Automotive Exports June 2019

www.automotive-exports.com

Monthly automotive aftermarket magazine June 2019

Monthly automotive aftermarket magazine

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

General Manager (Responsible) Mehmet Söztutan mehmet.soztutan@img.com.tr Editor Ayça Sarıoğlu ayca.sarioglu@img.com.tr Mehmet Soztutan, Editor-in-Chief mehmet.soztutan@img.com.tr

Advertising Manager Adem Saçın adem.sacin@img.com.tr Gsm: 0505 577 36 42 Reklam Danışmanı Ahmet D. Gölbaşı aderya@gmail.com Foreign Relations Manager Yusuf Okcu yusuf.okcu@img.com.tr Consultant Editor Leniiara Agliullina

We are at Automechanika Dubai 2019

T

urkish automotive industry, with its vehicles and components manufacturing subsectors, is one of the major driving forces behind the Turkish economy. As noted earlier in this column, the autoparts industry of Turkey has developed rapidly as a consequence of developments in the automotive industry. The autoparts 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 exports. Business people operating in the industry have become outward oriented more than ever before.

These companies not only dominate the primary supply markets but also capture an increasing share of the replacement market. Their continued success in exports markets depend on close technical links with part makers in industrialised countries and the willingness of their foreign partners to integrate their Turkish counterparts into their production-distribution networks as regular suppliers of high quality, low-cost components.

Turkey's autoparts industry exports are increasing steadily year by year. Turkey is the only country within the surrounding geographical area to have established a well advanced automotive industry.

Therefore, the automotive industry is strategically important both for Turkey and for firms that will invest in Turkey. We think that technology will always be the key for the survival of the automotive industry. History says so.

This month, we participate in Automechanika Dubai 2019 to convey the message of the Turkish automotive and auto spare part exporters. The stars of the automotive world will be meeting at Automechanika Dubai as usual.

Automechanika Dubai, showcasing the latest global trends, has turned out to be a remarkable automotive aftermarket platform for the Middle East and Africa. The Fair which covers the full range of automobile, truck and bus parts, equipment, components, accessories, tools, and services continues to bring world renowned manufacturers, suppliers and service providers in touch with one of the most important growing markets in the world. The markets targeted by the Fair are widely recognised as the most attractive in the world in terms of future potential.

Our publications remain at the service of those business people seeking to increase their share in the increasingly competitive automotive markets.

We wish lucrative business for all participants.

Correspondent İsmail Çakır ismail.cakir@img.com.tr Graphics & Printing Manager Tayfun Aydın tayfun.aydin@img.com.tr Design & Graphics sami.aktas@img.com.tr Chief Accountant Zekai Turasan zturasan@img.com.tr Finance Manager Mustafa Aktas mustafa.aktas@img.com.tr Subsciption İsmail Özçelik ismail.ozcelik@img.com.tr HEAD OFFICE: Evren Mahallesi Bahar Caddesi Polat İş Merkezi B Blok No:1 Kat: 4 Güneşli - Bağcılar/ İstanbul Tel: (90.212) 604 51 00 Fax: (90.212) 604 51 35 www.img.com.tr turkey@ihlas.net.tr KONYA: Metin Demir Hazım Uluşahin İş Merkezi C Blok Kat: 6 No: 603-604-605 KONYA Tel: (90.332)238 10 71 Fax: (90.332)238 01 74 PRINTED BY: İHLAS GAZETECİLİK A.Ş.

Merkez Mahallesi 29 Ekim Caddesi İhlas Plaza No:11 A/41 Yenibosna–Bahçelievler/ İSTANBUL Tel: 0212 454 30 00 www.ihlasmatbaacilik.com

Please mention Automotive Exports when writing to advertisers

Feel the pulse of the market and stay ahead of the competition!

Automechanika Dubai 2019-The leading international trade show for the automotive aftermarket and service industry in the MEA region As the leading international automotive aftermarket trade show in the Middle East, Automechanika Dubai 2019 acts as the central trading link for markets that are difficult to reach connecting the wider Middle East, Africa, Asia and key CIS countries.

Over 1,800 exhibitors from around 60 exhibiting countries will showcase the entire spectrum of the automotive aftermarket across 6 product sections - parts & components, electronics & systems, repair & maintenance, tires & batteries, accessories & customizing and car wash, care & reconditioning.

In 2019, Automechanika Dubai will introduce new product highlights – Body & Paint and Oils & Lubricants, as well as special features at the show with exhibitors catering to agricultural parts and equipment, motorcycle competence and truck competence, including key industry experts and stay up-to-date on the industry trends by connecting and learning at Automechanika Academy.

Dubai proved to be the ideal platform in

June 2019

6

the region for trade and the sharing of expertise between professionals

from across the globe.

Last year, the event welcomed 1,801 exhibitors from 61 countries, who were able to interact and engage with 31,971 visitors from 146 countries.

This strategically located trade hub delivers the best business advantages as follows: Meet over 1,800 exhibitors across 13 halls showcasing diverse range of products, equipment and services Review products and pricing options from over 60 exhibiting countries and more than 20 country pavilions Negotiate partnerships with key manufacturers including exclusive distribution rights in key markets Discover product innovations and be prepared for future market demand Feel the pulse of the market and stay ahead of the competition Visiting Automechanika Dubai opens up a world of possibilities that you wouldn’t find anywhere else. Meet, connect and source from over 1,800 exhibitors under one roof.

NSK Group’s traditional iftar held once more

The traditional NSK Group’s iftar was held in Bursa-Karacabey and Istanbul with a considerable participation. At the beginning of the iftar programs, employees were given seniority incentive awards in various categories for the personnel having 10 years of working time or more.

The traditional iftar dinner was held in Bursa Karacabey, where NSK Group factories are located, with the participation of NSK Group employees, families and business partners. The iftar dinner, attended by people in Salon Taha, was held in a friendly atmosphere. The iftar invitation in Istanbul was held at the Hilton Garden Inn Hotel.

The invitations were held in two locations with the participation of

June 2019

8

approximately 1,500 people. Prior to the iftar programs, the Seniority Incentive Awards were presented to NSK Group employees who are working over 10 years and above. Honorary President Nurettin Kazangil, Chairman of the Board of Directors Ömer Kazangil, Members of the Board of Directors, Mehmet Kazangil, Said Kazangil and Yavuz Kazangil, presented the awards for 61 employees in the categories of 10,15,20,25 and 30 years. The company has 400 employees.

As known, ROTA manufactures OEM products such as tie rod end, ball joint, centre rod, axial joint, triangular torque rod, torque rod and repair kit for commercial vehicles, agricultural tractors, construction machinery and special vehicles.

NSK Group manufactures in 3 factories

in a total area of 48.000 m2 with 15.000 m2 closed area. Its products are exported to more than 100 countries with 2 sales and marketing companies in Istanbul and Brazil. NSK Group carries out production and salesmarketing activities with its qualified employees.

First domestic automobile to hit streets by 2022 In November 2017, Turkey rolled up its sleeves to design and manufacture its first indigenous automobile in a joint venture formed by five of the largest Turkish industrialists, all experienced in their own areas of operation. While the project continues at full speed with intensive public and private efforts, it is projected that the first domestic car will hit Turkish streets by 2022, Industry and Technology Minister Mustafa Varank told Sabah daily in an interview.

Recalling a recent meeting with President Recep Tayyip Erdoğan, who championed the project, Varank noted that the line-drawing phase has been completed and presented. The minister noted that the process in the domestic car began with the appointment of CEO Mehmet Gürcan Karakaş, who assumed the role in September 2018. “Business plans have been made, and the plans continue in accordance with the schedule,” the industry and technology minister said.

The 15-year plan of the project envisions production of five models and three facelift versions, Varank said.

The minister said the project is being June 2019

10

carried out by the private sector, and they, as the government, are looking at how can they contribute and help.

Varank said three-dimensional drawings and engineering studies continue. He said a team of 40 engineers in the company is dealing with the research and development (R&D) dimension of the project, saying that the group is expected to reach 300 by the end of the year.

“The joint venture group will release this model by catching up with the era and exploring the window of opportunity,” Varank noted. “I believe this model will be quite popular. I do not think there will be a market shortage because the vehicle will be the best electric car in its class. For this purpose, we will carry out procedures related to the infrastructure of electric vehicles in Turkey as soon as possible.”

Five domestic firms - Anadolu Group, BMC, Kök Group, Türkcell and Zorlu Holding, with 19 percent of shares each and the Union of Chambers and Commodity Exchanges of Turkey (TOBB) with 5 percent of shares, will jointly lead the joint venture Turkey’s

Automobile Joint Venture Group (TOGG).

Stressing that export will also be possible since the automobile will match contemporary requirements and trends, Varank said they have received positive responses from citizens, public institutions and nongovernmental organizations in this regard.

“With the introduction of electric cars, technology is rapidly evolving in areas such as driving techniques, smart city planning and automobile software.

Upon switching to the electric car, the whole industry began to change.

Therefore, we see Turkey’s automobile project not only as an automobile project but also as a project that will transform the entire industry and the automotive industry in Turkey.”

