Automotive Exports July 2020 by istmag

www.automotive-exports.com

July 2020

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

Editor Ayça Sarıoğlu ayca.sarioglu@img.com.tr

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

Advertising Managers Adem Saçın adem.sacin@img.com.tr Enes Karadayı enes.karadayi@img.com.tr Foreign Relations Manager Yusuf Okcu yusuf.okcu@img.com.tr

Dynamism prevails as usual Following a mandatory yet brief break due to the coronavirus outbreak, Turkish factories in western Kocaeli, Bursa and Sakarya provinces – leading industrial cities of the country, started operating, with new investments on the way thanks to increasing orders. The Turkish automotive industry, which is considered as one of the major players in the Turkish economy, started its production even faster than the pre-coronavirus period as of June 1 when the country lifted almost all of the measures as the spread of the virus was declared under control and a new phase of normalization has begun. As known, the Turkish auto parts industry has recorded a dynamic growth in line with the automotive industry. From simple components in the mid-1960s, the sector has ascended to produce high-tech components. 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 their presence in the country through joint-ventures. There has also been substantial locally-owned investments by spare parts manufacturers. The major effects are that: - Quality of production improved dramatically, especially through the establishment of quality management systems. - The industry has adapted to the EU regulations and has established an efficient and exemplary cooperation with public institutions in the transformation of the EU regulations to national regulations. - 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. Key factors which attract foreign capital inflows to Turkey mainly include the market size, consumer composition, friendly investment legislation and banking system together with other attractiveness arising from highly skilled human resources in production and management, the unsaturated domestic market with high potential, easy access to neighboring (regional) emerging markets, and low labor cost. We wish them lucrative trade for the business people operating in the automotive business.

Correspondent İsmail Çakır ismail.cakir@img.com.tr Finance Manager Cuma Karaman cuma.karaman@img.com.tr Accountant Yusuf Demirkazık yusuf.demirkazik@img.com.tr Digital Assets Manager Emre Yener emre.yener@img.com.tr Web Designer Amine Nur Yılmaz amine.yilmaz@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 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

Turkey’s domestic car to be a globally registered brand

fficials have been carrying out trademark applications meticulously abroad for Turkey’s homegrown fully electric car, following the vehicle’s introduction in Turkey in late December. Turkey’s Automobile Joint Venture Group (TOGG) has already applied for design registration to several countries, including Russia, the U.S., India, China, Japan, South Korea and some European countries. Along with the applications, the venture group has also applied to the Turkish Patent and Trademark Office (TürkPatent) to receive the industrial property rights of the domestic car, which is set to begin mass production in 2022. The patent applications to TürkPatent included those of the rights of the car’s “cruise control system” along with its “semi-replaceable battery, interchangeable battery system and mechanical connection structure.” The patent and registration authority has already approved applications made by TOGG under three different titles, while reports on other subjects are expected to be prepared by the authority soon. TürkPatent Chairman Habip Asan told that the industrial property rights provided by the institution provide national-level protection thus the venture company has to make applications abroad to preserve its rights in those countries as well. A product of Turkey’s 60-year dream, the domestic automobile was developed and designed by TOGG in just 18 months. TOGG aims to become Turkey’s first global brand and, therefore, works to introduce

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novelties and first-of-a-kind qualities in terms of technical features and equipment of the automobiles it will release. Asan said TOGG has been cautiously carrying out the works regarding both registrations and receiving the industrial property rights of the domestic car from the very beginning of the process. TOGG has also rented a 9,000 square meter area in Informatics Valley, an important project established in northwestern Turkey’s Kocaeli province as a national and international innovation center of the Industry and Technology Ministry. As an important transition corridor between Europe and Asia, Kocaeli is among the leading provinces contributing to the Turkish manufacturing industry’s production capacity. The consortium’s sports utility vehicle (SUV) in the C-segment will be the first fully

electric SUV in Europe. It will also surpass competitors with the longest wheelbase, largest internal volume and fastest pickup performance. The fully electric SUV will come in two different engine configurations: 200 horsepower and 400 horsepower. The 400 horsepower will go from 0 to 100 kph in 4.8 seconds. It will have a range of up to 500 kilometers, and its locally produced lithium-ion battery will charge to 80% in under 30 minutes. TOGG comprises of five of Turkey’s leading industrial groups that have joined forces to build the car. It will establish a factory in the northwestern province of Bursa, often dubbed the capital of Turkey’s automotive industry. The groundbreaking ceremony for the factory, to cover over 1 million square meters in Bursa’s Gemlik district, is expected to be held in the first half of this year.

Leader Exporter Sector was “Automotive Industry” in May “Our Expectations from Turkish Exporters are Beyond the Normal”

urkish Exporters Assembly (TİM) announced the provisional foreign export data for May. In May, Turkey’s export was $9 billion 964 million, decreasing 40,9 percent. Exports in the last 12 months decreased by 8,4 percent to $165 billion 732 million. Chairman of TIM Ismail Gülle pointed out that Germany’s Export numbers faced the biggest decrease in the last 30 years in April, Japan’s Export numbers also faced the biggest decrease after the financial crisis in 2008. Mr. Gülle also said “With the normalization process and the following months, our expectations from Turkish exporters are beyond the normal.”

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Virtual Trade Delegations to be Continued with India and South Korea Gülle also said: “We will continue to hold virtual trade delegations with the coordination of Trade Ministry, within the scope of the ‘next generation trade diplomacy’ activities. We organized two virtual Trade delegations to Uzbekistan and Kenya. We plan to hold two more delegations to India on 15th-19th of June and South Korea on 22nd-23rd of June.” Leader Exporter Sector was “Automotive Industry” in May In May, Export in “Automotive Industry”

was $1 billion 203 million, “Chemistry Products” followed automotive with $1 billion 177 million and “Clothing” was the 3rd sector in monthly export with $840 million 203 thousand. In May, according to same month in 2019, Automotive export decreased by 56,3 percent, Chemistry’s export decreased by 48,2 percent and Clothing’s export decreased by 39,1 percent. In May, according to same month in 2019, Turkey’s export to Switzerland increased by $44,4 million, to Azerbaijan increased by $39,1 million and to Venezuela increased by $15,9 million.

Istanbul Automotive at the service of auto aftermarket with Gepaş brand The company supplies mirror and fender signals, bumper reflectors, expansion jars, glass washing tanks, hydraulic tanks, door and glass opening arms, and rubber engine mounts and bushings

Istanbul Otomotiv is an Istanbul based company operating in the automotive spare parts sector successfully. We asked the success story of the company to Melike Aylin Avcı, Deputy General Manager of Gepaş. Would you brief us your company? Gepaş is a respectful name in the automotive aftermarket industry. It has been operating in the automotive spare parts industry since 1970. The company, which initially started with the wholesale of spare parts and later gained a different dimension with manufacturing, has gained a good place in the sector with its exports in the later stages. What would you say about your operations and product portfolio? Automotive Istanbul, is also known for its quality products and services that provide a reliable brand (GEPAŞ) in Turkey as well as in our sector in the overseas market. Our product range includes mirror and fender signals, bumper reflectors, expansion jars, glass washing tanks, hydraulic tanks, door and glass opening arms, and rubber engine mounts and bushings. Which countries do you export? In addition to being able to respond to customer orders quickly with our products in the domestic market, we also export the products of other manufacturers in favorable conditions to Europe, and especially in the Middle East and African countries. Do you participate in international fairs? Our participation in the fairs took place many times, including France, Germany, Spain, Italy, Russia, Algeria and Egypt. We did not need to attend the fairs for several years, as the business capacity was at a sufficient level and the new customers started to call us and started working with the contacts at the previous fairs.

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Auto sector ready to resolve supply shortages

he automotive sector is expected to resolve supply shortages by September and push preowned car prices down to market-level amid high demand for vehicles boosted by cheap loans, a senior industry representative said. Murat Şahsuvaroğlu, the chairman of Turkey’s Authorized Automotive Dealers Association (OYDER), told that the industry will not be able to meet the high demand for another two months as factories are still struggling to return to full capacity due to prolonged disruptions in global supply chains and preventative measures to slow the coronavirus pandemic. “Factories, automotive subsidiaries and supply chains can return to their prepandemic production levels in September. After that point, I don’t expect the industry to experience a lack of stock availability,” Şahsuvaroğlu said. He added that fixing the supply problems will subsequently reduce prices in the secondhand automotive market. The secondhand market has seen skyrocketing prices over the past month after car dealerships across the country failed to meet the high demand, pushing customers to turn to preowned options. Şahsuvaroğlu stated that the low circulation of used cars also contributed to the bubble in the secondary market, which itself has been struggling with the lack of supply for some time. He said the majority of the country’s auto leasing and rental companies have not been able to renew their fleets and sell off those that have been in service for two years. Şahsuvaroğlu also noted that the pandemic caused certain changes in consumer purchasing decisions, pushing people to purchase personal cars to avoid public transportation. “People no longer want to board a plane or use public transportation and intercity buses to travel for summer holidays,” Şahsuvaroğlu said.

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Demand no longer an issue but supply remains tight Demand for automobiles has steadily risen since early June after three public lenders, namely Ziraat Bank, VakıfBank and Halkbank, introduced low-interest loan packages for individual and corporate customers who want to purchase new and secondhand passenger vehicles and following the easing of strict lockdown measures. Loans offered by banks have interest rates as low as 0.49% and a grace period of up to 12 months. Thanks to the demand-boosting measures, major car dealerships across the country reported that the market could see between 60,000 to 65,000 car sales in June, a 40% increase compared with the same period last year. The sector also revised overall vehicle sales projections for 2020 upward to 650,000, with 35% growth compared to 2019. However, supply shortages are likely to make it difficult for the industry to meet the growing demand. The stock unavailability has been an issue for the car market since the last quarter of the

previous year. The situation worsened after the pandemic forced auto factories to suspend production worldwide, paralyzing the entire industry. It was only possible for factories to resume production in May at limited capacity, which fell short of resolving the supply problems. Automotive production in the country slipped by 22% in March and further plunged by 91% in April, according to the Automotive Manufacturers Association (OSD) data. The industry saw a production loss of some 150,000 units over the two months. Overall, 2020 production between January and April dropped 28% year-onyear the data showed, with some 352,309 vehicles, including automobiles and commercial vehicles, being manufactured in the period. Several car brands were able to import new vehicles from Europe, which went unsold due to a collapse in demand. However, the practice is not likely to continue as the demand begins to pick up in the European market as well. Industry experts expect supply shortages to be resolved by the end of 2020 when factories resume production at full capacity.

