Turkey: Ford to consolidate production of LCVs in Europe
Hyundai doubles production capacity of passenger cars to 200K
In 2007, the annual production volume of vehicles in Turkey exceeded one million units for the first time. The volume decreased by 24.2% y/y to 869,605 units in 2009 after the economy was hit with the effect from the bankruptcy of Lehman Brothers. However, the production in Turkey has maintained a level between 1.1 and 1.2 million units since 2010.
Auto industry in Turkey has become an export hub mainly targeting Europe. About 70% of the vehicles produced within the country are exported. Turkey has a population of around 75 million (as of December 2012), and its domestic automobile market volume, which was around 500K units several years ago, has grown to approximately 900K units. Because the models produced in-country are limited, approximately 60% (over 70% for passenger cars) of the sales volume within Turkey are imports.
The Turkish government has expanded investment incentives for 2012 and 2013 to enhance domestic automobile industry. It is planning to increase the automobile export value from the current 25 billion dollars to 75 billion dollars by 2023.
As part of its restructuring strategy in Europe, Ford is closing two of its plants in the U.K., but it will enhance the production structure in Turkey to transfer the production of the Transit. A third plant will be constructed to make Turkey a development and production site for light commercial vehicles (LCVs) marketed in Europe.
Hyundai Motor Company is planning to expand its business utilizing Turkey-South Korea FTA which went into effect in May 2013 and double its passenger car production capacity to 200K units by the end of 2013.
Renault began production of the new Clio launched in the fall of 2012 at plants in Turkey and Flins, France. The company and the French government has been in dispute over the production ratio at these two plants, however, the production volume for January to March 2013 were 60% from the Turkey plant and 40% from the Flins plant in France. Renault also started the production of the new Fluence and Symbol.
As for Japanese OEMs in Turkey, Toyota will start production of the next generation Corolla sedan from June 2013. Honda is considering producing the Urban SUV Concept based on the next generation Fit.
"2014 Ford Transit Connect wagon"
(sold as the Tourneo Connect in Europe)
showcased at 2013 Detroit Auto Show
"Corolla Furia Concept" believed to
go into production from June 2013
(photo taken at 2013 Detroit Auto Show)
Production, exports and sales volumes in Turkey
Source: Otomotiv Sanayii Dernegi (OSD)
Note: numbers in blue are item breakdown of new vehicles sold.
Ford and Tofas (Fiat) mainly produce CVs
Of the top three companies with highest production volumes, Ford and Tofas (Fiat) focused their productions on commercial vehicles (CVs). Ford's vehicles manufactured in Turkey are all CVs and 63% of the vehicles manufactured between 2010 — 2011 by Tofas(Fiat) were CVs. As a result, 46.2% of the total production volume for 2012 is CVs.
Mercedes-Benz is also placing Turkey as its core production site for heavy-duty vehicles.
Production volume by vehicle types
|2009||2010||2011||2012||Jan.-Mar. 2012||Jan.-Mar. 2013|
|Source: Otomotiv Sanayii Dernegi (OSD)|
|Note 1.||The numbers in blue represent breakdowns for CVs.|
|2.||"Pickup" is an English translation for a local term, Kamyonet, generally referring to LCVs such as vans, pickup trucks with GVW 3.5t or less.|
As of 2012, Turkey has an annual production capacity of 1.58 million automobiles. The production performance for 2012 was 1.07 million units with a plant operation rate of 68%.
Toyota, Honda, and MAN are wholly owned subsidiaries, but other Japanese, European, and South Korean automakers are establishing production structures jointly with local companies.
Annual production capacities by OEMs and vehicle types (2012)
|Passenger Car||Truck||Pick up||Bus||Mini-Bus||Midi-Bus||Total|
|GVW > 3.5t||GVW 3.5t or less||26 Passengers or more||Up to 14 Passengers||15-25 Passengers|
|Production in 2012||577,296||29,129||426,633||6,427||29,335||4,158||1,072,978|
|Source: Otomotiv Sanayii Dernegi (OSD)|
|Note 1.||Ford Otosan is constructing a third plant with an annual production capacity of 110K units and plans to start the production of LCVs smaller than the current models from the end of 2013. Hyundai will expand its passenger car production capacity from the 100K units to 200K units by the end 2012.|
|2-1.||Tofas is a vehicle manufacturing company established in 1968 with Fiat owing 37.8% of the company and Koc Holding owning 24.3%. The company manufactures vehicles for Fiat, PSA, Opel as well as its own brand (mainly taxies).|
|2-2.||Tofas (Fiat) LCVs like the Doblo and Fiorino vans (classified under "Kamyonet"="Pickup" in volume related document from OSD) account for approximately 2/3 of the total production volume (compact vehicles built on a monocoque body mostly with a load limit of around 500 kg). The production capacity is classified under "P. Car" in the table above.|
|3.||Karsan is a local company which manufactures licensed models from major OEMs (Peugeot Partner/Citroen Berlingo, Renault Truck, and Hyundai Truck) under contract as well as mini-buses under its original brand, "the J Series".|
Production and export volumes by OEM
Of the manufacturers locally producing vehicles in Turkey, Renault, Ford, and Fiat manufactures around 300K units annually followed by Toyota and Hyundai with 100K units. The companies export 60% to almost 90% of the vehicles manufactured.