Suggesting that the mobility ecosystem that will develop in the transformation of the automotive sector will also an important opportunity for Turkey in the development of new technologies, Varank noted that this is not just an R&D project, but also a project to produce a brand, so to speak.

Karsan’s electric minibus hits European roads Karsan’s Jest Electric, the first product of the supply agreement signed between domestic producer Karsan and BMW for electric motor vehicles, is on its way to Europe.

The first deliveries of Jest Electric have been made to France, Germany, Romania, Portugal and Slovakia, which have all started using it.

The company has received a total of 35 orders for Jest Electric from a number of countries, including France, Portugal, Romania, Lithuania, Slovakia, Greece, Italy and Germany, announcing that it has produced 20 of them at the Bursa factory and exported the finished products.

Karsan CEO Okan Baş said interest in Jest Electric continues to grow every day, adding: “With its distinguishing features of dimensions and battery technology from its rivals, Jest Electric has begun to attract the attention of Europeans. The Jest Electric, which has already hit the roads in France, Germany, Romania, Portugal and Slovakia, has started turning heads in Greece most recently.”

According to Baş, the company recently won the tender for electric vehicles in Lithuania and increased the total number of orders to 35. “We continue to receive new orders and are preparing for new tenders,” he explained.

The power of Jest Electric is derived from a 100 percent BMW electric engine that ensures strong acceleration. The BMW-made electromotor in Jest Electric boasts 170 horsepower and 290 Newton meters of torque, collaborating with a single rate gearbox.

Jest Electric, with its 44 and 88 kilowatt-hour batteries developed

by BMW, offers up to 210 kilometers of range and can be charged in eight hours by conventional alternating June 2019

14

current chargers and in one hour at fast charging stations.

Thanks to the regenerative braking system that provides energy recovery, the BMW ion batteries can recharge themselves by up to 25 percent.

The Jest Electric features a 10.1inch multimedia touch screen, digital dashboard, keyless go, USB sockets and Wi-Fi compatible infrastructure.

The four wheels of the vehicle have independent suspension systems.

Plans underway to put speed limiters, data recorders on cars The European Union is moving to require cars and trucks to have technology that would help keep drivers from speeding as well as data recorders that would document the circumstances of accidents.

Those were among the safety features included in a provisional agreement announced by the EU’s executive commission.

The package would mandate so-called intelligent speed assistance, which recognizes speed limits using mapping systems and help drivers observe them by restricting engine power. The driver can override the system by pushing harder on the gas pedal. But the onboard data recorder could further deter speeding by registering the car’s speed.

“Every year 25,000 people lose their lives on our roads,” said Elzbieta Bienkowska, the European Commissioner responsible for internal market and industry. “We can and must act to change this.”

The European Commission, the executive arm of the 28-country EU, said that the features would be required on all vehicles on European roads from 2022.

The other safety features would include systems to warn drivers if they seem drowsy and against distractions such as smartphone use. Cameras and sensors would be required to avoid accidents while backing up and to help keep a car in a lane. For cars and vans, the deal requires advanced emergency braking, which can detect obstacles and push the brake pedal if the driver does not responds in time.

And another system would help bus and truck drivers avoid hitting cyclists

June 2019

16

in their so-called blind spots. Although properly adjusted mirrors should allow truck drivers to see to the side, Germany’s transport ministry has pushed for the measure to reduce deaths of cyclists and pedestrians.

Much of the technology already exists and is available on more expensive cars.

The European Automobile Manufacturers’ Association welcomed the EU’s agreement but said vehicle technology needed to be supplemented with better road infrastructure and measures to encourage safer driver behavior.

“This challenging piece of legislation will no doubt be instrumental in further improving road safety - something all auto makers are fully committed to,” said ACEA Secretary General Erik

Jonnaert. “At the same time vehicle technology alone will not be sufficient.

For maximum effect, policy makers must now push for a fully integrated approach to road safety; combining vehicle technology with better road infrastructure and safer driver behavior.”

The association warned in December that intelligent speed assistance should be introduced only gradually. It said the technology was hampered by too many false readings due to out-of-date maps and poor sign visibility.

The measures announced were agreed on in negotiations between European national governments, the commission, and the European parliament. The provision political agreement is subject to formal approval by the European parliament and EU leaders.

‘Made in Turkey’ car to be fully electric with 500 km range

Turkey’s first domestically manufactured automobile, expected to hit Turkish streets in the second half of 2022, will be a fully electric vehicle with a 500-kilometer range, according to Industry and Technology Minister Mustafa Varank. The minister explained: “We will set forth our own automobile as a project to fully compete with its competitors and develop an ecosystem within this scope.

We do not see it as just an automobile project. There is great transformation in the world, and the automobile industry also experiences this change and transformation in the fastest way,” he said, stressing that as a technology project, Turkey’s automobile would transform the automotive industry and make it competitive with other countries.

The minister stressed that with the electric engine, software, autonomous driving and battery technologies, the automobile industry was turning in a completely different direction. “With this project, we believe we have caught this opportunity at the right time,” he added.

In November 2017, Turkey had started

June 2019

20

to design and manufacture its first indigenous automobile in a joint venture formed by five of the largest Turkish industrialists, all experienced in their own areas of operation.

Five domestic firms - Anadolu Group, BMC, Kök Group, Türkcell and Zorlu Holding, with 19% shares each, and the Union of Chambers and Commodity Exchanges of Turkey (TOBB) with 5% of the shares - will jointly lead the joint venture Turkey’s Automobile Joint Venture Group (TOGG).

The minister said the prototype for the locally produced car is likely to be unveiled at the end of 2019. “Probably, the car will be offered for sale and hit the roads in the second half of 2022.

People are waiting for this car. It looks

like there will be demand for it,” he explained adding that they would soon announce the location of the research and development (R&D) center. “If you want to make an investment, you prefer the closest location to the supplier.

So, you want to choose an area where you can use the ecosystem in the most efficient way,” he noted. “The talks are in progress about the location of the factory. We will not disclose information on the subject due to commercial confidentiality. We are not unveiling the segment of the first model either. However, they [the joint venture group] plan to come up with a price that will compete in global markets with all models.”

Turkey’s net international investment position improves

Turkey’s net international investment position (NIIP) performed better in March, rising 5.4% compared to the end of last year, according to Turkish Central Bank (CBRT) on May 20.

The NIIP, the difference between a country’s external assets and liabilities, totaled at minus $337.1 billion as of March-end, up from minus $356.2 at the end of 2018, the CBRT reported.

Turkey’s assets abroad increased by 4.6% to hit $241.7 billion during the same period.

Country’s liabilities against non-residents was around $578.8 billion in March, down

June 2019

22

1.5% from the end of last year.

The NIIP -- which can be either positive or negative -- is the value of overseas assets owned by a nation, minus the value of domestic assets owned by foreigners, including overseas assets and liabilities held by a nation’s government, the private sector, and its citizens.

Turkey’s reserve assets rose 3.5% to reach $96.3 billion, while other investment stood at $92.3 billion, indicating a rise of 7.4% in the same period of time. A sub-items of other investment, currency, and deposits of banks amounted to $51.4 billion,

increasing 15% compared to the end of 2018.

“As regards to sub-items under liabilities, direct investment at the end of March 2019 recorded $122.4 billion indicating 9.7% decrease in comparison to the end of last year, with the contribution of the changes in the market value and foreign exchange rates,” the bank said.

Total external loan stock of lenders went down to $78.1 billion as of Marchend, falling 4.2% from the end of last year. “Total external loan stock of the other sectors recorded $104.4 billion decreasing by 2.4%,” the bank added.

23

June 2019

New package historic step to ensure value-added, export-oriented production

The Treasury and Finance Ministry announced a comprehensive financing package for three areas of economic activity, including the production of raw materials and intermediate goods, machinery and agriculture.

The ministry’s primary aim is to introduce this TL 30 billion package, İVME (advanced, productive, indigenous, industry), to take a concrete step toward supporting the passage to export-oriented and high value-added production, one of the most emphasized agenda items in the New Economic Program (NEP). The İVME package also seeks to provide an innovative and important possibility for banks to hedge assets in their balances with the actual consumer price index and the government debt security index.

For the first time, a loan package as large as İVME addressed the targeted policies for Turkey’s $46.2 billion of imports per year of raw materials, intermediate goods and machinery sectors. While devising this package, a comprehensive study was conducted to identify 43 key investment areas for which support will be given to decrease the current account deficit. Focusing on specific sectors that have high import dependency, run trade deficits, make high contributions to employment and have high potential for exports, the ministry has taken into effect one of the most concrete policy steps toward the current account deficit issue of the

June 2019

24

Turkish economy.

Support to boost the operationally of the Turkish economy will not only be provided for investments, but also will be given to companies in 43 different business areas. The package aims to activate capacities that are inactive or below potential.

An investment loan of up to TL 150 million would be provided for the production of raw materials and intermediate goods for a maximum of 10 years with a principal repayment of up to two years. Furthermore, a business loan of up to TL 30 million would be granted for a maximum of five years with a principal repayment of up to one year.