Turkey’s 1st domestic car plant gets environmental green light

urkey’s Environment and Urbanization Ministry approved the Environmental Impact Assessment (EIA) for the construction of Turkey’s first domestic car plant. The Automobile Joint Venture Group (TOGG), a consortium of Turkey’s five major companies that joined forces to manufacture the domestic car, announced on Twitter that the factory has successfully completed the EIA. The assessment consists of information on the potential environmental and

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social impacts of building a smart plant in the Gemlik district of the northwestern province of Bursa. It also includes recommendations for the mitigation of potential adverse impacts and enhancement of the beneficial ones. In June 2018, five industrial giants – the Anadolu Group, BMC, Kök Group, Turkcell and Zorlu Holding – as well as an umbrella organization, the Union of Chambers and Commodity Exchanges of Turkey (TOBB), joined hands to produce TOGG.

The country’s long journey to produce a fully homegrown car came to an end on Dec. 27 as it unveiled the first prototypes in a grand ceremony in the northwestern town of Gebze. President Recep Tayyip Erdoğan unveiled prototypes of a sport utility vehicle (SUV) and a sedan, both fully electric and C-segment models. Mass production of the SUV will begin in 2022, while the production of the sedan model is expected to launch after the SUV goes into production.

Turkey estimated to play greater role in postpandemic global economy

urkey’s role in the economy is set to grow in the wake of the coronavirus pandemic, said a key EU lawmaker. “The proven track record of Turkey in this process will allow the country to play a much greater role in the coming postpandemic economy,” Ryszard Czarnecki, member of the European Parliament and founding chair of the EU-Turkey Friendship Group, told Anadolu Agency (AA) in an exclusive interview. Czarnecki said relations between the EU and Turkey date back decades to the country’s application for an association with the then-European Economic Community (EEC) in 1959, followed by the Association Agreement in 1963. He cited the words of then-European Commission President Walter Hallstein calling the agreement “an event of great political significance” and calling “Turkey is part of Europe.” “Despite being one of the first countries to produce an association with the European Community, Turkey was unable to move swiftly in the direction of further integration” in the half-century since, said Czarnecki, a member of Poland’s ruling Law and Justice Party (PiS). “Numerous complex political developments on the side of Turkey as well as the EU” were responsible for this, he explained. ++‘EU, Turkey should reassess interests’ Czarnecki said geopolitical developments in 2020 have shifted the interests of both Turkey and the EU, and those interests should be reassessed and reworked by both sides. The EU-Turkey Friendship

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Group chair said the main topics of discussion between Turkey and the EU will be visa liberalization and modernizing the customs union. Turkey has pressed EU officials on the visa issue especially since March 2016, saying it was promised this under a deal to stem the flow of irregular migrants in the face of a crisis. Turkish officials and business leaders have also long argued that updating the outdated 1995 customs union with the EU would benefit the economies of both sides. Post-pandemic economy Czarnecki stressed many things will be redefined and reevaluated when humanity wins the fight against COVID-19. “It is clear that governments, corporations and citizens will factor in health concerns and trade interruptions in a variety of ways,” he added. Czarnecki said Turkey can benefit from an EU-led European recovery program, focusing on rebuilding economies to make them more resilient. “This includes rethinking economic, political and social proximity politics,” he added. Pointing to the importance of Turkey’s geopolitical advantage, Czarnecki said: “Such geographical proximity gives Turkey the ability to deliver to Europe much faster compared to East Asian economies. Plus, by allowing their manufacturing to take place in Turkey, European producers can enjoy low-cost site visits.” “Although Turkey’s production costs are higher compared to some Far Eastern

countries, it offers a favorable exchange rate,” he added. “With its proximity to the world’s most sophisticated single market, its high-level caliber workforce and business-savvy entrepreneurs, this is Turkey’s big chance,” he said. EU-Turkey Friendship Group Czarnecki said friendly relations between his home country, Poland, and Turkey date back to Ottoman times. “We in Poland never forget that after the (1795) division of Poland, the Ottoman Empire always recognized the existence of Poland and kept a seat for the ambassador of Poland at the Sublime Porte,” he said. “I also would like to underline that our former Prime Minister Jaroslaw Kaczynski, the current president of our ruling party, always supported the accession of Turkey to the European Union,” he added. He said as the new chairman of the European Parliament’s EU-Turkey Friendship Group, he will be looking for ways to rekindle exchanges between Turkey and the EU under these new circumstances. “It will be in our mutual interest to try to bridge differences, learn from each other and look on what we can agree about,” he added. Czarnecki said: “The friendship group will try to deal with these issues by bringing together civil society from all sides, focusing on culture and sports,” adding: “We hope that we can contribute to improving the future relations of the EU and Turkey.”

Over $2.4B in exports bring best-ever January for automotive industry

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The locomotive of Turkish exports, the automotive industry enjoyed its best January ever as it managed to export goods worth over $2.4 billion, according to data by Uludağ Automotive Exporters Association (OİB). Having maintained its export leadership for 14 consecutive years, the industry managed to increase its overseas sales by 3.2% last month to $2.4 billion. It had a share of 16.3% in the country’s overall exports. Private cars exports had the highest contribution, surging by 27% yearon-year in the said month. The industry started the year with a slight increase in sales to the European Union countries, while a double-digit increase

was seen in sales to France and Spain. Exports to France were up 23% year-onyear and totaled around $276.84 million, making it the second largest export market for Turkey’s automotive industry. Private car sales to the country increased by 72%, the data showed. Sales to Spain, which has become the sector’s fifth largest market, rose by 29% to $168.69 million. Private car exports to Spain saw an increase of 48% last month. Among others, exports to Egypt last month jumped by 115% to over $48 million, while those to Azerbaijan increased by 119% to $10.89 million. Sales to Iran surged by 161% to slightly over 10 million, while exports to Croatia were up by 121% to $11.5 million.

China registers Turkey’s 1st national car designs

he Automobile Joint Venture Group (TOGG), a consortium of five major Turkish companies working on the manufacture of Turkey’s first national automobile, announced that the Chinese patent agency had accepted its design registration application. TOGG’s sports utility vehicle (SUV) and sedan designs were registered by the Chinese Patent Authority, according to the company’s website. The decision follows the interior and exterior designs of TOGG’s automobiles having been registered by the European Union’s Intellectual Property Office (EUIPO) in April. The industrial property rights provided by EUIPO will

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remain valid until February 2029 – 10 years after the trademark is granted – but could be extended upon application by TOGG. Meanwhile, TOGG’s design registration applications in the U.S., India, Japan and South Korea are still pending approval and expected to be finalized in 2020, according to the consortium. Turkey’s long journey to produce a fully Turkish-made car came to an end on Dec. 27 last year, as the country unveiled its prototypes at a grand ceremony in Gebze, near Istanbul. President Recep Tayyip Erdoğan unveiled the prototypes of an SUV and sedan, both fully electric, in addition to C-segment

models. Mass production of the SUV will begin in 2022, with the sedan to follow. TOGG will produce five different models – an SUV, sedan, c-hatchback, b-SUV and b-MPV – until 2030, and own the intellectual and industrial property rights of each. The cost of the factory to produce the vehicles is expected to reach 22 billion Turkish liras ($3.7 billion). It will employ 4,323 staff, including 300 qualified personnel. The cars, indigenous to Turkey, will also be supported by the government with various tax discounts and incentives.

E-commerce volume totals $20 bln in 2019

he volume of e-commerce in Turkey amounted to 136 billion Turkish Liras (nearly $20 billion) in 2019, the country’s trade minister said on June 24. During a virtual meeting on Turkey’s Electronic Commerce Information System (ETBIS), Ruhsar Pekcan shared some details of the country’s e-commerce data that is compiled for the first time. In the first five months of this year, especially amid the coronavirus pandemic, the volume of e-commerce reached 63.3 billion Turkish Liras ($9.2 billion),” Pekcan revealed. This, she said, marks an increase of 48% compared to the same period last year, adding e-commerce food shopping increased six folds during the pandemic. During the period, sectors showing the highest increase in card transactions were white goods and home appliances with 75% increase, clothing, shoes and accessories with 43%, electronics sector and software sector with 53% and 95% rises, respectively. Emphasizing that this data will be the main source in all future analyzes related to the e-commerce, Pekcan said 85% of the country’s total e-commerce volume in 2019 comprised of domestic purchasing, 9% purchase from other countries through Turkish e-commerce sites, and 6% of Turkish citizens shopped from overseas. Pekcan pointed out that currently a total of 68,457 businesses continue their e-commerce activities. ecommerce,

Turkey only market in Europe to record rise in car sales in first 5 months

to steps taken to counter the outbreak, Turkeyâ&#x20AC;&#x2122;s car sales were less affected. According to European Auto Industry Association (ACEA) data, car sales in the European Union, Britain and European Free Trade Association (EFTA) countries slumped by 42.8% from January to May this year and stood at nearly 3.97 million units following three months of unprecedented falls across the region, with most markets seeing double-digit declines. Some 6.94 million units were sold in the same period of last year.