Turkey: production and export volumes of major OEMs
|Tofas (Fiat) (Note 2 & 3)||Production||212,493||267,436||253,090||312,245||307,788||208,947|
|A.I.O.S. (Anadolu Isuzu)||Production||7,842||10,007||1,817||3,292||4,324||n.a.|
|Source: Otomotiv Sanayii Dernegi (OSD), Marklines Data Center|
|Note 1.||2007-2011 & 2012 total value is from OSD. 2012 breakdown is from Marklines Data Center.|
|2.||The 2011 performance for Tofas (Fiat) includes the production volume (68,166 units) of the Peugeot Bipper/Citroen Nemo (a sister model of the Fiat Fiorino), which began production in 2007.|
|3.||The 2012 performance for Tofas (Fiat) does not include the volumes for the two PSA models mentioned above (42,481 units) and the Opel Combo (33,578 units), a Fiat Doblo based model, which started production in 2012.|
Turkish government announces investment incentives for auto industry
Expansion of investment incentives by Turkish government
|The Turkish government made announcements on incentives to expand investment into the Turkish auto industry in June 2012 and February 2013. While the auto industry is driving the Turkish economy, the companies rely heavily on imports for intermediate commodity, especially for modules with high added values. The government hopes to improve the situation by increasing local procurement rate from the current 56% to 85%.|
|In addition to manufacturing of automobiles in general, investments relating especially to the production of engines, engine parts, transmissions, and electrical units will be given privileges to taxes such as value-added tax, import duty, and corporation tax for purchasing machineries and facilities. Furthermore, with the introduction of these incentives, the government will put an effort into inviting Volkswagen to Turkey which currently does not have local manufacturing site (the VW group sold 123,006 imported vehicles in 2012 which is the second highest volume after the Renault-Nissan group with 138,330 units).|
|It aims to strengthen the competitiveness in production of high value-added products and increase the annual automobile export value from the current 25 billion dollars to 75 billion dollars by 2023, the 100th anniversary of the country with these measures.|
Ford to consolidate development and production of CVs in Europe
Restructuring of business in Europe, currently in a slump, is under way at Ford; the production of the Transit will be transferred to a plant in Turkey after the Southampton plant in the U.K. closes in 2013. The third plant in Turkey is in construction to start production within 2013.
At the same time, the OEM will consolidate development and production function of CVs targeting Europe to Turkey. It is reviewing CV line-ups for Europe and product mixes for cargo vans as well as People-movers (the Tourneo series) consisting of four models each will be completed by mid-2014. The company aims to increase the annual sales volume for the entire Transit series including both cargo and passenger vehicles from 250K—300K units to 400K units by 2016.
The Turkey plant has manufactured a total of over 2.25 million CVs exporting them to 70 countries around the world since the production of the Transit began in 2001 (21% were shipped to North America between January and March 2013).
Four cargo van models
|Models||Overview||Start of production/sales|
|Transit||Load capacity between 1,500 kg and 2,000 kg.||2001|
|Transit Custom||One-ton class load capacity.||Manufactured from July 2012|
|Transit Connect||A 700 kg class van based on a C-platform. Exported to the U.S. from 2009.||2002|
|Transit Courier Van||A compact van based on a B-segment platform measuring 4.16m in length.||Sold from Spring of 2014|
Note: the Transit Custom is a new model placed between the large-sized Transit and the compact Transit Connect, with production beginning from July 2012 together with the Tourneo Custom.