Inflation and government securities indexed loans provide more advantageous conditions and promises for business activities when finance opportunities and conditions have become tougher. In his presentation on, Treasury and Finance Minister Berat Albayrak emphasized that the İVME loan package will contribute to decreasing the current account deficit of Turkey.

In recent months, Turkey has put forth an important tempo in the current account along with the momentum it achieved in exports and has continued to see a gradual decline in its current account deficit.

Albayrak noted the current account deficit reached its highest level of $58 billion in May 2018, adding that they expect to post a current account surplus as of June, a first for the ruling Justice and Development Party (AK Party) in its 17-year rule.

Meanwhile, with measures taken by the government and the stabilization process in the economy, the country’s 12-month rolling current account deficit dropped to $12.83 billion in March, its lowest level since the end of 2009.

The monthly current account deficit in March also saw its lowest level since October 2015 and dropped to $589 million, decreasing by $4.14 billion year-on-year, according to the Central Bank of the Republic of Turkey (CBRT) data. Economists expect the country’s current account deficit to maintain its trend and continue to narrow in April as well and drop below $10 billion.

Last year, the current account balance

posted a deficit of around $27.6 billion, improving from a nearly $47.5 billion deficit in 2017. It realized around 3.5% of the country’s gross domestic product. This figure was the lowest since 2009, while Turkey’s highest annual current account deficit over the last decade was seen in 2011, with $74.4 billion.

The country’s NEP, announced in September 2018, targets a currentaccount-deficit-to-GDP ratio of 3.3% this year, 2.7% in 2020 and 2.6% in 2021.

The latest TL 30 billion loan package will be facilitated by three public lenders: Ziraat Bank, Halkbank and Vakıfbank.

Commenting on the support package, ZiraatBank General Manager Hüseyin Aydın indicated that other participation banks and conventional lenders are expected to follow suit of state lenders and join similar projects.

Aydın underscored that the stable growth of the Turkish economy and its ability to take a larger share of global trade is possible with the increasing quality of production.

Halkbank General Manager Osman Arslan noted that the İVME financing package is a visionary step for the Turkish economy.

“In the first four months of the year, we have observed the quick and positive results of significant measures targeting the cash flow of the private sector. While the positive trend in industrial production continues, developments in the subsectors strengthen the positive course of the economic balancing period. We will continue to support the real sector in the second half of the year during which we will continue to feel the impacts of the economic reforms,” Arslan said.

The Halkbank general manager remarked that the new financing package would make significant contribution to the Turkish economy, as it will particularly provide loans for import-dependent sectors that run a trade deficit.

Vakıfbank General Manager Mehmet Emin Özcan also highlighted that the İVME financing package is of great significance in terms of ensuring sustainable growth, which is only possible with high value-added investments.

Fiat Chrysler proposes merger deal with Renault Group Fiat Chrysler Automobiles (FCA) said that it has offered a fifty-fifty merger deal with Renault Group. The two automakers have been planning a merger to curb costs in producing vehicles and to pool resources for developing the next generation automobiles.

“The proposed combination would produce a global automaker, preeminent in terms of revenue, volumes, profitability and technology, benefitting the companies’ respective shareholders and stakeholders,” FCA said in a press release.

Meanwhile, Renault Group in a statement said its board of directors will discuss the FCA’s bid. According to FCA, the merged company may sell 8.7 million vehicles annually and can be a leader in several vehicle grades such as electric vehicles.

“On a simple aggregated basis of 2018 results, the combined company’s annual revenues would be nearly 170 billion ($190.3 billion) with operating profit of more than 10 billion ($11.2 billion) and net profit of more than 8 billion ($8.9 billion),” it added.

The company further said that the combined business could save 5 billion ($5.6 billion) annually. Established in 1898, Renault Group, sold 3.9 million vehicles in 134 countries in 2018. The group owns Dacia, Renault Samsung Motors, Alpine and LADA brands.

FCA Group, which holds brands like Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Fiat Professional, Jeep, Lancia, Ram and Maserati also sells vehicles in over 135 countries globally. Italian Fiat Group and American Chrysler Group had merged, earlier in 2014 to form the FCA Group.

June 2019

26

More than 159,000 vehicles registered in first quarter The number of vehicles registered in Turkey reached 159,219 in the first three months of this year, the country’s statistics authority said.

The first quarter figure was down 42.1 percent from the same period last year, the Turkish Statistical Institute (TurkStat) announced.

The total number of road motor vehicles registered was around 23 million by the end of March.

Automobiles accounted for the bulk of new registrations - 60 percent (95,583) - a drop of 42.4 percent year-on-year

between January and March.

In March, the number of registered motor vehicles also slipped 37.9 percent compared to the same month last year, to 58,7909, TurkStat added.

The breakdown of model brands for new registered cars in the month is as follows: Renault, 16.1 percent; Fiat, 12.3 percent; Volkswagen, 11 percent; Hyundai, 6.5 percent; Honda and Toyota, 6.2 percent apiece; Opel, 5.3 percent; Peugeot, 4.3 percent; Dacia, 4 percent; Mercedes-Benz, 3.7 percent; and other brands accounted for 24.5 percent.

Automotive firm to invest $225M by 2020 for facelift One of the leading automotive companies in Turkey, Tofaş, a joint venture of Turkey’s Koç Holding and Italy’s Fiat Chrysler, has decided to start the facelift investment of the Egea/Tipo car family produced at the Tofaş’s plant located in the northwestern province of Bursa.

In a statement to the Public Disclosure Platform (KAP), Tofaş said it is foreseen to invest approximately $225 million by the end of 2020.

“With the material disclosures dated 10/25/2013 and 11/6/2014, the duration of the publicly disclosed project has been extended until the end of 2024,” the company said.

Within the scope of the first investment plan, the statement read, 1.3 million units of production targeted in the 2015-2023 period have been realized as approximately 530,000 units up to now and with the contribution of the new investment, a total of 1.45 million pieces of production, 70 percent of which is for export markets, is targeted during the project period of 2015-2024.

“In this context, it is foreseen to invest

June 2019

28

approximately $225 million by the end of 2020 and it is planned to start production of new vehicles in the last quarter of 2020,” Tofaş said.

In a statement, Tofaş CEO Cengiz Eroldu said the Fiat Egea has been the most preferable automobile in Turkey for the last three years, indicating that Fiat Egea, which was chosen “Best-Buy Car Of The Year In Europe” at AutoBest 2016, is also maintaining its market success in the Europe, Middle East and Africa region.

“The Egea model will continue providing value added to our country’s economy with the export volume it produces,” Eroldu said.

In 2015 Tofaş introduced a sedan body vehicle as the first member of the Egea family, the company’s new passenger car project. The model also went on sale in other countries’ markets as of December of the same year. With the completion of project-related investments, hatchback and station wagon versions of the Egea family also went on sale in 2016. Costing about $1 billion, the project to develop these

models represents one of the biggest product investments ever undertaken in the history of the Turkish automotive industry.

The sedan member of the Fiat Egea family sold 34,000 units in 2018 and holds the title of being “Turkey’s Best-Selling Automobile” for the last three years. Founded in 1968, Tofaş is said to be the only company in Turkey that manufactures both passenger cars and light commercial vehicles.

With an annual production capacity of 450,000 vehicles and with nearly 9,000 employees, Tofaş is Turkey’s fourthbiggest industrial enterprise.

Having had an export ratio of 80 percent in 2018, the company is carrying exports to around 80 countries. It exported 243,832 units last year, while its total production stood at 301,750 units. One of the important strategic production facilities of Fiat Chrysler Automobiles around the world, Tofaş is also one of the biggest research and development (R&D) centers in Europe.

Turkey reduces tariffs on some US imports to reciprocate

Turkey has lowered tariffs on some U.S.

August amid a diplomatic row between

imports in response to a similar United

the NATO allies. Turkey retaliated by

States move to halve tariffs on Turkish

doubling tariffs on U.S. cars, alcohol and

steel imports, the official gazette showed.

tobacco imports.

The United States had doubled tariffs on

“Reciprocally we decided to reduce by

Turkish steel and aluminum imports last

half the additional duties levied on 22

Banker:Turkey to overcome difficulties Turkey can overcome difficulties through its dynamic population, Adnan Bali, the CEO of private lender İşbank, said.

Turkey generated 7 million new jobs in the last 10 years, a figure more than the total population of several EU countries, but could not decrease unemployment, he said.

Noting that 800,000 people joined the labor force every year in Turkey, Bali underlined: "We have to produce 800,000 new jobs every year to keep unemployment stable."

"I believed that Turkey will overcome difficulties with its dynamic population structure," he stressed.

In order to accelerate development, he said, Turkey should raise production and exports. Turkey should also increase domestic savings and use foreign sources mindfully, Bali noted.

June 2019

30

products originating in the U.S.,” Trade Minister Ruhsar Pekcan wrote on Twitter.

“With this decision duties levied on the US originating aforementioned products will be reduced from $521.2 million to $260.6 million,” she added.

Before the decision, tariffs on U.S. whiskey stood at 140%, while the rate is at 120% for passenger cars, 50% for PVC and 60% for cosmetic products.

The White House decision last week to halve those tariffs was a positive development between Ankara and Washington, but the U.S. administration also terminated Turkey’s eligibility for the Generalized System of Preferences (GTS) programme, in a move Turkeysaid contradicted trade goals.