As for Turkey, sales jumped 20% yearon-year in January-May, according to Automotive Distributors Association data (ODD). Croatia led the way, reporting the biggest drop in the said period with 55.8%, followed by a 54.2% drop in Spain and a 51.4% decline in the U.K., the data showed. The contraction of the German market was slightly less severe, with registrations down 35% over the first five months. So far this year, car registrations decreased by 50.4% in Italy, 48.5% in France and 35.7% in Belgium.

urkey surpassed European countries and became the only market that has managed to increase auto sales from January through May. The automotive sector stands among the industries hit the hardest by the coronavirus pandemic as lockdowns closed car dealerships and brought a halt to manufacturing and sales. The outbreak has brought major losses in the European market, while it also impacted Turkeyâ&#x20AC;&#x2122;s auto sales. However, since Turkey reported its first coronavirus case later compared to Europe and due

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Sharpest drop in U.K. As for May, European passenger car sales slumped by 56.8% year-on-year to 623,812 units but the drop, although still very severe, was not as sharp as in the previous month because of an easing of restrictions imposed to contain the pandemic. The same month in 2019 saw 1.44 million vehicles being sold. The drop was less pronounced than a 78.3% plunge in April. Sales of new cars in Britain tumbled 89% from last year in May, only slightly less negative than April’s record 97% collapse, as car dealerships remained shuttered by the government’s COVID-19 lockdown. The U.K. registered only 20,247 new units, representing the weakest May for sales since 1952, the Society of Motor Manufacturers and Traders (SMMT) said. The possibility that Britain’s transition out of the EU ends in December with no new trade deal is also likely to weigh on carmakers, some of whom have highly integrated supply chains with the continent. Sales recorded double-digit declines in all EU markets, with Croatia, Portugal and Spain reporting the biggest drops of 76.2%, 74.7% and 72.7%, respectively. In Germany, just over 168,000 cars were registered last month, according to the country’s Federal Motor Transport

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Authority, down 49.5% compared with May 2019 and following a 37.7% drop in March and 61.1% in April. The decline in Italy, France and Belgium stood at 49.6%, 50.3% and 32%, respectively. Among carmakers, Volkswagen led the way as it sold 145,195 units in May, followed by PSA Group with 91,146 units and Renault Group with 62,230 units. Sales in Turkey up 20% Turkey’s passenger car and light commercial vehicle sales jumped 20% year-on-year in January-May and totaled 183,095 units, the ODD data showed. While passenger-car sales surged 21.7% on an annual basis to 146,528 in the January-May period, the country saw 36,567 light commercial vehicle sales, rising 13.9% during the same period. Turkey ranked seventh in Europe in terms of passenger car sales, leaving behind 24 European countries. Demand had a serious drop in the second half of March when the outbreak started affecting social life and the commercial environment after the country reported its first coronavirus case on March 11. Automakers started gradually shutting down factories and halting production on March 20 in a move that was first planned to last two weeks but ended up lasting

through most of April. Top international automakers – including Ford, Honda, Hyundai, Mercedes, Renault and Toyota – have factories in Turkey. The facilities started gradually resuming operations on April 13, with all having reopened by May 11. In May, the automotive market narrowed 2.4% compared to the same month last year due to the coronavirus pandemic, hitting 32,235 vehicles. Passenger car sales fell 7.6% to 25,073, and LCV sales soared 21.6% year-onyear to 7,162 in May. Passenger car sales enabled Turkey to rank sixth in Europe. Demand for automobiles in Turkey has steadily risen since early June after three public lenders, namely Ziraat Bank, VakıfBank and Halkbank, introduced low-interest loan packages for individual and corporate customers who want to purchase new and secondhand passenger vehicles and following the easing of strict lockdown measures, but supply shortages are forcing potential buyers to walk away empty-handed. Car dealerships across the country have reported that domestic demand, which has been deferred since the last quarter of 2019, began to revive after the country started to reopen, but car stocks are still limited due to the global supply chain disruptions caused by the coronavirus pandemic.

Turkish automotive sector to recover in 2020: Report 2020 will be a year of recovery for Turkey’s automotive production and exports, according to a report by audit and consultancy firm KPMG Turkey, released on Feb. 12. The firm’s report said that the first Turkish indigenous car, introduced last December, and Volkswagen’s investment plans in the country may increase industrial investments in Turkey. Volkswagen, which already has an established production firm in Turkey, is expected to make the decision for its factory investment in 2020, the report noted. The automotive sector, one of the country’s locomotives, had difficulties in

2019. While 1 million auto sales had been made in the domestic market in 2017, these decreased by 35 percent in 2018 and by 23 percent in 2019 to 492,000 units. The country’s automotive production and exports also narrowed by 9 percent and 5 percent, respectively, in 2019, versus the previous year. Turkey’s automotive exports were $31.2 billion last year. The sector employs around 500,000 people. According to the report, the country will see 580,000 auto sales in 2020, with an annual increase of 18 percent. The report also forecasted that the country will produce over 1.4 million vehicles and export more than 1.2 million of them this

year. Meanwhile, it predicted a slowdown in the global market, including in the U.S. and China. The report said the destructive effects of technology would continue saying: “The automobile is becoming a technologic and smart vehicle rather than a four-wheeled transportation vehicle.” The coming decade will see more impactful changes than the past 50 years, it added. While the share of new business fields was $0.1 trillion in the $5.5-trillion automotive sector in 2015, this will reach $4.3 trillion in a $7.7-trillion sector by 2030. The income of the taxi and fuel sectors will drop by 38 percent in the same

Turkey’s textile, automotive businesses expect quick start and recovery Following a mandatory yet brief break due to the coronavirus outbreak, Turkish factories in western Kocaeli and Sakarya provinces – leading industrial cities of the country, started operating at full speed, with new investments and factory openings on the way thanks to increasing orders. Especially automotive and textile industries, which are considered chief players in the Turkish economy, started their production even faster than the precoronavirus period as of June 1 when the country lifted almost all of the measures as the spread of the virus was declared under control and a new phase of normalization has begun. Mustafa Gültepe, CEO of the Talu Tekstil located in the first Organized Industrial Zone (OIZ) in Sakarya, who is also the chairman of the Istanbul Textile and Apparel Exporters Association (ITKIB) said that they started June fast, as the company is receiving high numbers of orders from Europe. Textile and apparel were one of the sectors most affected by the pandemic that hammered businesses worldwide. Hitting Europe and the U.S. hard after emerging in China, the outbreak shuttered nearly all stores and eventually caused a difficult process for Turkish textile manufacturers and exporters. However, the textile manufacturers underwent a quick revival and now foresee an even quicker recovery after the shock they experienced, sector representatives said. Talu Tekstil is currently working again at full production after its factories produced nothing but medical masks during the month of April. “The demands have increased significantly with the opening of stores in Europe. Our capacities are also increasing rapidly,” Gültepe said.

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The company opened its third factory in Adapazarı last year to keep up with increasing orders and is now planning to move its factory to a newly established giant factory with a closed area of 20,000 square meters (65,617 square feet) in central Turkey at the end of the month. Its production capacity is planned to increase by 30% after moving to the new factory. “Our investments will continue to increase,” Gültepe said. The company, which strictly follows all the rules set out by the Ministry of Health, has already changed the working order and reorganized its dining halls accordingly with social distancing rules while every staff member is required to wear face masks and have their temperatures taken regularly. Produce to export The company sells its entire production abroad and were sending products to 155 countries before the outbreak. Talu Tekstil, which was manufacturing approximately 1 million products a day for global companies before the virus, is working with the target of producing at these levels again in August. Stating that they provide employment for 2,500 people, Gültepe noted, “As industrialists, we are ready to do whatever we can with the support of the state.” He added that Turkey stands out as one the most powerful alternatives to supply chains and with this challenging process it has even “strengthened its solid supplier position.” Capacity high in automotive Assan Hanil Automotive Industry and Trade Inc., established with the partnership of Kibar Holding and South Korean Seoyon E-Hwa that resumed production on April

20, is also continuing to produce at high levels and increased its capacity utilization rates up to 70% in a short time. Atacan Güner, the company’s general manager, said that the capacity utilization rates are increasing daily, and “the sector is expecting 90-95% levels in September.” The company operates five plants; three of which are located in Kocaeli, one in northwestern Bursa and the other in central Aksaray; and produces for brands including Hyundai, Ford, Mercedes, Toyota, Karsan, Isuzu and Honda. The companies that receive products from Assan Hanil which has an annual 190 million euro ($214.2 million) turnover, are also among the largest exporters and have large markets in Europe. Thus, 90% of the company’s turnover comes from indirect exports. Saying that the main acceleration in the sector will be achieved with the opening of the European market, Güner said: “We expect the market to return to 70-75% sales pace in June and its precoronavirus levels in three to four months.” Güner also said that the company’s initiatives for investment abroad also continue uninterrupted despite the virus and having its main target in western Europe. “Our search for investments continues regarding Germany, Czechia and Poland,” he said, noting that “they plan to buy at least 50% shares of a company with an investment of 40 million euros.” Stating that they are recovering rapidly although the sector is the most affected by this crisis after the textile and aviation industries, Güner explained that the credit support given by the public banks to the automotive sector is also very important. Predicting that this step will be reflected in the sector very quickly, Güner said: “The automotive (sector) is the locomotive of the exports. All kinds of support to be given here are also very important for the protection of employment. We expect the sales to double with the support in question.” Turkey’s three largest state Lenders announced that they will extend a new loan incentive scheme with reduced rates to invigorate the transition to normalization and revive social life, as economic activity steps up following a slowdown due to the coronavirus pandemic. Ziraat Bank, VakıfBank and Halkbank are beginning to offer four new loan packages, including mortgages for new houses, loans for vehicle purchases, locally manufactured goods and holiday expenses at annual interest rates running below inflation. The move was later joined by the state lenders’ participation banks.