Four Tourneo models and Transit Minibus (People-movers)
|Models||Overview||Start of production/sales|
|Transit Minibus||A Transit based mini-bus (14-seater or less) is being sold and manufactured.||-|
|Tourneo Custom||An eight to nine-seater passenger van. Available with a body length of 4.97m and 5.34m. Powered with a 2200cc diesel engine.||Manufactured from July 2012|
|Tourneo Connect||A C-segment five-seater vehicle sharing the platform with the Focus. It measures 4.42 m in length. Available with a 1.6-liter diesel engine or a 1.0 and 1.6-liter Ecoboost engine.||Sold from the end of 2013|
|Grand Tourneo Connect||A seven-seater Grand Tourneo Connect is added to the Tourneo Connect line-up. The body length measures 4.82m ; 400mm longer than the standard model.|
|Tourneo Courier||A B-segment five-seater vehicle sharing the platform with the Fiesta. It measures 4.16m in length. Available with a 1.5 and 1.6-liter diesel engine or a 1.0-liter Ecoboost engine. Currently in development at a R&D site in Turkey.||Manufactured at the third plant in Turkey; sold from Spring of 2014|
Note: Ford is launching a new People-mover series from 2012 under the name the "Tourneo" in Europe. Cargo vans sold in Europe and North American models (both cargo and passenger models) will continue to be released under the Transit/Transit Connect model names.
Ford constructs third plant in Turkey; strengthen sites in Turkey in Europe restructuring
|Ford will construct a third plant in Turkey. 260 million Euros will be spent on this project. The plant will have an annual production capacity of 110K units. The production of LVCs will start within 2013.|
|The company is in the process of restructuring its business in Europe, which has been in a slump. The Southampton vehicle plant and the Dagenham stamping plant in the U.K. will be closed in 2013 (manufacturing of engines will continue at the Dagenham plant), and the Genk vehicle plant in Belgium will be shutdown in 2014. The Transit vans manufactured at the Southampton plant (annual production volume of 28,755 units in 2011, 11,400 units in 2012) will be transferred to Ford Turkey, and the production at the Genk plant will be transferred to a plant in Spain.|
|Turkey is the only country making a profit in Europe for Ford. Of all the European OEMs, Ford has come up with the most aggressive restructuring plan. The restructuring will bring Ford in Europe a savings of 450 to 500 million dollars annually from the decrease in fixed cost and increase in plant operation rate, giving Ford an advantage among European automakers.|
Hyundai Motor Company to double production capacity to 200K units by the end of 2013
Hyundai Motor Company plans to double its passenger car production capacity from 100K to 200K units. Additionally, it will construct an engine production and a R&D site. The company also announced its plan to jointly manufacture CVs with a local Turkish company, Karsan.
Hyundai Motor Company to double production capacity to 200K units
|Hyundai is currently producing the Accent and the i20 at its Turkey plant. The production of the new i20 started in May 2012. The automaker announced that it will double its passenger car production capacity from the current 100K units to 200K units by the end of 2013 in order to start production of an A-segment vehicle, the i10, at the end of 2013.|
|It also plans to construct an engine plant and a R&D site. The completion of the R&D site will make it the third development site in Turkey after Ford and Fiat.|
Hyundai and Karsan jointly manufacture CVs
|In November 2012, Hyundai Motor Company and an automobile manufacturing company, Karsan, announced that they will jointly manufacture CVs under the Hyundai brand. With Hyundai investing 200 million dollars and Karsan 60 million dollars, CVs between GVW 3-6 tons will be manufactured. Hyundai will provide Karsan with KD sets to start production at the end of 2014. The companies plan to have an annual production volume of 200K units in seven years. Eighty-five percent of the CVs manufactured at the plant will be exported to countries in Europe.|
|Note 1.||FTA went into effect between Turkey and South Korea on May 1, 2013. This will immediately relieve 93% of customs duty on industrial products exported from Turkey to South Korea. Customs duties on industrial products between the two countries will completely be abolished over the next seven years. 52% of the customs duties on agricultural products will be abolished over the next ten years.|
|2.||Import customs duties on some of the vehicles and auto-parts will also be reduced in stages to be abolished in seven years. This will be advantageous for Hyundai and related suppliers.|
Renault starts production of new Clio, Fluence, and Symbol from fall 2012
Renault produces approximately 60% of the new Clio in Turkey