Pekcan said Turkey would continue working to boost trade with the United States to $75 billion.

Capacity usage improves in May The capacity utilization rate (CUR) in Turkey’s manufacturing industry improved on a monthly basis in May, data from the Central Bank showed.

The figure reached 76.3 percent this month, up 1.3 percentage points from April, according to the bank survey.

Among the six main industrial groups, the highest capacity usage was seen in intermediate goods with 76.3 percent while the lowest CUR was 73.4 percent for durable consumer goods.

Of more than 20 sectors, apparel manufacturers posted the highest CUR with 83.36 percent while May’s lowest capacity usage was observed among manufacturers of leather and related products, with 61.96 percent.

The bank also reported that the business confidence index declined by 6.3 percent on a monthly basis to touch 98.9 in May. That followed the 3.3

percent, 5 percent and 4.5 percent increases recorded in April, March and February.

The 100-point level on the index separates optimism from pessimism.

Only two of the business sentiment survey’s eight main subindices rose in May monthon-month, data showed.

On a related note, the Turkish Statistics Institute, TÜİK, reported that confidence in the country’s construction, services and retail trade industries declined on a monthly basis this month.

The construction sector confidence index dropped the most in the month with a 7.7 percent month-on-month decrease to 49.8 points.

The seasonally-adjusted confidence index for services was down 4.4 percent in May to 79.4 while confidence in retail trade fell 0.7 percent to 89.9.

Turkish drivers prefer electric vehicles above world average As recent developments have raised consumers’ belief in the future of electric vehicles, studies suggest that Turkish consumers’ willingness to purchase electric vehicles maintains a level above the world average. Developments in the field of electric vehicles are moving very rapidly. Studies show that battery prices are rapidly declining, while the ranges are increasing, plus fast charging stations are becoming incrementally widespread. According to information compiled from the TEB Cetelem Observatory 2019 report, electrical vehicles offer some solutions in environmental, economic, industrial and social terms thanks to their specific technical features. However, in addition to some possible obstacles in the development process, ongoing technical and organizational issues are also worth noting. When these obstacles are overcome, drivers are expected to fully benefit from the power and convenience of this innovation. The results of the report indicate that significant progress has been made on issues related to the infrastructure and legal regulations of electric vehicles in the period between the observatory survey conducted in 2012 and the study conducted in 2019 on electric vehicles. Consumers’ perceptions and requests have also changed during this period. Through the promotional activities carried out in this period and the first models

seen on the roads in the meantime, people have gotten used to this new product more and more. In the survey conducted in 2012, the lack of confidence in the technology of the product was the third reason for not buying this product, while this item ranked sixth in this year’s survey, proving that people have adopted this product. While the limited range of electric vehicles stands out as the main weakness, it is seen that providing customers’ acceptance of this factor is an obstacle that cannot be ignored. Moreover, while the purchase price and range, which drivers consider as a critical criterion for electric vehicles, has not shown much improvement in recent years, this element is still considered to be one of the biggest obstacles to people’s adoption of electric vehicles. However, positive developments have been recorded in the amount of savings in usage expenses.

Consumers’ perceptions of electric vehicles are likely to be significantly improved due to the increased attractiveness of electric vehicles.

The rate of people ready to pay more for an electric vehicle in Europe increased by 7 points compared to 2012. Meanwhile, a survey of 10,600 people between the ages of 18 and 65 from 16 countries, including Turkey, outlined the opinions of consumers about electric vehicles. According to the report, 25 percent of the vehicles sold in the world are expected to be

electric in 2030. This figure is expected to rise to 36 percent in China, where the purchase is encouraged, and up to 39 in Norway. According to statements by Turkish drivers participating in the survey, 29 percent of the vehicles to be sold in Turkey will be electric. Given the Turkish consumers’ perception of electric vehicles, the reason for not buying is the vehicles’ high price.

Short range despite long battery charge time is also expanding the distance between Turkish consumers and electric vehicles. Another factor keeping Turkish drivers away from electric vehicles is their range of 83 kilometers per day, which is 32 kilometers above the world average. In spite of the negative data, the rate of Turkish drivers, who said they could buy an electric car in the next five years, was 60 percent, which was 17 percentage points above the world average of 43 percent. Turkey’s first indigenous automobile to be manufactured by the Automobile Joint Venture Group (TOGG) is expected to enter the market in 2022 with an electric SUV in the C segment.

The fact that batteries will be cheaper is shown as the first reason for electric vehicles to become widespread as of 2030. A cost of $1,000 for one kilowatt-hour in 2010 is now down by 5 percent. In the future, this cost is expected to fall below $150

Firms ready to place orders for domestic car

Turkey’s first indigenous car project has already started to attract the interest of car rental companies. Zeplin Car, one of the major players in this field with a fleet of 18,200 vehicles, has announced that it is ready to place an order for 2,000 vehicles.

Works on the domestic car, which will hit the roads in 2022, continue at full speed. The Industry and Technology Ministry is said to have been enjoying an influx of orders placed by individuals and companies.

In November 2017, the Turkish public saw the launch of a groundbreaking initiative to manufacture Turkey’s first domestic automobile. The project has brought together the country’s largest manufacturers and companies in a consortium that includes Kıraça,

June 2019

32

Anadolu Group, Turkcell, Zorlu and BMC. During the announcement, President Recep Tayyip Erdoğan said he would buy the first car. According to reports, over 30,000 orders have so far been placed by various individuals and companies.

Zeplin Car Chairman Hakan Sevim said the daily car rental industry has brought an innovative solution for companies and individuals. “With the spread of electric cars in particular, the industry will grow even further.

We want to fill this opportunity with domestic electric vehicles. For this reason, we have placed an order for 2,000 vehicles. However, it is also important that the vehicle has a range of at least 400 kilometers.”

Pointing out that they deliver some 3,000 vehicles to consumers on a daily basis, Sevim said the economy of “sharing” is on the rise and that this market will grow even further with the increase of electric cars.

“Now, without the need to buy, everyone can get the vehicle they want at any time. Turkey’s domestic automobile project is therefore of

great importance. An electric car with a range of 400 kilometers will ensure significant savings for both companies and individuals. We will buy 2,000 vehicles once the domestic automobile is ready,” he added.

He added that they have started making future plans for daily car rentals in line with the electric car infrastructure. “In the future, people will go to electric car parks located within walking distance and instead of buying cars they will take the charged cars and go wherever they want. Therefore, we attach great importance to the domestic electric car project,” he said.

Sevim said some 9,000 companies are registered with Zeplin Car. “We have developed the corporate membership system in Turkey for the first time. Under this project, we open current accounts for companies and provide cars to their staff in 81 provinces of Turkey. The employees or the managers of the company with corporate membership can take the car as soon as they get off the plane in any cities they want, in line with the corporate agreement.

Turkey’s bus, minibus exports record nearly 19 pct rise in Q1 Bus-minibus-midibus exports, one of the subproduct groups of the automotive sector, rose by 18.91 percent in the first quarter of 2019.

According to the Automotive Industry Exporters’ Association, the Turkish automotive sector exported buses, minibuses, and midibuses to 110 countries in 2018, amounting to $1.8 billion in exports with a 12.57 percent increase year-on-year.

In the first quarter of 2019, this automotive group saw an 18.91 percent increase in exports over the same period of the previous year, rising from $420.8 million achieved in the first quarter of 2018 to $500.4 million in the same period of this year.

If the sector’s export growth trend continues as in the first quarter, the year-end export figure is expected to exceed $2 billion.

In the first quarter of the year buses, minibuses and midibuses were sold to 72 countries, with Romania taking the lead in terms of quantity.

Exports to Romania, which overtook Germany in this product group, surged 13.5-fold over the same

June 2019

36

period of the previous year from $5.58 million to $80.65 million. This figure amounted to $75 million of the export increase Turkey achieved in this product group in the first quarter.

Exports to Germany, which came second in exports this quarter fell by 19.73 percent to $69.4 million.

Turkey’s automotive exports to France, on the other hand, increased by 37 percent from $38.5 million to $52.9 compared to the same period of the previous year.

Meanwhile, exports to Italy, Poland, the U.K., Spain, Bulgaria, Croatia, Belgium, Hungary, Israel, Norway and Greece surpassed $10 million each in the January-March period.

Among these countries, Hungary saw a 7.5-fold increase in exports from $1.5 million to $12.6 million compared to the previous year.

Exports to Israel, which is among the leading countries in the export hike, rose from $2.2 million to $11 million, while exports to Greece climbed from $3 million to $10.5 million.

hdK ^W Z W Zd^

www.ge-pas.com

info@ge-pas.com

İSTANBUL OTOMOTİV SAN. TİC. LTD. ŞTİ.

Başvekil Cad. İsmail Sokak No: 9/C Şehremini/İSTANBUL/TÜRKİYE

ǣ ͲͲ ͻͲ ʹͳʹ ͷͺ͸ ͹ͷ ͵ͺ – ͵ͻ ǣ ͲͲ ͻͲ ʹͳʹ ͷͺ͸ ͹ͷ ͵͹

Turkey becomes new regional management center of Nissan Japanese automotive giant, Nissan has made its Turkey country office the management center for eight North African countries and the Commonwealth of Independent States (CIS), the company confirmed in a statement.