Turkish exporters to receive $500M loan package

As part of the cooperation between the Turkish Exporters’ Assembly (TIM) and a Turkish private-lender Iş Bank, exporters will be provided a credit package of up to $500 million (TL 3.5 billion), the head of the TIM Ismail Gülle said. The protocol for the loan package was signed in a ceremony held with the participation of Gülle and Iş Bank General Manager Adnan Bali. Within the scope of the package, a maximum of 150,000 in dollars and euros or TL 1 million credit will be allocated for each company, in order to expand the package’s capacity to reach more exporters. Export Exchange Credit is set to be offered to all TIM member exporters with an interest rate of 2.4% annually in dollar loans and 1.15% annually in euro loans. Turkey’s exports rose 34.3% year-on-year to reach $9.1 billion in the first 23 days of June, Gülle also said in the meeting. In May, Turkey’s exports dropped 40.9% to $10 billion on a yearly basis, due to the COVID-19’s effects on the economy. In April, credits used for exports reached TL 196 billion ($28.6 billion), Gülle noted. Emphasizing that collaborating with Iş Bank is important in providing confidence to exporters, Gülle said: “It is our greatest hope that similar collaborations will continue increasingly. Especially in the last two years, we have seen both volumetric

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and proportional increases in the loans of the banking sector for exporters and the interest and relevance of the sector in exports pleases us.” While the export loans of banks were at the level of TL 116 billion in April 2018, the value of those loans increased by 69% and reached TL 196 billion in April this year. Also speaking on the details of the package, Bali said that exports which have a critical role in the growth of the country’s economy are also of great importance in the way out of this difficult pandemic period. “We are implementing many initiatives in order to reduce the effects of the pandemic

on employment, production, trade and payment systems and ensure the continuity of economic activity. In addition to our ongoing support packages for the economy, we offer the maturity and payment options for every need for export financing with the protocol we signed with TIM ” he said, highlighting that as part of the protocol, the bank kept its interest rates at the lowest possible level to support the country’s exporters. “We think that the low-interest rates we apply in export foreign currency loans are critical not only for our exporters but also for all segments of the economy,” the bank’s general manager added.

Foreign loan burden on Turkish private sector decreases

he Turkish private sector’s outstanding loans from abroad fell further in April compared to the end of last year, the Central Bank of the Republic of Turkey (CBRT) announced. Long-term debt hit $173.6 billion as of April, falling $7.4 billion from end-2019, with 41.9% held by financial institutions.

Some 62% of Turkish private sector longterm debt was in U.S. dollars, 33.5% in euros, 2.8% in Turkish liras and 1.7% in other currencies. The private sector’s short-term loans – debt that must be paid in the next 12 months – also fell $895 million to $8.1 billion in the same period.

Financial institutions held 76% of the short-term loans, while 24% consisted of liabilities of non-financial institutions. “Regarding the currency composition of the total short-term loans, 38.8% consists of U.S. dollars, 34.3% consists of euros, 25.6% consists of Turkish liras, and 1.3% consists of other currencies,” the CBRT said.

companies with projects in the fields of nanotechnology, advanced materials, biotechnology, advanced manufacturing, and processing technologies, said a TÜBİTAK statement. Under the industrial leadership and competition component of Horizon 2020, an EU program promoting

research and innovation, a total of eight projects at 11 companies (some done in collaboration with each other) will be supported by the EU. The 11 Turkish firms selected for the grants include energy giant Tupras, major appliances producer Arcelik, and cement producer Cimsa.

EU provides $4.4 mln grant for Turkish firms’ tech projects

he EU Commission is giving backing to a number of Turkish firms’ techrelated projects, said the Scientific

and Technological Research Council of Turkey (TÜBİTAK) on June 26. The commission will grant a total of €4.4 million ($4.94 million) to Turkish

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Turkish banks and firms secure over $6.9B international financing

urkish banks and companies have achieved signif icant success by securing nearly $6.91 billion (TL 47 billion) in international financing during the period when the coronavirus pandemic has halted economic activity and severely affected the global economic system and financial markets. The financing enabled the institutions to easily overcome the financial difficulties of April and May when debt returns are the most intense. Turkish banks, including Akbank, Ziraat Bank, VakıfBank, QNB Finansbank, Yapı Kredi Bank, Türk Eximbank, Garanti BBVA and Iş Bank, and confectionery giant Ülker Bisküvi secured a syndicated loan of $6.3 billion in April and May, marked by difficult market conditions due to the outbreak. The banks have also managed to secure nearly $600.6 million in non-syndicated financing from several international organizations, including the European Bank for Reconstruction and Development (EBRD). The institutions in question thus achieved a 91% syndicated loan renewal rate in the last two months, given the $9.93 billion syndicated loan used in 2019. In addition, borrowing costs during this period were also 25 basis points lower in the dollar and 40 basis points lower in the euro than last year. The cost of syndicated loans was “Libor + 2.25%” in dollars and “Euribor + 2%” in euro. Private lender Akbank was first to secure a syndicated loan renewal, having renewed 86% of last year’s $700 million loan by securing a $605 million syndicated oneyear loan on April 1-8. The public lender Ziraat Bank managed to renew 75% of the $1.42 billion of last year’s syndicated loan by securing $1.06 billion on April 9. Another public lender VakıfBank renewed

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88% of last year’s $1.09 billion by securing a $950 million syndicated loan on April 29. QNB Finansbank, whose syndicated loan stood at $200 million last year, on May 14 mobilized $225 million from international lenders, posting a 128% loan renewal rate. Also, another private lender, Yapı Kredi, reached an 84% loan renewal rate as it secured $870 million between May 15-27 from last year’s $1.03 billion. Having used a $407 million syndicated loan last year, Türk Eximbank received a syndication loan worth $723 million on May 14-29 amid coronavirus’ economic fallout. The institution thus managed to post a record loan renewal rate of 178%. Garanti BBVA on May 20 secured a $594 million syndicated loan, renewing 79% of last year’s $755 million. Having used a $950 million loan last year, Iş Bank managed to mobilize a $792 million syndicated loan on May 21, reaching a loan renewal rate of 83%. The leading biscuit maker in Turkey, Ülker Bisküvi, overcame global market turbulence by also securing international funding to continue smooth operations. It secured a total of $455 million from eight

lenders on April 2 despite market volatility. The loan consisted of a syndicated facility of $374 million and a parallel loan of 75 million euros ($81 million) provided by the EBRD. The company, therefore, renewed 121% of the last year’s loan. One of Turkey’s best-known confectionery, Ülker produces biscuits, cakes, wafers, chocolate bars and chocolate-covered biscuits. It sells products throughout Turkey and exports to Europe, North America, Africa, Asia and the Middle East. The EBRD is a major investor in Turkey. Since 2009 it has invested almost 12 billion euros in various sectors of the country’s economy, with almost all investments in the private sector. In the period when global economies stalled, five Turkish banks managed to also receive non-syndicated financing worth $600.6 million from various international institutions, primarily the EBRD. Denizbank, QNB Finansabnk, Garanti BBVA, Yapı Kredi and Türk Eximbank received $175 million, $136 million, $104.6 million, $100 million and $85 million, respectively, in May.

Cheap loans pave the way for fivefold increase in housing sales

ome sales soared in Turkey due to deferred demand that was put on hold due to the coronavirus outbreak after public lenders unveiled mortgage loan packages at historically low-interest rates in June to help avert an economic fallout from the coronavirus pandemic. The move by the public banks, which was later joined by the participation banks of the state lenders was followed by initiatives from the private sector. Turkish real estate firm Emlak Konut GYO has also launched a housing campaign with two years of nonpayment, which further fueled the demand. Meanwhile, sector representatives say that a supporting act from private banks is also needed for the path opened by public banks for the revival to be continuous. At the beginning of June, Turkey’s three largest state lenders Ziraat Bank, VakıfBank and Halkbank and two of their participation banks Ziraat Katılım and Vakıf Katılım announced in a joint declaration that they are delivering four loan packages including mortgages for new houses and loans for vehicle purchases, locally manufactured goods and holiday expenses with annual interest rates running below inflation. Within the scope of the housing package, the mortgages for both the new houses and secondhand housing units will have up to 15 years’ maturity with interest rates as low as 0.64% and a grace period of up to 12 months, the banks said, while the low equity-down payment rate starting at 10% will be applied for the use of financing. Head of the Association of Real Estate Investment Companies (GYODER) Mehmet Kalyoncu stated that the move by the public banks is the biggest incentive given to the sector so far. He said that there has never been stagnation in housing demand in Turkey;

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however, the demand was postponed, noting that “now the deferred demand stepped in. In particular, support packages by state-owned banks, and Emlak Konut GYO’s recent campaign brought a great impetus to the sector.” Injection to sector Kalyoncu said house sales have increased five times during the normalization process which started on June 1, when compared with the pandemic period when the impact on the sector was more visible. Underlining that interest rate cut and campaign mobilization are like medicine to the sector, Kalyoncu went on saying, “I can easily say that if the support and mobility in the sector continues, house sales can exceed the past year’s sales at the end of the year. “Banks approve loans very quickly. The system works very well,” he added. The sales of residential properties in Turkey increased by 8.9% over the January-April period, lifted by sales with mortgages, according to the Turkish Statistical Institute (TurkStat) data. Overall house sales reached 383,821 in the first four months, while sales of mortgaged houses increased by 141.4%, reaching 146,387 units. However, the pandemic’s initial impact was hardly felt in April with property sales recording a 55.5% year-onyear decrease. Nearly 1.35 million housing units were sold in the country in 2019. Private lenders should join Nazmi Durbakayım, the head of the Istanbul Constructors’ Association (INDER), said the incentives, which started under the leadership of the state lenders, would trigger a normalization and a revival in all sectors and that the citizens should

evaluate the opportunity well. Durbakayım, similar to Kalyoncu’s remarks, said that private banks should also join the stimulus move. Speaking on the Emlak Konut GYO’s campaign, Durbakayım stressed that today a TL 600,000 ($87,528) house can be bought with TL 27,000 advance payment and with two years of nonpayment. “After two years, you start paying 15% of the price and then the installments. The rent you get from that house will increase every year, the value of the house will increase, but your installment is set to stay the same. There is a significant increase in sales for 20 days since those who saw this opportunity took action,” he explained. TL 8.7 billion worth units sold The sales offices that carry out their services even until 2 a.m. are now serving 250 customers daily following the campaign announcements. As part of the Emlak Konut’s campaign, 6,300 units worth TL 8.7 billion (around $1.27 billion) have been sold so far. Within the scope of cooperation, the Emlak Participation Bank and Emlak Konut GYO launched a campaign that enables buyers to buy a home with a 5% down payment and a 10% discount. The campaign that will be valid for a limited time in 26 different Emlak Konut GYO projects is being applied in provinces including Istanbul, western Izmir and Denizli, capital Ankara, northwestern Gebze and central Konya. Emlak Participation provides customers with a “grace period” and favorable maturity ratio with the financing support applied in the housing campaign. Within the scope of the campaign, in which installment payments are set to be applied starting from the third year of payment, a 0.79 maturity ratio will be offered.