|Renault showcased its latest (fourth generation) Clio at the Paris Motor Show held in September 2012 and began production at the Turkey and Flins (France) plants. A dispute regarding production ratio between Renault and the French government has been reported. Renault wants to increase production at the Turkey plant; conversely the French government wishes to increase the production in France. There is a cost difference of 1,300 Euros to manufacture one unit of the Clio in Turkey versus France.|
|Renault has not announced the production volume plan at both plants, but according to a research by Marklines Data Center, about 60% (53,872 units) were produced at the Turkey plant and the remaining 40% (36,718 units) at the Flins plant in France between January and March 2013 (over 50% was manufactured in Turkey between 2010 and 2012).|
|In March 2013, agreement was made between Renault and a labor union, which represents two thirds of its workforce, to increase the annual production volume in France to 180K units by 2016 in return for the union's compromising on working conditions. As a result, (1) Renault announced the production of 82K units of the Nissan Micra to be sold in Europe at the Flins plant from 2016. (2) A part of the Clio produced at the Turkey plant is planned to be transferred to France.|
Renault starts production of the new Fluence and Symbol from the end of 2012
|Renault showcased the new Fluence and Symbol at the Istanbul Auto Show in November 2012 and began production at OYAK-Renault. The Fluence is a C-segment sedan (a hatchback Megane based model) and the Renault Symbol (sold under the name Thalia in some regions) is a sister model of the new Dacia Logan launched in 2012. Note: the previous generation of the Symbol was a sedan based on the Clio.|
Toyota produces new Corolla and Honda considers production of Urban SUV Concept
Toyota starts production of new Corolla from June 2013
|Toyota is currently manufacturing the Auris and Verso at its Turkey plant (74,822 units were manufactured for 2012). The production of the "Corolla Furia Concept," showcased at the Detroit Auto Show held in January 2013, will start from June 2013 manufacturing 100K units annually shipped to 30 countries. The production of the Auris will be transferred to the U.K.|
|Toyota will spend 160 million Euros to the Turkey plant to organize production and increase annual production volume to 210K units and expand the export value from Turkey plants from the current 1.5 billion dollars to 2.5 billion dollars.|
Honda considers production of Urban SUV Concept
|Honda manufactures the Civic sedan at its plant in Turkey. The plant has an annual production capacity of 50K units, but the actual volume produced stayed at 20K units between 2009 and 2012.|
|Honda showcased "the Urban SUV Concept" based on the next generation Jazz (the Fit in Japan) at the Detroit Auto Show held in January 2013. The model will go into production in 2013 for Japan and 2014 in Mexico plants mostly marketed for the U.S. market. The OEM is currently considering producing vehicles for Europe at the Turkey plant. A final decision will be made based on the situation in the European market.|
Sales volume and shares in Turkey by OEMs
800K - 900K units including imported cars were sold between 2010 and 2012 in Turkey.
Fiat, Ford, and Renault are in the lead with higher local production volumes. However, the VW group, which does not produce locally, is continuing to grow. The group sold 123,006 imported vehicles in 2012.
The volume of new cars sold in Turkey in 2012 decreased to 820K units from 910K units in 2011. Ford's local subsidiary, Ford Otosan, expects the market volume to exceed 800K units in 2013.
Breakdown of new vehicles sold
|2008||2009||2010||2011||2012||Jan.-Mar. 2012||Jan.-Mar. 2013|
Source: Otomotiv Sanayii Dernegi (OSD)
Turkey: sales volume of "passenger cars+ LCVs" from major OEMs (includes imported vehicles)
|Renault-Nissan (Including Dacia)||PC||68,279||55,430||70,842||102,525||129,806||119,454|
|Hyundai Group (including Kia)||PC||36,649||35,636||66,048||56,506||54,424||55,535|
|Top eleven companies||PC||345,638||287,152||354,473||495,569||576,940||540,611|
Source: JATO Dynamics, Marklines Data Center Note: the table shows retail sales volume of passenger cars and LCVs including imported vehicles. The total is not consistent with the volume released by OSD because the data is from a different source and does not include heavy commercial vehicles.
Shares for "passenger cars + LCVs" from major OEMs (includes imported vehicles)
|Fiat||PC + LCV||13.6%||13.0%||15.7%||14.9%||15.5%||13.7%|
|Top eleven companies||94.3%||91.9%||94.7%||96.2%||96.1%||96.6%|
Number of imported passenger cars by brand
|Passenger car total||243,542||354,150||414,031||409,676||89,588|
Source: Otomotiv Sanayii Dernegi (OSD) Note: The grand total does not match with the sales volume of imported vehicles referred at the beginning of this report because it does not include mid-/heavy-duty commercial vehicles.
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