The decision will expand the sphere of responsibility for Sinan Özkök, Nissan Turkey’s managing director. He has now been appointed as the Managing Director for North Africa and CIS countries.

As of April 1, Özkök will handle Nissan operations in Morocco, Tunisia, Sudan, Azerbaijan, Armenia, Georgia, Uzbekistan and Turkmenistan.

According to the statement, the company’s activities in these countries were previously managed within the

June 2019

38

Middle East region.

Nissan Turkey, which started to operate under the global umbrella of the brand in 2015, is continuously increasing its market share, it has retained its leading position in the SUV market with a 19 percent share. Nissan Turkey has also set an example to other countries with its innovative practices.

Following the decision, Özkök said: “North Africa and the Commonwealth of Independent States are high potential markets for our brand. We are happy to contribute to the development of our brand by moving our knowledge and experience to a vast region, spanning from Casablanca to Tashkent. In this period where we are experiencing shrinkage in the domestic market, this decision will be a source of motivation

for our team working in Turkey and produce new excitement.”

Having started his career in the automotive industry in 1993, Özkök worked on logistics and product planning. Since 2001, he worked on strategic planning in Renault France and served as Paris regional manager.

After returning to Turkey in 2007, Özkök served in many high-level positions such as dealer development, branch management and sales and network directorship.

He was appointed Nissan Turkey Managing Director in October 2015 and managed to make the brand the leader in SUV segments and one of the top 10 automotive brands in the country.

EU commercial vehicle market expands 5.8% in Jan-April ISTANBUL-The EU market for commercial vehicles posted an annual growth of 5.8% during the first four months of 2019, the European Automobile Manufacturers’ Association (ACEA) reported.

The number of new commercial vehicle registrations amounted to 871,100 in the January-April period, according to a ACEA data.

Among key markets, Germany (12.1%), the U.K. (8.3%), France (6.5%), Spain

(3.8%) and Italy (3.4%) recorded an increase in demand for commercial vehicles.

Demand for vans -- light commercial vehicles -- rose by 5.9% to surpass 721,000 new registrations in the bloc during the four month period.

On the heavy commercial vehicles side, EU demand grew by 4.9% to over 111,000 new trucks during the same period.

More than 136,500 new medium/

heavy commercial vehicles were also registered in the EU, marking 6.1% increase year-on-year the JanuaryApril period.

“Four months into the year, demand for new buses and coaches showed a slight decrease (-0.9%),” the ACEA added.

Last year, the number of new commercial vehicle registrations amounted to 2.5 million in the 28-member bloc.

Mergers, acquisitions in Turkish automotive industry to increase

Mergers and acquisitions in the Turkish automotive industry, especially in terms of supplier companies, are expected to increase in the coming years, according to a report by international audit and tax advisory company KPMG. The report elaborated on the developments experienced in the Turkish automotive industry over recent years and included expectations for 2019.

Examining the acquisitions and mergers that have taken place in the Turkish automotive industry since 2015, the report highlighted that the supply industry will be the center of attention for foreign investors throughout the year.

KPMG Turkey Advisory Head Hande Şenova said the automotive industry, which has been through a tough year due to high exchange rates, high

June 2019

40

borrowing costs and high input costs, offers significant opportunities for investors.

“Companies with high export rates, relatively low exchange rate risks and that can protect their profitability are on the radar of strategic and financial investors. In addition, we think that important opportunities will develop in the coming period for investors who follow financially troubled companies that could not borrow from the market and have a need for financing,” she said.

According to the report, the majority of the 23 mergers and acquisitions transactions seen in the automotive sector in Turkey between 2015 and 2018 took place in the supply industry.

At the same time, it was observed that foreign investors entering the Turkish market are targeting to reach leading manufacturers that strengthen their position in Turkish and European markets.

Recently, the automotive sector, which has been going through a comprehensive technological transformation, has become the center of research and development (R&D) activities with the entrance of technology companies to the automotive sector, according to the report. The report also stated that companies that want to keep up with the change in the sector often try to establish partnerships with technology companies.

The sector hit an all-time high in 2018, raising its exports by 11 percent to $31.6 billion. It took the lead for the

13th time in a row in annual exports.

It constituted 19 percent of the total exports and 6 percent of total employment.

The domestic automobile market contracted last year in Turkey, but this slowdown did not stop the country’s strong sales performance compared to European nations. Turkey overtook 23 countries and ranked eighth in Europe in terms of automobile sales in the continent, according to the “2018 European Automotive Market Evaluation” report prepared by the Automotive Distributors Association (ODD) and based on the data of the European Automobile Manufacturers Association (ACEA).

With a total of 486,321 automobiles sold, Turkey outperformed the Netherlands, Sweden and Austria in the list of Europe’s most automobile sales last year. According to December data, Turkey ranked sixth, selling 60,843 automobiles, following Germany, France, the U.K., Italy and Spain.

When foreign capital investments made in the Turkish automotive industry are examined, the report said the vast majority of them on unit base came from the U.S., European countries, Japan and India.

In the field of tractors and agricultural machinery, India-based Mahindra’s investments come to the fore. The report also projects that due to the size of the domestic market and tax incentives for products produced within Turkey, India’s investments in the country will continue in the upcoming period.

Turkey exports automotive goods to 39 countries Turkey’s automotive industry, which achieved an all-time high export figure in 2018, saw the number of countries where it sells goods worth more than $100 million reach 39.

The long-standing leader of Turkish exports, the automotive industry reached $31.6 billion in exports last year, marking an 11 percent rise compared to the previous year, according to information compiled from the Turkish Exporters Assembly (TİM) and the Uludağ Automotive Industry Exporters Association (EİB).

The industry exported to a total of 207 countries, free zones and autonomous regions, ranking first among other industries for 13 consecutive years.

The number of countries where it sends products worth $1 billion or more went up to nine last year from seven in the previous year. The number of countries to where the industry’s exports crossed the $100-million threshold reached 39 from 34 from the previous year, with nine of them exceeding the billion-dollar threshold and 30 of them exceeding $100 million.

The Netherlands and Romania were below the billion-dollar market, but

June 2019

42

well above the $100 million threshold.

Reaching $905 million with a 19 percent rise, the Netherlands ranked 10th among the countries to which the Turkish automotive industry carried out largest exports, followed by Romania with $893 million.

Exports to Croatia, Slovakia, Serbia, Taiwan and Chile stood over $100 million. The industry’s exports to Morocco stood at $561 million, Israel at $523 million, Sweden at $488 million, Russia at $453 million, Hungary at $416 million, Portugal at $364 million, Austria at $307 million and Egypt at $304 million.

Croatia, Slovakia, Serbia, Taiwan and Chile joined the countries that exceeded the $100 million export threshold last year.

Exports to Croatia soared 50 percent from $77 million in 2017 to $115.4 million in 2018, Slovakia to $109 million from $71.6 million with a 52 percent rise, Serbia to $105 million from $82.4 million with a 27 percent rise, Taiwan to $104.6 million from $61.6 million with a 70 percent rise and Chile to $100.6 million from $63 million with a 60 percent rise.

In addition to these countries, Turkey exported goods worth over $100 million to Bulgaria, Algeria, Czech Republic, Denmark, Saudi Arabia, Norway, Mexico, South Africa, Iraq, Iran, Ireland, Switzerland, Canada, Ukraine and Greece. Exports to Brazil increased by 13 percent to $99,165 million. If the rise of exports to the country continues, it will soon be joining the group of countries receiving over $100 million worth of Turkish automotive industry’s goods.

On the other hand, eight EU members and the U.S. came to the fore as export markets that exceeded $1 billion in 2018.

Exports to Germany reached $4.8 billion last year, followed by Italy, with $3.3 billion, France with $3.2 billion, U.K. with $2.9 billion, Spain with $1.8 billion, and Belgium with $1.4 billion.

Sales to Slovenia and Poland exceeded the $1-billion threshold for the first time last year, reaching $1.2 billion and $1.1 billion, respectively. Exports to the U.S. stood at $1.1 billion, despite a decline from the previous year

Turkey: Ford’s only remaining heavy commercial vehicle production hub Ford Otosan has become the only truck manufacturing and development center of the American automotive firm Ford Motor Company. Ford closed its factory in Brazil and put an end to the production of heavy commercial vehicles in South America, making Turkey a global production hub in this regard.

Ford Otosan, which once again brought the American automotive giant in the truck market in 2010 with its new “Ford Trucks” brand and new global products developed in the process, is now gearing up to manufacture for the whole world.

General Manager Haydar Yenigün said Ford’s exit from the South American market will not adversely affect them. “On the contrary, the axis of heavy commercial vehicles is shifting to Europe, Russia and the Middle East and North Africa region. It was Ford Otosan’s doing and this will give us a great advantage in this scope,” he added.

Yenigün further noted that as Ford’s global engineering center for heavy commercial vehicles and relevant diesel engine and engine systems, Ford Trucks produces advanced technologies to deliver products

that compete in all potential export markets; not only in Turkey, but also in Europe and North America.