Turkey’s current account records $5.06B gap

urkey’s current account balance posted a $5.06 billion gap (TL 35 billion) in April, the Central Bank of the Republic of Turkey (CBRT) announced, widening from a $469 million deficit in the same month last year, as the coronavirus’ impact started to be felt in earnest in midMarch and April. According to the balance of payments figures released by the bank, the country’s 12-month rolling deficit totaled $3.3 billion.

Istanbul ranks 16th among top 100 ecosystems

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The figure beat market expectation of a $4.1 billion deficit in the month. A recent survey showed that a group of 16 economists projected the current account deficit to range from $2.2 billion to $5.2 billion for the fourth month of this year. The survey also revealed the current account balance by the end of 2020 is forecast to register a $10.9 billion deficit. The gap stemmed from an increase in the import-export gap to $3.8 billion, increasing $2.3 billion from a year

he metropolis of Istanbul ranks in the top 20 on a list of the world’s 100 best “emerging ecosystems” for startups, Turkey’s technology and industry minister announced on June 25. Citing a new report by U.S.-based global entrepreneurship research institution Startup Genome, Mustafa Varank tweeted that Turkey’s commercial capital Istanbul, at number 16, outranked several major cities such as Dubai, Moscow, and Brussels. “Our potential is high in technology-based enterprises, and our targets are big,” he

earlier and a net outflow of $240 million in the services item against a net inflow of $2.3 billion in April 2019. Turkey’s gold- and energy-excluded current account balance registered a deficit of $3.3 billion, versus a surplus of $3.3 billion in April last year. “Investment income under the primary income account indicated a net outflow of more than $1 billion, decreasing by $111 million compared with the same month of last year,” the bank said.

added. On the list, India’s commercial capital Mumbai comes first, followed by Jakarta, Indonesia and Zurich, Switzerland at numbers two and three. “Startups have become a top growth engine of the economy and policymakers are putting more energy and focus into the development of their startup ecosystems,” said the report. “Europe is the leading continent for Emerging Ecosystems, with 38 cities in the list followed by North America with 32 startup ecosystems and Asia-Pacific is third with 22 ecosystems,” the report added.

Turkey ready to welcome back tourists with new measures

n normal times, tourists must rise at dawn to secure a free sunbed on the beach in Antalya, a popular holiday resort in southern Turkey. Today even after sleeping in, the best locations are still available. As everywhere, the coronavirus pandemic has hammered the tourism industry – a vital Turkish economic sector that welcomed a record 50 million foreign visitors last year. But with the lifting of restrictions around the world, including the gradual opening of airline connections, Turkey is trying to

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lure tourists to save what it can of the summer season. At a luxury hotel on the Mediterranean coast, floor markings invite customers to respect social distancing, disinfectant gels are placed at the entrance to elevators and restaurants and all staff wear protective face masks, according to Agence France-Presse (AFP) journalists who participated in a press trip organized by the Turkish tourism ministry. “We have taken strict measures to protect our employees and tourists,” Tourism Minister Mehmet Nuri Ersoy told AFP in an interview.

“Turkey is the best-prepared country” to welcome travelers, he said. The minister unveiled the “safe tourism” certificate, awarded on the basis of 132 criteria hotels and restaurants must meet to be able to accommodate customers in proper sanitary conditions. About 500 establishments have received that label and authorities hope to quadruple the figure in the coming month. Reconfigured hotels To earn the tourism ministry’s label, hotels must also set up a separate section to isolate tourists who test positive for

COVID-19. “We had to reconfigure our establishments. Despite these additional expenses, we will not increase prices,” said Sururi Çorabatır, president of the Federation of Turkish Hoteliers (TÜROFED). The government has also introduced a health insurance scheme – 23 euros ($26) worth – covering hospital expenses for COVID-19 patients. Travelers can sign upon arrival. The stakes are high: from hoteliers to restaurateurs, along with farmers who sell their products in the region, the pandemic has upended the lives of all those who live off tourism in Antalya. The area nicknamed “Las Vegas without a casino” for its luxury resort hotels looks like a ghost town. Except for some pharmacies, all shops and restaurants are shut down. “In 2019, we received 35 million passengers, including 15 million from abroad. Since the beginning of the year, the total number is less than a million,” said Deniz Varol, director-general of Antalya airport. In the airport, thermal cameras take passengers’ temperatures, a quarantine room has been set up and a center with the capacity to carry out 20,000 tests a day has opened. Negotiations In the absence of foreign tourists, some Turks enjoy a quiet vacation. Deniz Kaya, who comes to Antalya every year, has never seen the city “so empty.” “People are careful, they spend their holidays respecting social distancing rules,”

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she said while tanning by the pool. Foreign tourists from certain countries began to gradually arrive in Turkey, but numbers will increase in the upcoming weeks as more countries lift restrictions on international travel. The reopening of flights for most nations will be completed in August. Most of the travelers are expected to arrive in Turkey’s leading touristic areas, which includes the southern resort city of Antalya and the vacation towns of Bodrum and Dalaman, as well as western Izmir province and Istanbul. However, the number of arrivals will depend on negotiations with tourists’ home countries including Germany which has placed Turkey on a list of destinations it considers “coronavirus risk areas,” and

Russia – one of the most infected countries in the world. Turkey sends data on virus cases in its coastal resorts to Germany daily, and invited a Russian delegation to observe measures taken by hotels. According to official figures, Turkey has recorded 5,000 virus-related deaths and nearly 190,000 cases. The number of cases registered daily has recently increased after the lifting of restrictions that were in place. Despite all the difficulties, Ersoy remains optimistic. In 2016 – a year marked in Turkey by an attempted coup and several terror attacks, “there was a serious crisis followed by a very strong rebound,” he recalled. “Bookings for 2021 are piling up: Tourists have not forgotten Turkey, on the contrary.”

Turkeyâ&#x20AC;&#x2122;s sectoral confidence index rises in services, retail and construction Turkeyâ&#x20AC;&#x2122;s seasonally adjusted sectoral confidence index increased by 8.5%, 9.3% and 33.1% month-on-month in the service, retail trade and construction sectors, respectively, in June, according to data by the Turkish Statistical Institute (TurkStat). The service sector confidence index, which was 51.1 in May, reached 55.5 in June with the recent rise. The business status subindex of the service sector also increased by 2.9% in the last three months to 38.2.

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In the period in question, the sub-index measuring demand for services rose by 3.6% to 40.5, while the sub-index indicating expectations for the demand for services in the next quarter increased by 13.7% to 87.8. The seasonally adjusted retail trade confidence index increased by 9.3% in June, reaching 86.4. In the retail trade sector, the business volume sales index increased by 17% to 48.6 in the last quarter

compared to the previous month. The current commodity stock sub-index fell by 5.6% to 113.7. The sub-index measuring business volume-sales expectations was revised to increase by 28.9% to reach 96.8. The construction sector confidence index rose to 78 in June from 58.5 in May. Compared to the previous month, the sub-index indicating the current level of registered orders in the construction sector increased by 48% to 59.1.

52,080 road motor vehicles registered in May

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urkey saw 52,080 new registrations of road motor vehicles in May, the country’s statistical authority reported. TÜİK said the number of new motor vehicle registrations fell 9.8% on a yearly basis, while it increased 29.6% on a monthly basis. Among the 52,080 vehicle registrations in May, cars accounted for 43.7%, followed by motorcycles at 37.4%, small trucks at 8.8% and tractors at 7.4%, according to TÜİK. Trucks, minibus, bus and special

purpose vehicles constituted 2.7% of new registrations. Among 22,748 newly registered cars in May, Renault’s share was 19.1%, while Peugeot (15.2%), Opel and Fiat (both 9%), and Citroen (6.3%) followed it. The total number of road motor vehicles registered reached 23.45 million as of the end of May, TÜİK said, adding: “Cars represented 54.1%, small trucks 16.4%, motorcycles 14.4%, tractors 8.2%, trucks 3.6%, minibuses 2.1%, buses 0.9% and special purpose vehicles 0.3% of total number of road motor vehicles registered.”

Türk Eximbank gets $430 mln under World Bank guarantee

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ürk Eximbank is obtaining €380 million ($430 million) from a consortium of international banks, Turkey’s trade minister Ruhsar Pekcan said. Half of the principal amount of the funding was guaranteed by the World Bank Group’s lending arm, the International Bank for Reconstruction and Development (IBRD), Ruhsar Pekcan said in a statement. She highlighted that the 10-year funding was provided at a “much more affordable” cost than a eurobond issue with a similar term under the current conditions. Showing the confidence in Turkey’s economy amid the crisis over the global

pandemic, the fund will open a new loan window for exporters financing working capital and investment expenses, Pekcan said. She underlined that the transaction was the first in Turkey for the banking sector under the partial guarantee of the World Bank and the second in the world. Some 70% of the loan will be provided for small- and medium-size enterprises (SMEs), Pekcan said, adding: “At least 10% of the loan will be available for companies evaluated under the new definition of women’s participation developed with the World Bank.”

