NEP) in September last year. Measures taken in this scope led to narrowing in the foreign trade deficit, while a high increase was observed in the rate of exports meeting imports.

The annualized trade deficit gradually declined for the 12 months between June 2018 and May 2019 from $57.9 billion down to just $1.2 billion. The annualized balance has since then been recording surplus. It posted a surplus of $1.2 billion, $4.5 billion and $5.1 billion in June, July and August, respectively Thus, the $5.1 billion surplus in August is the highest-ever annualized current account surplus considering the data

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released by the CBRT and that goes back to 1991. In his evaluation of the data, AA finance analyst and economist Haluk Bürümcekçi told AA that foreign trade data for September pointed to a higher foreign deficit compared to last year, which, he said, makes them think that an end in the rise in the current account surplus is approaching.

Besides improvement in the headline data, Bürümcekçi said the non-energy

current balance, which is followed in terms of the basic tendency of the current balance, posted a surplus of $41.2 billion, while the core current balance recorded a surplus of $46.8 billion. Bürümcekçi emphasized that the surplus in the current account balance has reached its strongest level in history as an absolute value and said it may remain below the 2% of the GDP level achieved in the 2001 crisis.

Fitch affirms Turkey’s debt rating as ‘BB’ changing outlook to ‘stable’ The international credit rating agency, Fitch affirmed Turkey’s long-term foreign and local currency Issuer Default Ratings (IDR) as “BB,” changing the outlook to “stable” from “negative.”

The agency also revised up its GDP forecast for 2019 by 0.8 percentage points to 0.3% on the back of stronger second-quarter outturns.

Fitch maintained its GDP growth

forecast of 3.1% for 2020 and 3.6% in 2021. Earlier in September, an expert from Fitch had said Turkey executed a “very impressive” bounce back from the challenges it faced last summer.

“Turkey has shown a very impressive resilience, flexibility, and recovered and stabilized from the financial crisis of last summer,” Ed Parker, Fitch Ratings managing director for Europe, Middle

East, and Africa EMEA region, told a global conference in London.

Pointing to Turkey’s strong fundamentals, Parker said the country’s sovereign balance sheet, low government debt and private banks are in relatively good shape.

He also praised the dynamism and flexibility of the Turkish private sector.

Economists expect fall in interest rates Economists surveyed predicted that the Central Bank of the Republic of Turkey (CBRT) will further reduce interest rates. The Monetary Policy Committee (MPC) will hold a meeting for the seventh time this year to determine the bank’s decision on interest rates.

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A group of 14 economists expect an average drop of 100 basis points in the one-week repo rate – the lowest estimate at 50 basis points and the highest at 200.

In the previous meeting, the MPC decided to cut interest rates by 325

basis points from 19.75% to 16.50%.

After meeting, the bank will hold one more committee meeting this year.

In 2018, the CBRT held nine MPC meetings as interest rates climbed from 8% to 24% over the course of the year.