“We carry on our path with our outstanding success in research and development and production and our rapidly growing structure that is now spreading to 36 countries,” he continued. “We have the infrastructure, competence and experience to continue our effective growth in the international markets in the coming period as the company’s only heavy commercial vehicle developer and manufacturer on the global level.”

The groundwork for Ford Trucks’ global network was laid in 2010 following the Global Cargo agreement inked with Ford Motor Company, one of the main shareholders of Ford Otosan. In line with the Global Cargo Growth Strategy, Ford Otosan started to build its global network by assigning truck sales distributors in 60 countries on three continents, mainly in the Middle East, Africa, Russia, Turkic Republics, Central and Eastern European markets. Ford Trucks, which currently operates in 36 countries and aims to reach 51 by the end of 2020, decided to put its plan, including Western European

markets, into effect earlier following the international successes achieved by F-MAX, its new tow truck manufactured in Eskişehir.

Yenigün made further evaluations about the Western European expansion of Ford Trucks, which is a very important venture for the future of Ford Otosan, highlighting that they are at the forefront of their investments which they have made since 2010.

“We continue our growth in international markets with the opening of our dealers in Central and Eastern Europe following the Middle East, Africa, Russia and Turkic Republics,” he said. “At a time when the heavy commercial market is shifting to Russia and the Middle East and North Africa region, we have displayed a strong stance in these markets, enriching our experience in different markets and becoming more visible on the industry’s radar as an international brand.”

“We have received nearly 70 dealership requests from Europe after the success of our tow tractor, which was fully developed by Turkish engineers and manufactured in our factory,” Yenigün noted.

12.Uluslararası Günes Enerjisi ve Teknolojileri Fuarı

04-06 Nisan 2019

.

Günes. Enerjisi‘nin Devleri Solarex Istanbul‘da Bulusuyor .

Ziyaret Saatleri 10:00-19:00

0212 604 50 50 www.solarexistanbul.com info@solarexistanbul.com

öy İstanbul Fuar Merkezi / Yeşilk 9-10-11-12. Hall

Ücretsiz Davetiye için/Free Invitation

www.solarexistanbul.com

BU FUAR 5174 SAYILI KANUN GEREĞİNCE TOBB (TÜRKİYE ODALAR VE BORSALAR BİRLİĞİ) DENETİMİNDE DÜZENLENMEKTEDİR.

Current account gap drops at its lowest since 2009

Picking up from where it left off at the end of last year, Turkey has continued to see a gradual decline in its current account deficit.

With measures taken by the government and the stabilization process in the economy, the country’s 12-month rolling current account deficit has dropped to $12.83 billion in March, its lowest level since the end of 2009.

The monthly current account deficit in March also saw its lowest level since October 2015 and dropped to $589 million, decreasing by $4.14 billion year-on-year, according to the Central Bank of the Republic of Turkey (CBRT) report released. The figure was nearly $4.73 billion in the same month of 2018.

A group of 17 economists, surveyed

by Anadolu Agency, estimated a $900-million deficit in March, while, on the other hand, the median of 12 forecast in a Bloomberg survey was for a gap of $1 billion.

Economists expect the country’s current account deficit to maintain its trend and continue to narrow down in April as well and drop below $10 billion.

Haluk Bürümcekçi, said recovery in the current account balance will continue until end of the first half of 2019.

June 2019

46

“Lower foreign trade deficit versus the last year and posting surplus of services item were main factors for recovering of the current account deficit,” he noted.

Bürümcekçi said that he expected the country’s year-end current account deficit will be $10 billion.

Banu Kıvci Tokalı, the chief economist of HalkInvest, a subsidiary of state lender HalkBank, stressed the current account deficit could drop to $8-10 billion in April, of which data will be released in June.

She underlined that the decline in the deficit would continue rapidly during the first half of the current year due to policies to support exports, the base effect and moderate energy prices.

Tokali forecast that the country would close the year with a $19 billion current account deficit. “The current-accountdeficit-to-GDP ratio, which was 5.6 percent in 2017 and 3.6 percent in 2018, could fall to 2.6 percent by the end of 2019,” she added.

Orkun Gödek, DenizBank Investment Group strategist, highlighted that the current account deficit of $589 million was under the expectations of $1 billion in March.

“In the first quarter, the current

account deficit was $1.9 billion, while it was $16.2 billion in the same quarter last year,” he said.

In an interview , Treasury and Finance Minister Berat Albayrak said the current account deficit, which nearly hit $60 billion last year, will nearly be zeroed by the end of May. Albayrak said the current account balance and surplus were in a period of rapid recovery and that there would be no external financing requirement in the next period.

The central bank said in its report that the development in the current account is mainly attributable to a $3.7-billion decrease in the goods deficit recording net outflow of $916 million.

The CBRT also said Turkey’s current account deficit – excluding gold and energy – posted a $3.5-billion surplus in March 2019, versus a $573-million deficit in the same month last year.

“Services item realized net inflow of $1.3 billion increasing by $113 million compared to March 2018,” the bank said. It added that travel item under services recorded a net inflow of $1.04 billion, rising by $55 million compared with March 2018.

Previously, current account deficit fell 88.4 percent in January to $813 million deficit, indicating a decrease of $6.22 million compared to January of the previous year, bringing the 12-month rolling deficit to $21.59 billion, the lowest level of 105 months.

In February, it fell to $718 million, down by $3.78 billion from the same month last year. The 12-month rolling deficit reached $17 billion in the month.

Economists forecast that the 2019-end deficit will be $13.8 billion.

Last year, the current account balance posted a deficit of around $27.6 billion, improving from a nearly $47.5 billion deficit in 2017. It realized at around 3.5 percent of the country’s gross domestic product. The figure was the lowest since 2009, while Turkey’s highest annual current account deficit over the last decade was seen in 2011, with $74.4 billion.

The country’s new economic program, announced in September 2018, targets a current-account-deficit-to-GDP ratio of 3.3 percent this year, 2.7 percent in 2020 and 2.6 percent in 2021.

10. Aftermarket Conference held in İstanbul Aftermarket sales around the world will reach 1.3 trillion dollars by 2030 The 10th Aftermarket Conference, the automotive industry’s most efficient organization for aftermarket products and services, was held in İstanbul. The participants discussed the current practices, opportunities, problems in the automotive industry, within a global and national perspective.

The Aftermarket Conference was organized jointly by the TAYSAD, Automotive Suppliers Association of Turkey, OIB, the Automotive Industry Exporters’ Association, and OSS, the Turkish Automotive Aftermarket Association, for the 10th time this year.

During 10th Aftermarket Conference, where the leading stakeholders of the sector were present as participants and speakers, main industrial strategies were also discussed.

Alper Kanca, Chairman of TAYSAD, Automotive Suppliers Association of Turkey said that TAYSAD has more than 430 members and has made significant contributions to the economy with its domestic turnover of 25 billion dollars and 11 billion dollars exports and 200 thousand employment. He also pointed out that aftermarket volume in the world will reach 1.3 trillion dollars by 2030, until 2030. China is expected to be June 2019

48

at the top with 8 percent growth in this sector.

“Our country, which has a great potential of maintenance, repair and spare parts, should keep up with the future of the automotive industry with its strong structure in the field of supply industry.”

“In order to adapt to the changing competitive environment, TAYSAD members closely follow technological developments and continue to invest in innovation and expansion. With the help of their advanced manufacturing capabilities, they produce prototypes, use testing facilities, perform CNCbased and conventional machining, engage in product development, pursue collective R&D activities with foreign and domestic companies and use CADCAM applications during the design process.” Alper Kanca, Chairman of TAYSAD noted.

Güven Özyurt, OIB Vice Chairman said the Turkish automotive industry has become an export champion for 13 years. He added, “Our sector reached an export figure of 31.6 billion dollars in 2018 with an increase of 11 percent compared to the previous year. We set the export target for 2019 as 32 billion dollars. Today, the automotive

industry is one of the pioneers of digital transformation. It is clear that OEMs will be the driving force of this transformation in the industry. In order to maintain the competitiveness of our supplier companies, we put emphasis on compliance with Industry 4.0.”

Rıza Şahin, OSS, Chairman of Automotive Aftermarket Association emphasized the importance of digitalization and said, “One of the topics that will determine the future of our sector is the digital transformation.

According to research, software, electronics and data-oriented services in the automotive sector will become one-fourth of Europe’s market until 2025.”

Moreover, LMC Automotive Director Jonathan Poskitt shared his expectations of the European market by focusing on the current figures of the European automotive industry. He said, “The demand for SUV models in Europe is growing year by year. We expect Sedan, HB and StationWagon to outperform their market share. In addition, the electric conversion of SUV models continues rapidly. In 2015, we expect only 1 percent of electric SUV models to rise to 35 percent in 2025.”

Investment council urges for new reform vision to draw more FDI The Coordination Council for the Improvement of Investment Environment (YOİKK) convened to lay out a new revisionist road map for reform that will further strengthen Turkey’s investment environment. In his opening remarks at the meeting held in the Presidential Complex, Vice President Fuat Oktay drew attention to the reforms implemented in the last 17 years. “Turkey has been branded as the most reformist country among the members of the Organization for Economic Cooperation and Development (OECD) in eliminating the hurdles limiting foreign direct investment (FDI).