Economic Confidence Index increases as coronavirusrelated restrictions relaxe

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urkey’s Economic Confidence Index rose sharply to 73.5 in June, the country’s statistical authority said. The figure jumped 19.1% from 61.7% as Turkey relaxed coronavirus-related restrictions, the Turkish Statistical Institute (TurkStat) data showed. The month-on-month rise was driven by improvements in the consumer, real sector, services, retail trade, and construction confidence indices. The construction confidence index surged the most, by 33.1% to 78. “The consumer confidence index increased by 5.2% to 62.6 and real sector confidence index increased by 22.2%, reaching 89.8,” it added. Commenting on the data, Turkey’s Treasury and Finance Minister Berat Albayrak said: “Confidence

in the Turkish economy is on the rise. I hope we will continue 2020 with this performance and take it even further next year.” Mustafa Varank, the country’s Industry and Technology Minister, said: “There is a strong revival in all sub-items of the index, especially in the real sector.” Services and retail trade confidence indices also showed an 8.5% and 9.3% rise, respectively. The economic confidence index measures the degree of optimism in the economy which consumers express through their saving and spending habits. It indicates an optimistic outlook about the general economic situation when the index is above 100, while it shows a pessimistic outlook when below 100.

Factory trial start for 1st Turkish-made electric train

actory acceptance trials have begun for Turkey’s first indigenous electric train, a senior official said. Even during the novel coronavirus pandemic, the Turkey Wagon Industry Corporation’s (TUVASAS) personnel continued to work hard to complete the project, Industry and Technology Minister Mustafa Varank said during the testing ceremony in the country’s western Sakarya province. Thanks to these efforts, the train has reached the testing phase. After the factory trials, railway testing will begin at the end of August, Varank underlined. The train, designed for intercity travel, can be produced for 20% less than comparable

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imported models, he said, lauding its high rate of domestic production, including its main control, monitoring, climate and lightening systems. The prototype was 60% produced with domestic resources and this may reach 80% in the mass production phase, he said. Varank noted that the annual volume of the global railway systems sector was around €160 billion ($180 billion) and is expected to increase rapidly. Turkey can be a global player in this area, and will spend €15 billion on railway systems in the next decade, he added. Transportation and Infrastructure Minister Adil Karaismailoglu said TUVASAS, which

was established as a train repair facility, had become the largest railway system producer in the Middle East. Noting that TUVASAS would continue its operations under the name of Turkey Rail System Utilities Industry Company (TURASAS), he said the ministry would prioritize railway projects in the coming period. “We’ll work to make Turkey an important railway production hub.” The country has spent 880 billion liras ($338.46 billion) in transportation and communication infrastructure during the last 18 years and 162 billion liras ($62.3 billion) of this amount was in railway systems, he underlined.

Construction starts on 2nd unit of Turkey’s 1st nuclear power plant Akkuyu

he construction of the second unit of Turkey’s first nuclear power plant Akkuyu has started, Energy and Natural Resources Minister Fatih Dönmez said. Dönmez stated that they aim to put the first unit into operation at the Akkuyu Nuclear Power Plant in 2023. “We plan to commission the second unit in the following year,” he added. Dönmez examined the ongoing construction with Akkuyu Nuclear Inc. General Manager and Chairman Anastasia Zoteeva during his visit to the power plant. The power plant is set to consist of four units with 1,200 megawatts (MW) capacity each. Licensing and pre-construction preparations for the third and fourth units are also ongoing, the minister noted, stressing that the plant will meet approximately 8%-10% of the country’s current electricity consumption when it starts operating at full capacity. Dönmez stated that approximately 6,700 people work in the field and almost 90% of those working in the field are Turkish citizens and Turkish engineers. Experts from Russia and different countries around the world, which bring critical expertise, are also here, he added. The plant is expected to employ around 3,000 people, including engineers and technicians. An intergovernmental agreement was signed between Turkey and Russia in May 2010 for Akkuyu, the first nuclear plant of Turkey that will have four VVER-1200 power reactors with a total installed capacity of 4,800 MW. The plant’s groundbreaking ceremony was held on April 3, 2018, with the participation of President Recep Tayyip Erdoğan and his Russian counterpart Vladimir Putin via

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videoconference call from Ankara. Dönmez, in a recent live broadcast, said one of the most important political and strategic objectives under the national energy and mining policy is using more domestic resources to recover from dependence on foreign sources. “We have focused on our hydrocarbon exploration in the seas in recent years,” he said, pointing out that the country increased its technical capacity with two seismic research vessels and three deepwater drillships. Before acquiring seismic research and drilling vessels, the Turkish Petroleum Corporation (TPAO), Turkey’s national oil company, was conducting these works with international foreign partners, however, the minister underlined: “We wanted to make things ourselves, both with our own human resources and with our own technical means. Especially in very strategic commodities such as oil, natural gas and energy, there are times when you cannot receive such services even if you have money.” Turkish Petroleum has carried out some six deepwater drilling projects in conjunction with international partners previously in the Black Sea and 10 shallow-water drillings.

It has also most recently discovered natural gas resources with its own drilling capacities, the minister noted. Turkey’s first oil and gas drilling vessel, Fatih, set sail from northern Turkey’s Trabzon morning for its long-awaited drilling mission in the Black Sea following the completion of installation works. After nearly 1 1/2 months of preparation, Fatih will start its first drilling activities in the Black Sea in the Tuna-1 zone in mid-July. The Tuna-1 zone is located off the mouth of the Danube block in the crossroads between Bulgarian and Romanian maritime borders with the inland waters of Turkey. Turkey’s first seismic vessel, Barbaros Hayrettin Paşa, had earlier carried out seismic surveys in the Black Sea and had identified rich reserves of natural gas in the Danube block in Turkish seawaters of the western Black Sea. Romania and Bulgaria have been producing oil and gas for many years in the Danube block. On the other hand, Turkish drilling procedures in the Eastern Mediterranean fall under two categories: licensed areas issued by the Turkish Republic of Northern Cyprus (TRNC) to Turkey and the licensed areas that are issued by Turkey to Turkish Petroleum.

Over $2.4B in exports bring best-ever January for automotive industry

he locomotive of Turkish exports, the automotive industry enjoyed its best January ever as it managed to export goods worth over $2.4 billion, according to data by Uludağ Automotive Exporters Association (OİB). Having maintained its export leadership for 14 consecutive years, the industry managed to increase its overseas sales by 3.2% last month to $2.4 billion. It had a share of 16.3% in the country’s overall exports.

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Private cars exports had the highest contribution, surging by 27% year-on-year in the said month. The industry started the year with a slight increase in sales to the European Union countries, while a double-digit increase was seen in sales to France and Spain. Exports to France were up 23% year-onyear and totaled around $276.84 million, making it the second largest export market for Turkey’s automotive industry. Private car sales to the country increased

by 72%, the data showed. Sales to Spain, which has become the sector’s fifth largest market, rose by 29% to $168.69 million. Private car exports to Spain saw an increase of 48% last month. Among others, exports to Egypt last month jumped by 115% to over $48 million, while those to Azerbaijan increased by 119% to $10.89 million. Sales to Iran surged by 161% to slightly over 10 million, while exports to Croatia were up by 121% to $11.5 million.

Turkish-built cars boost share in auto market sales in 2019

he total number of sales of cars manufactured in Turkey over the course of 2019 jumped almost 6% over the previous year, according to Automotive Distributors Association (ODD) data, lowering the share of imported cars. The sale of passenger cars and light commercial vehicles dropped by 22.8% last year to 479,060, down from around 670,000 units in 2018, ODD data showed. Some 206,069 of vehicles sold last year were manufactured in facilities in Turkey, bringing their share in the total sales to 43%, up from 37.1% in the previous year. On the other hand, 272,991 vehicles sold were imported, leading to a drop in their share in overall sales to 57%, from 63% in 2018. In 2018, with a total of 620,937 units across the market, sales of domestically manufactured vehicles in Turkey were leveled at around 230,493 units, while the sales of imported vehicles stood at around 390,444. Fiat led the way among carmakers as 73,441 units of its total sales portfolio of 76,251 last year were manufactured in the country. It was followed by Renault with 51,258 units, followed by Ford with 33,425, Toyota with 22,012, and Honda with 17,246 units. German carmaker Volkswagen took the lead in the list of imported cars with 48,496 units sold in the Turkish automobile market, followed by Peugeot, which does not manufacture in Turkey, with a sales figure of 28,861 units, Citroen with 20,006 and Opel with 18,059 units. Passenger car sales last year amounted to some 387,256 units, a 20.37% year-on-year decrease, while sales of light commercial vehicles declined by 31.8% to 91,804 units.

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As for January of this year, sales of passenger cars and light commercial vehicles surged almost 90%, according to ODD data. Some 27,273 automobiles were sold last month, up from 14,373 units sold in the same period of 2018. The increase follows the upward trend that started in September, which came after a monthlong narrowing in the market, amid a drop-in borrowing costs since the Central Bank of the Republic of Turkey (CBRT) started slashing interest rates in July. The number of domestically manufactured vehicles was recorded at 11,239, with imported vehicles numbering around 16,034 units. Passenger car sales doubled during the same period to 22,016, up from 10,979 in the same month last year. An ODD report showed that 5,257 light commercial vehicles were sold in January â&#x20AC;&#x201C; a 54.89% increase year-on-year from 3,394 units. High volatility in foreign exchange rates

in the second half of 2018, followed by a high increase in interest rates on loans, led to a sharp decline in domestic demand. The government, however, introduced tax cuts in November 2018 to reinvigorate consumption. It later extended the cuts until the end of June 2019. The CBRT began aggressively lowering rates in July 2019 after having raised the key rate to 24% in September 2018 in the face of rising inflation. The bank cut its key interest rate to 11.25% last month from 24% since July 2019 on the back of the stabilizing lira and a drop in inflation. It was followed by a campaign initiated by public lenders in late September to spur domestic demand by offering cheaper loans to citizens when they bought domestically made vehicles from select manufacturers. The ODD recently said sales were expected to come to around 550,000 to 600,000 in 2020.

R&D activities turning into value boost Turkey’s competitiveness

s research and development (R&D) activities at Turkey’s technoparks turn into economic value, they increase the country’s competitive strength, President Recep Tayyip Erdoğan said. Erdoğan was speaking at the opening of the second stage of Teknopark Istanbul, a technology development zone that has spearheaded the development of important national projects, including for the Turkish defense and aerospace industry. It offers different facilities to startups and technology companies. Turkey is a country with strong research infrastructure comprising of 207 universities, 1,234 R&D centers, 365 design centers and 85 technology development regions, Erdoğan said. “These centers are home to important companies and entrepreneurs. Every element produced in this system, in which academic and technical knowledge turns into economic value, contributes to our country’s long-term goals. Only the work done so far only in Teknopark Istanbul is the most concrete expression of this fact,” Erdoğan noted. Teknopark Istanbul is home to 312 firms and nearly 5,400 R&D engineers. Some 1,763 defense industry-oriented projects are currently being developed in the technopark. The zone hosts several local and foreign companies that perform high technology R&D studies primarily in the defense industry, aviation and space, maritime, advanced electronics, energy, health sciences and industrial software. Among these companies are ASELSAN, Turkish Aerospace Industries (TAI), TEI, Rokestan, STM, ASFAT, BMC Power, Vestel Defense, Yaltes, C-Tech, Altınay Aviation,

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Pavotek, Femsan, Armelsan, Kale Havacılık, Figes and Boeing. Teknopark Istanbul has already come to the fore due to its support and contribution to the R&D activities concerning the key national defense projects such as Altay Main Battle Tank, newest armed drone Akıncı, Anka unmanned aerial vehicle, T-129 Tactical Attack and Reconnaissance Helicopter (ATAK) and naval projects such as MİLGEM corvettes and development of an amphibious assault ship, the TCG Anadolu, which will be a Turkish Naval Forces flagship. Mentioning that Teknopark Istanbul Technology Transfer Office supports four clusters, Erdoğan explained that defense, aviation and space, health industry, maritime and cybersecurity clusters continue their activities with the objectives of eliminating foreign dependency, producing national technologies and bringing the domestic industry to a higher level. He added that once all of its stages are completed, Teknopark Istanbul will have an indoor area of 1.5 million square meters and will turn into a home for over 1,000 R&D firms. The president stressed that they aim to turn the technopark into a prestigious R&D center in the world where 43,000 of R&D engineers will be carrying out their works. Among others, Erdoğan said with its young population, Turkey is one of the biggest candidates to succeed the aging science and technology giants Europe and Japan. He added that the country has proved itself in the defense industry, suggesting it was now time to do the same in other areas of production as well. Speaking on tthe country’s overall economic performance, Erdoğan said the worst has been left behind, adding despite all negative expectations, the country will have

closed 2019 with positive growth. After a financially and economically turbulent period that kicked off in the second half of the year in 2018 and prolonged into the first half of 2019, the Turkish economy had been battered by currency volatility, high inflation and high interest rates, resulting in tumbling domestic demand by consumers and investors. Turkey’s gross domestic product (GDP) entered a promising era of growth in the third quarter of 2019, breaking three consecutive quarters of contraction. The economy grew 0.9% year-on-year between July and September of 2019, according to data of the Turkish Statistical Institute (TurkStat). Compared with the second quarter, the Turkish economy expanded by a seasonally and calendar-adjusted 0.4%, its third positive quarter-on-quarter in a row, TurkStat data showed. In the first two quarters, the economy contracted 2.3% and 1.6%, respectively, on an annual basis. In 2018, the economy posted an annual growth rate of 2.8%, narrowing in the last quarter. The common market expectation for the fourth quarter estimates ranges from 4.5% to 5%. While the government forecasts 0.5% annual growth for the whole of 2019, its New Economic Program (NEP) targets a 5% annual growth rate for 2020, 2021 and 2022. Erdoğan said a period in which financing costs are falling, which prompted investment climate, has started. “We are seeing indicators of this in multiple sectors, including automotive and house market. Confidence in the economy is increasing ... The domestic demand is strengthening,” he added.

Turkey’s industrial output beats estimates as economy picks up steam

urkish industrial production climbed 8.6% year-on-year in December, official data showed, exceeding forecasts in the fourth consecutive rise as the economy gathers pace. Month-on-month, industrial production was up 1.9% in December on a calendar and seasonally adjusted basis, the Turkish Statistical Institute (TurkStat) said. A Reuters poll for the calendar-adjusted index had forecasted that output would increase 7% annually in December. The output also saw an increase of 5.8% year-on-year in the last quarter of 2019. In the month, all the three main sub-indices – mining and quarrying, manufacturing and electricity, gas, steam and air conditioning – rose by 9.8%, 9.1% and 0.3%, respectively. “The steps we have taken for growth based on value-added production, export and employment are bearing fruits. The annual 8.6% increase in the December industrial production demonstrates that this growth trend has started,” said Treasury and Finance Minister Berat Albayrak, evaluating the data. “We will keep supporting our real sector and continue to increase confidence in the economy,” Albayrak said over his Twitter account.

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Also elaborating on the data, Industry and Technology Minister Mustafa Varank said on Twitter that the industrial production index hit the 21-month-high in December. He said the country is focused on making this performance and production-based growth permanent. “We are working in a year in which growth is accelerating, the real sector is strengthening and employment is on the rise,” the minister said. “On an annual basis, all components of the index remained positive. The strong trend in the fields of capital goods, intermediate goods and high technology is an indication that we are on the right track for the future,” he added. The Turkish economy has rebounded at a much higher pace than expected from the 2018 currency shock thanks to the supportive fiscal stance, strong net exports and credit policies, ING bank said. The bank noted that the calendar-adjusted growth in December turned out to be better than expected, gaining momentum in recent months with accelerated activity and large base effects, while the current uptrend will probably continue in the months ahead with the supportive base and continuing recovery in the macro outlook.

“Recent high-frequency data suggest the recovery will continue this year with an ongoing acceleration in lending thanks to the changes in the reserve requirement framework and deep rate-cutting cycle since mid-2019,” the bank noted. Viewed as a precursor to growth figures, industrial production has expanded since September after contracting annually for 12 straight months. Turkey’s economy grew 0.9% year-on-year between July and September, according to TurkStat data. Compared with the second quarter, it expanded by a seasonally and calendaradjusted 0.4%, its third positive quarteron-quarter in a row. In the first two quarters, the economy contracted 2.3% and 1.6%, respectively, on an annual basis. In 2018, the economy posted an annual growth rate of 2.8%, narrowing in the last quarter. The common market expectation for the fourth quarter estimates ranges from 4.5% to 5%. While the government forecasts a 0.5% annual growth for the whole of 2019, its New Economic Program (NEP), announced in September last year, targets a 5% annual growth rate for 2020, 2021 and 2022.

2019 brings first and highest current account surplus since 2001

urkey achieved a higher-than-expected current account surplus in 2019, its first and highest surplus since 2001, official data showed. Having shown a significant improvement until the last quarter of last year, the current account balance ended the year with a surplus of $1.674 billion, according to the Central Bank of the Republic of Turkey (CBRT) data. “The success of the rebalancing period in 2019 has emerged with the current account figures,” said Treasury and Finance Minister Berat Albayrak, evaluating the data. Measures that were taken over the last year and the rebalancing in the economy have brought a gradual decline in the annual current account deficit that dropped from about $58 billion on a 12-month basis in May 2018. “Contrary to all expectations, we closed such

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a difficult year with a positive figure on the growth side, and we crowned this success with a current surplus of approximately $1.7 billion,” Albayrak said over his Twitter account. The minister noted the country would take firm steps toward its goals of sustainable current account balance and potential growth. “We will continue to reduce costs, support exports, support the real sector and eliminate the most important vulnerabilities of our economy,” Albayrak added. The current account balance posted a deficit of $2.8 billion in December. Official data showed that the figure widened by $1.7 billion from the same month the previous year. The full-year figure exceeds a forecast of a $1.18 billion surplus, according to a Reuters poll. The estimates of a group of

14 economists ranged between $2.6 billion and $3.3 billion. The survey also forecasted the balance to post a $1.2 billion surplus in 2019. The current account had posted $47.35 billion and $28.26 billion deficits in 2017 and 2018, respectively. Last year was closed with $1.67 billion, the first and the highest current account surplus since 2001. The economists attributed it to the 9.1% narrowing in imports, the 2.1% increase in exports and the 17% increase in tourism revenues. They project the surplus would narrow and turn into a deficit in 2020 as the country entered a potential growth path. Finance analyst and economist Haluk Bürümcekçi said the preliminary figures of the foreign trade gap in January pointed to a wider current account deficit compared to the previous year, adding that the narrowing of the annual surplus would continue and eventually turn into a deficit.