Thanks to these reforms, Turkey has attracted $210 billion in FDI in the last 17 years. YOİKK, formed with the inclusion and contribution of many Turkish associations, bodies and nongovernmental organizations (NGOs) operating in the field of investment, has been conducting activities since its foundation, Oktay said.

YOİKK, formed with the inclusion and contribution of many Turkish associations, bodies and nongovernmental organizations (NGOs) operating in the field of investments, has been conducting activities since its foundation, Oktay said.

The vice president stressed Turkey’s determination to conduct sweeping reforms and noted that the meeting will specify the activities to be held in the upcoming period. The council will seek to further improve the investment environment, he added.

June 2019

52

The YOİKK will determine flexible and sustainable policies based on national and international circumstances.

YOİKK has made significant contributions to the improvement of the investment climate, according to Oktay, who also noted that all these reform works were carried out by taking into consideration the comprehensive consultations and demands from the sections represented by the participants.

The vice president emphasized that thanks to the results of the dedicated work run by relevant ministries and NGOs and coordinated by the board in the recent period, Turkey ranked 43rd in the World Bank’s Ease of Doing Business list for 2019, climbing 17 places compared to previous year, noting that 2.4 percent out of the 5.7 percent average economic growth in the last 17 years came from investments.

According to the report published by the World Bank, Turkey received 74.33 points out of 100, improving 4.34 points compared to previous year. New Zealand, which topped the list, scored 86.59 points.

According to the “Doing Business 2019 – Training for Reforms” report, the previous year’s reforms accelerated Turkey’s efforts to improve the business climate for domestic small and medium-sized enterprises (SMEs).

Oktay further remarked that the continuation of the momentum in the investment environment depends on the sustainability and development of

works carried out by the institutions in the recent period.

He indicated that with the vision it will lay out, YOİKK will be a pioneer for the increase of foreign direct investments, both in the international and domestic arenas.

“In addition to being a platform for solving problems, YOİKK will act with a perspective that aims to produce an appropriate investment climate for attracting tomorrow’s technology and investments. We aim to make a ‘participatory and innovative’ spirit of cooperation prevail in our board studies, whose road map and operation with main lines we will be designating.

We plan to primarily include in the process the ‘solution oriented, welldefined and result-oriented’ reform proposals that our board members will offer to further develop the investment climate,” said Oktay.

The contribution and guidance of YOİKK will have important effects on the national development initiative, according to the vice president.

“As a result of the improvement in the investment environment, we expect the international investments that will head toward our country to produce added value, provide technology transfer to our country, and the employment figures and the current account balance to follow a more positive course. We should worker harder to attract foreign investment and remain competitive in this period of escalating global competition and financial tightening,” Oktay said.

Auto production about 490,000 in Jan-April ANKARA- A total of 489,429 vehicles rolled off Turkish automotive industry production lines in the first four months of this year, the Automotive Manufacturers Association (OSD) said.

The country’s auto production- including automobiles, commercial vehicles, and tractors- fell 13% year-onyear in the January-April period.

The association said automobile production in Turkey also fell 14% to reach at 322,281 during the same period.

From January to April, total auto sales market almost halved to 123,155 vehicles.

Turkey’s automotive exports went down 8% on a yearly basis to hit 126,026 in the first four months.

The sector earned $10.5 billion from automotive exports between January and April.

We Continue Our Employment Mobilization We will increase our employment rate by 35 percent Speaking at the opening of the 12. Labor Council program held in ATO Congresium, President Recep Tayyip Erdogan states employment calls carried out in February. Declaring that they provided employment for 250 from the beginning of 2019 up to now, Emin Ustun, Chairman of Emin Grup, said, “We will provide job for 500 till the end of the year in order to support the President of the Republic of Turkey. By increasing our number of employment by 35 percent, we will increase the number of our employees to 1852 in total. In the difficult period of our country, we will focus on investments that will prevent unemployment. Situated in Turkey’s four point we continue unabated our work with our 103 branches. In order to reach a wider audience, we will increase our number of branches to 129 by the end of the year. We will increase employment and support the country’s economy with the important investments we make.

Declaring that they have employed about 250 people with the call of employment made by our President in February, Emin Ustun, Chairman of Emin Grup, said, “We will double this number by the end of 2019. We will increase the number of our employees to 1852 by providing more employment for 500 people. At the same time in 2019, opening new branches in 16 points in Istanbul, Bingol, Siirt, Istanbul, Rize, Giresun, Yalova, Bursa, Karaman, Erzincan and Kirikkale, we will raise the number of our branches 129. One of the biggest reasons for unemployment is the halt of investments. At this point, we have big tasks. As Emin Grup, we will do all the works in order to add value to our country and we will continue our investments.”

June 2019

54

Bank to extend TL loans for non-SME firms to boost exports Türk Eximbank, which provides loans in local currency to small and medium-sized enterprises (SMEs) exporting in Turkish lira, will from now on grant loans to non-SME companies as well.

In a statement, Trade Minister Ruhsar Pekcan said significant efforts have been made in recent years to improve trade in local currencies.

She pointed out that the share of the Turkish lira in exports rose from 4.5 percent in the first two months of 2018 to 4.8 percent in the first two months of this year. Pekcan said Türk Eximbank has continued to provide TL loans to exporting SMEs with affirmative interest rates compared to market figures. She added that the bank channeled Turkish lira sources to SMEs in August 2017 and provided additional credit support of about TL 10 billion to SMEs, including TL 2.1 billion in 2017 and TL 7.7 billion in 2018, adding the said support will continue to increase in 2019.

The trade minister said that Türk Eximbank’s loan facility in Turkish lira was planned to be diversified and increased by taking into consideration the importance and growing potential of trade in local currency in the upcoming period. On providing loans in the local currency to nonSME companies, Pekcan said: “For this purpose, the current Turkish lira loan program for SMEs exporting in the local currency will continue.”

The loan will have a one-year maturity period and a six-month interest rate payment based on the Central Bank of the Republic of Turkey’s (CBRT) daily weighted average funding rate.

“We believe this opportunity will contribute to the development of trade in local currencies,” said Pekcan.

June 2019

56

Turkey and Russia cooperate on aircraft, armor parts Russia and Turkey are jointly working on aircraft and helicopters, and also components for armor, the press office of Russia’s state arms seller Rosoboronexport, part of the state hitech corporation Rostec, reported.

“We have a number of joint projects for developing promising aircraft and rotorcraft platforms, components for the armor and the after-sale maintenance of the armaments supplied,” the press office quoted Rosoboronexport CEO Alexander Mikheyev as saying.

Turkey is also showing interest in the newest Russian combat modules, air defense systems with different range capabilities and anti-tank weapons.

Despite rivals’ interference in bilateral relations, Russia and Turkey are coping with the difficulties that arise, the chief executive stressed.

“At present, we are discussing with our Turkish partners about the

implementation of some of the most important projects in the sphere of military and technical cooperation and in the civilian industry... We are undoubtedly ready for various formats of technological cooperation, including such science-intensive spheres as the aerospace industry, helicopterbuilding and the energy sector,” the Rosoboronexport press office quoted Rostec CEO Sergei Chemezov as saying.

The Rosoboronexport and Rostec chiefs announced this on the eve of the IDEF’19 defense industry exhibition to be held in Istanbul from April 30May 3. The exhibition will showcase equipment for land troops, the navy, the air force, security technologies, space technologies, onboard systems and also helicopters, ships, electronics, security systems, transportation and logistics equipment and systems.

Automotive exports total $2.6 billion in April The Uludağ Automotive Industry Exporters’ Association (OİB) announced that the Turkish automotive industry achieved the second highest April performance in its history.

According to an OİB written statement, Turkish automotive industry exports reached $2.6 billion with a 9.8 percent decline in April. Despite the fall, the industry achieved the second highest April performance in its history.

The automotive industry, which still ranks first in Turkey’s exports with a 17 percent share, reached an average of $2.6 billion in exports in the first four months of the year. Industry exports were $10.3 billion, a 6.8 percent fall in the January-April period.

As far as product groups, the export of vehicles, with the exception of buses, minibuses and midi-buses, declined in April, while exports to EU countries, which have a 76 percent share of Turkish automotive exports, dropped 13 percent.

Considering the April performance in terms of product groups, export of private cars, which have a 37 percent share, plummeted by 23 percent to $961 million.

Meanwhile, supply industry exports decreased by 3 percent to $926 million, the second-largest share of automotive exports.

Exports of motor vehicles for

June 2019

58

transportation of goods decreased 1 percent to $469 million, while exports of buses, minibuses and midi-buses increased 14 percent to $170 million.

Exports to France, the largest market in passenger cars, dropped 36 percent, followed by Italy at 41 percent, Spain at 34 percent, Germany at 33 percent, the U.K. at 17 percent, Belgium at 36 percent and Sweden by 22 percent.

On the other hand, exports to Israel rose 15 percent and to Slovenia and Hungary by 19 percent each. Exports of passenger cars, to the U.S. soared by 43.9 percent.

Meanwhile, exports to Germany, the largest market for the automotive supply industry, shrank by 11 percent and to France, the second-largest market, by 1 percent and to Romania, plunging by 23 percent.

Moreover, exports to the U.K., the U.S. and Algeria skyrocketed by 17 percent, 24 percent and 58 percent, respectively. Export of motor vehicles for transportation of goods to the U.K., Slovenia, and Spain went up by 32 percent, 72 percent and 30 percent, respectively, while exports to Italy fell by 41 percent, Belgium by 13 percent, the Netherlands by 18 percent, Germany by 26 percent and Sweden by 59 percent. In April, exports to Germany, the largest market for the Turkish automotive industry, stood at

$368 million, an 18 percent decline, and to France at $268 million, a 23 percent fall. Exports to Italy totalled $237 million with a 28 percent fall.While exports to Spain and the Netherlands, two important markets, declined by 24 percent each and to the Netherlands by 22 percent, exports to the U.K., Slovenia and the U.S. were up by 14 percent, 39 percent and 57 percent, respectively.

The reason for the fall in the German market was the 33 percent fall in automobile exports and 11 percent fall in supply industry exports. Also, the reason for the shrinkage in exports to France and Italy was the 36 percent and 41 percent fall, respectively, in passenger car exports.

Exports to EU countries, which are the largest market as far as country groups, dropped 13 percent to nearly $2 billion. Automotive exports to African countries surged by 30 percent and North American free trade zone countries by 14 percent.

Exports to the EU countries stood at $8 billion in the January-April period, while exports to North American free trade zone and Middle Eastern countries shrank by 19 percent and 4 percent, respectively.

Automotive exports to African countries increased by 10 percent and Far Eastern countries by 12 percent.

Share of imported cars declined to 61 pct The share of imported automobiles in the Turkish market has declined to 61 percent in the first three months of this year as the market share of locally produced models keeps growing.

Turkey imported more than 77.9 percent of its automobile in 2013.

That share dropped to 70 percent in 2017 and further declined to 63.3 percent last year.

According to the Automotive Distributors Association (ODD), the market share of imported automobiles in January-February fell to 61 percent, while the share of domestic cars increased to 39 percent. Thus, automobile imports have declined by 16.9 points since 2013.

While the automobile market shrank by 52 percent in the JanuaryFebruary period, imported car sales and domestic automobile sales fell by 55 percent and 45 percent, respectively. A total of 30,184 automobiles were sold during this period.

Also, the sales of light commercial

June 2019

60

vehicles dropped by 54 percent in the same period, in which the share of imports stood at 47 percent.

One of the most important reasons for the decline in the share of imports was the increased demand for automobiles produced in Turkey.

Currently, five automobile brands are producing eight models of automobiles in Turkey. Tofaş manufactures the Fiat Egea in Bursa, Oyak Renault produces the Megane sedan and Clio hatchbacks in Bursa, Toyota produces the C-HR and Corolla sedans in the industrial province of Sakarya, Hyundai Assan produces i10 and i20 and Honda produces Civic sedans in the country.

Another reason for the decrease in imports is the fact that many brands have not launched their 2019 car models due to the recession, changing the supply-demand balance in the market. The gap caused by imported cars in the market is currently compensated by domestic automobiles.

According to forecasts, a total of 350,000 automobiles, including

220,000 imported, will be sold in 2019. The share of imported automobiles is expected to be 62.8 percent by the end of the year.

Having run a foreign trade surplus in the past decade with the exception of the years of 2011 and 2015, the Turkish automotive industry broke a new record in 2018.

Because of the rise in domestic models, the foreign trade surplus soared to $13 billion in 2018 from $6.5 billion in 2017. A new foreign trade surplus record is expected in 2019.

Automotive equipment manufacturer Delphi Technologies has made Turkey a base of after-sale services and spare parts.

Reşat Dumanoğlu, the regional director for Turkey, the Caucasus, the Middle East and Africa at Delphi Technologies, stated that the company grew by 44 percent in 2018. “Thanks to our efforts, we have become the regional directorate of 67 countries in Turkey, the Caucasus, the Middle East and Africa,” he said.

Mercedes contributes to Aksaray’s economy by TL 1.7B German automotive firm Mercedes has carried out a socio-economic survey that measured the concrete contributions its truck factory in central Turkey’s Aksaray has made since its establishment in 1986.

Mercedes, operating in Turkey for over 52 years now, employed two independent research companies to carry out the survey.

The findings showed that the factory, built with a foreign direct investment of 495 million euros ($551.81), has produced an economic value of over TL 1.7 billion in the city with its production, employment, research and development (R&D) activities and exports over 33 years.

Some 2,000 people from the different

June 2019

62

demographic backgrounds, including local people, tradesmen, local authorities, employees and their families who joined the survey said that Mercedes-Benz Türk is a symbol of Aksaray, adding that the fact that the factory is located in the city is a source of pride for them.

Mercedes-Benz Türk CEO Süer Sülün expressed their pride regarding the company’s impact in transforming the region. “Over time, we have seen that Aksaray, one of the most beautiful examples of local development, has become one of the few MercedesBenz cities in the world. With our production, exports, R&D activities, employment we have produced, and investment activities, we provide added

value to both Aksaray and the national economy,” Sülün said.

He added that Mercedes-Benz Türk constitutes some 20 percent of Aksaray’s economy thanks to the indirect and stimulated impacts of the truck factory on its surroundings.

Aksaray’s total gross domestic product (GDP) in 2017 was TL 10.64 billion, according to Turkish Statistical Institute (TurkStat) data. “When we laid the foundations of the factory 33 years ago, we predicted that this investment would not be limited to providing employment alone, but the employment provided would have a direct impact on the quality of life. These figures prove that we have turned out to be right in our predictions,” he said

Bus, minibus exports record nearly 19 pct rise Bus-minibus-midibus exports, one of the subproduct groups of the automotive sector, rose by 18.91 percent in the first quarter of 2019.

According to the Automotive Industry Exporters’ Association, the Turkish automotive sector exported buses, minibuses, and midibuses to 110 countries in 2018, amounting to $1.8 billion in exports with a 12.57 percent increase year-on-year.

In the first quarter of 2019, this automotive group saw an 18.91 percent increase in exports over the same period of the previous year, rising from $420.8 million achieved in the first quarter of 2018 to $500.4 million in the same period of this year.

If the sector’s export growth trend

continues as in the first quarter, the year-end export figure is expected to exceed $2 billion.

In the first quarter of the year buses, minibuses and midibuses were sold to 72 countries, with Romania taking the lead in terms of quantity.

Exports to Romania, which overtook Germany in this product group, surged 13.5-fold over the same period of the previous year from $5.58 million to $80.65 million. This figure amounted to $75 million of the export increase Turkey achieved in this product group in the first quarter.

Exports to Germany, which came second in exports this quarter fell by 19.73 percent to $69.4 million. Turkey’s automotive exports to France, on the

other hand, increased by 37 percent from $38.5 million to $52.9 compared to the same period of the previous year.

Meanwhile, exports to Italy, Poland, the U.K., Spain, Bulgaria, Croatia, Belgium, Hungary, Israel, Norway and Greece surpassed $10 million each in the January-March period.

Among these countries, Hungary saw a 7.5-fold increase in exports from $1.5 million to $12.6 million compared to the previous year.

Exports to Israel, which is among the leading countries in the export hike, rose from $2.2 million to $11 million, while exports to Greece climbed from $3 million to $10.5 million.

Ford to close 3 factories in Russia over low demand U.S. carmaker Ford will close three of the four factories of its Russian joint venture after deciding to stop making passenger cars in a country where car sales have slumped in recent years, the company said.

Ford said in a statement that it has signed a preliminary agreement with its local partner Sollers on “a significant restructuring of its... joint venture in Russia, focusing exclusively on growing its commercial vehicle business moving forward.”

The joint venture “will discontinue its passenger vehicle portfolio in Russia to help deliver a more competitive and sustainably profitable business going forward,” Ford said.

Ford, based in the US state of Michigan, said that by the end of June this year it will close its vehicle assembly plants in the northwestern city of Saint Petersburg and the city of Naberezhnye Chelny in Tatarstan, central Russia.

It will also close an engine plant in Yelabuga in Tatarstan that opened in 2015.

Sollers will have a 51 percent stake in the restructured joint venture.

Currently, the factories produce seven models including the Ford Transit van.

Ford said that the “Russian passenger vehicle market has been under

June 2019

64

significant pressure in recent years, with recovery slower than expected and a shift to lower-priced passenger vehicle segments.”

The carmaker said that this led to “underutilization” of factories and “inadequate returns on invested capital,” although sales of the Ford Transit continue to grow, with a 15 percent share of the market segment.

Following a period of growth and massive investment by global

carmakers, Russia’s car market collapsed between 2013 and 2016, whiplashed by international sanctions over the Ukraine conflict and a crash in global oil prices.

New car sales, a key indicator of consumer confidence, fell by more than half during that period.

However, sales of new cars in Russia rose in 2018 for a second year running, but slowed in February this year.