OSD Summary Report Automotve Industry Monthly Report 6 / 2020 SUMMARY EVALUATION - 2019/2020

n January-May period of 2020, total production decreased by 34 percent and automobile production decreased by 31 percent compared to the same period of the previous year. In this period, the total production amounted to 415 thousand 454 units, and automobile production

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amounted to 288 thousand 133 units. In the January-May period of 2020, the total market increased by 20 percent compared to the same period of the previous year and reached 189 thousand 118 units. In this period, the automobile market increased by 22 percent and

realized as 146 thousand 528 units. In the commercial vehicle group, production decreased by 39 percent in the January-May period of 2020, decreased by 23 percent in the heavy commercial vehicle group and 40 percent in the light commercial vehicle group. Compared to the January-May period of 2019, the commercial vehicle market increased by 16 percent, the light commercial vehicle market by 14 percent and the heavy commercial vehicle market by 34 percent. In the January-May period of 2020, total automotive exports decreased by 38 percent and automobile exports by 35 percent compared to the same period of the previous year. In this period, total exports amounted to 331 thousand 391 units, while automobile exports amounted to 232 thousand 781 units. In the January-May period of 2020, total automotive exports decreased by 33 percent in USD terms and 31 percent in Euro terms compared to the same period of the previous year. In this period, total automotive exports amounted to $ 8.9 billion, while automobile exports decreased by 29 percent to $ 3.5 billion. Automobile exports in euro terms decreased by 27 percent to â&#x201A;Ź 3.2 billion.

Turkey’s automotive industry estimates record-breaking sales in June

urkey’s automotive industry expects sales to reach a record high in June on the back of attractive car loan packages by public lenders and deferred demand due to the coronavirus pandemic. Major car dealerships across the country told that the market could see between 60,000 to 65,000 car sales in June, a 40% increase compared to the same period last year. The sector also revised overall vehicle sales projections for 2020 upward to 650,000 with a 35% growth compared to 2019. Hyundai Assan Turkey Chairman Murat Berkel said the high demand observed in June encouraged the sector to revise the yearly sales projections from 430,000 to 550,000. He said new cars arriving at stores are sold almost immediately and car dealers are having difficulty maintaining stock. Several car dealerships reported that supply shortages could impose setbacks on future sales, saying car stocks are still limited due to global supply chain disruptions caused by the coronavirus pandemic. Peugeot Turkey CEO Ibrahim Anaç said the overall car sales could reach as high as 650,000 for the year but such a projection depends on the supply of new vehicles. Uğur Sakarya, the founder of Autofocus Automotive Management Consulting, said June sales could have been at least 15,000 more if the sector had had enough stock available. “There has been a demand boom both for new and secondhand cars since the beginning of June and we think this will go on until the end of the year,” Sakarya said. ’Demand for luxury cars also picking up’ Demand in Turkey’s premium car market is expected to recover quickly as well after the slump during the pandemic, according to a leading luxury car brand director. Alfa Romeo and Jeep Brand Director Özgür Süslü said that premium car brands have suffered declining sales in April and May due to the pandemic but the market has started to revive after the reopening of the economy following three-months of restrictions. Süslü said the sector had to revise the sales outlook for 2020 from 55,000 to 45,000 based on the pandemic but added that the revised projection would still be considered a success given how disrupting the crisis has been for the industry. He said Alfa Romeo and Jeep also revised its sales forecast to 4,500 for the year, which would still be a record-breaking performance compared to the previous years.

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Nevzat Kaya, chairman of Aston Martin Turkey, also said demand started to pick up in the luxury car market in mid-May, especially in the SUV and sports car segments. Loans packages support demand but supply remains tight The attractive low-interest loan opportunities announced on June 1 by Turkey’s public lenders have significantly boosted car demands, but dealers are likely to struggle with supply shortages until the end of 2020. Ziraat Bank, VakıfBank and Halkbank introduced loan packages for individual and corporate customers who want to purchase new and secondhand passenger vehicles, including motorcycles or commercial vehicles, from contracted companies that make them domestically. Banks offered loans with interest rates as low as 0.49% and a grace period of up to 12 months. The loan packages also included secondhand car purchases. However, supply shortages are likely to make it difficult for brands to meet such high demand. The stock unavailability has been an issue for the car market since the last quarter of the previous year. The situation worsened after the pandemic forced auto factories to suspend production worldwide, paralyzing the entire industry. It was only possible for factories to resume production in May at limited capacity, which fell short of resolving the supply problems. Automotive production in the country slipped by 22% in March and further plunged by 91% in April, according to the Automotive Manufacturers Association (OSD) data. The industry saw a production loss of some 150,000 units over the two months. Overall, 2020 production between January and April dropped 28% year-on-year the data showed, with some 352,309 vehicles, including automobiles and commercial vehicles, being

manufactured in the period. Several car brands were able to import new vehicles from Europe, which went unsold due to a collapse in demand. However, the practice is not likely to continue as the demand begins to pick up in the European market as well. Industry experts expect supply shortages to be resolved by the end of 2020 when factories resume production at full capacity.

World’s most productive car plant shuts down over China virus The most productive car factory in the world fell quiet as South Korea’s Hyundai suspended operations at its giant Ulsan complex, hamstrung by a lack of parts with the coronavirus outbreak crippling China’s industrial output. The five-plant network can make 1.4 million vehicles annually, in a coastal location facilitating importing components and exporting cars globally. But supply lines are crucial in an ever more interconnected worldwide economy and the coronavirus outbreak in China has seen Beijing order factories closed in several areas as it seeks to contain the epidemic. As a result, Hyundai – which with its affiliate Kia ranks as the world’s fifth-largest auto manufacturer – has run out of the wiring harnesses that connect vehicles’ complex electronics. The company is now having to suspend production at its factories across South Korea, putting 25,000 workers on forced leave and partial wages and placing healthy victims of the disease outbreak across the Yellow Sea. “It’s a shame that I can’t come to work and have to accept a pay cut,” said an Ulsan production line staffer with the surname Park. “It’s a very uncomfortable feeling.” The closures could be the first example of a phenomenon that rolls out around the world, analysts say. The impact on Hyundai will be eyewatering, with analysts estimating a fiveday South Korean shutdown to cost the firm at least 600 billion won. Hyundai is not the only corporate casualty: Kia will suspend three plants for a day, the South Korean unit of French automaker Renault is considering stopping its factory in Busan next week, and Fiat Chrysler CEO Mike Manley told the FT that his firm could be forced to halt one of its European factories. Analysts warn of broader troubles if Beijing extends the Lunar New Year holiday further as the coronavirus – which according to official figures has infected more than 31,000 people in China and killed 636 – continues to spread. “The biggest problem is that we don’t know how the outbreak in China will

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unfold,” said Cheong In-kyo, an economics professor at Korea’s Inha University. “South Korean companies rely heavily on China for parts and components. The problem is even if just one part is missing, you can’t do anything.” The disruption was only just beginning, he added, and warned it would spread beyond the auto sector. “There is not a single category that is not manufactured in China.” ‘Everyone is impacted’ The People’s Republic is the world’s biggest exporter of goods, with the U.S. by far its largest trading partner. Exports to the U.S. from China and Hong Kong combined – many goods are shipped via the financial hub – totaled more than $450 billion last year, followed by Japan with more than $150 billion. South Korea and Vietnam also both imported goods worth more than $100 billion from the pair. “China has become an integral part of the global manufacturing supply chain, accounting for about one-fifth of global manufacturing output,” said Mark Zandi, chief economist at Moody’s Analytics. Its neighbors will be hit by supply chain effects first, he said, naming Taiwan and Vietnam, followed by Malaysia and Korea. The effects in the U.S. would be delayed by the length of the supply lines, said Kristin Dziczek of the Center for Automotive Research in Ann Arbor, Michigan, but there would be secondary impacts on parts from other overseas markets built with Chinese

items. Automakers and suppliers were “evaluating and planning how to navigate the disruptions,” she said. “But there is no capacity the size of China sitting idle waiting to fill in the gaps and it’s difficult to move quickly in this environment when everyone is impacted.” The global car industry was plunged into turmoil when a single Renesas Electronics factory in Japan – making a vital and widely-used microcontroller – was put out of action by the 2011 Fukushima earthquake. Supply lines have since become much more diversified, analysts say. “Car manufacturers have a system of multiple sourcing because the risk would be too big to have only one supplier in one place for a particular part,” said Ferdinand Dudenhoeffer, director of Germany’s Center Automotive Research. It was standard for parts to be provided by “at least two different suppliers,” he said, adding that as part providers tended to be in the same region as the vehicle assembly line, “the car industry in Europe or America is much less exposed to a Chinese risk than Asian countries like Korea or India.” But sourcing wiring harnesses from three different companies failed to protect Hyundai’s South Korean plants. “We should have more diversified suppliers,” said production worker Park. “It’s a shame that there is nothing we can do at this point because we are so reliant on one country.”

Hybrid, electric car market attracts growing interest in Turkey

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Turkey’s electric and hybrid car market is growing with high interest among consumers, as the number of sales in 2019 has tripled the figures from the previous year. According to the year-end data provided by the Turkish Electric and Hybrid Cars Platform (TEHAD), 222 of the 11,237 electric and hybrid cars sold in 2019 were fully electric while the rest of them were hybrid models, excluding mild hybrids. Toyota’s Corolla Hybrid model was the best-selling model among the hybrid cars with a total of 7,605 sales, while the Jaguar I-Pace topped sales among electric models with 119 units. TEHAD Chairman Berkan Bayram, whose views were included in the statement shared on the electric and hybrid car platform’s website, said that with the

inclusion of the latest numbers, a total of 1,600 fully electric cars are on the roads in Turkey. There are currently four electric models in the Turkish market, the statement said, adding that there will be five additional models in 2020. The electric MINI, Audi e-Tron, Mercedes EQC, Porsche Taycan and Nissan Leaf are expected to be introduced to the market in the first half of the year. The sales and market share of electric cars have increased rapidly in Europe while showing a relatively slow increase in Turkey. However, more automotive brands are beginning to launch newer, more advanced models in the country. Turkey has recently introduced its fully electric domestic car, as well, the mass production of which is set to begin in 2022.