AUTOMOTIVE INDUSTRY

Emrah KUTLU

Zeynep AVCIOĞLU

AUTOMOTIVE INDUSTRY

• Key driving sector of the economy

• Closely tied to other sectors of the economy

• Prime buyer in basic industries

• Requires complex and multidisciplinary technology

AUTOMOTIVE INDUSTRY

• Intense competition in the market

• Intensive R&D

• Fastest developing sector in the global economy

AROUND THE WORLD

• 1800’s Europe

• US Mass production

• 1990’s Globalization

TURKEY

• mid 1950’s

• 1954 Türk Willys Overland Ltd.

• Tofaş, Renault, Ford

• Joint ventures

MARKET STRUCTURE

• Highly labor and capital intensive

• Majority of costs for producing - Labor - Materials - Advertising

MARKET STRUCTURE PORTER’S FIVE FORCES MODEL

MARKET STRUCTURE

• The auto industry is considered to be an oligopoly.

• Today there are 15 companies in production of which 5 are automotive producers and 10 are commercial vehicle producers.

MARKET STRUCTURE

• The automotive industry is one of the four largest exporters.

• Significant contribution to:

- National production and development

- Employment

- Level of technology

MARKET STRUCTURE

Table- 1 PRODUCTION IN TURKEY

Source: OSD, MVI Monthly Report

MARKET STRUCTURE

• The companies in the sector are mainly located in the Marmara Region.

• Existing motor vehicle production capacity of the automotive industry in Turkey is 1,015,000 units per year, as of 2002.

Table- 2 The Firms in the Automotive Industry

Source:OSD, 2002

Table- 3 The Leading Firms in the Industry and Their Sales 2004 yılı ilk 500

firma sıra no.2003 yılı

500 Büyük

Firma Sıra

No

Firma ve Müessese

Adı

Bağlı

Bulunduğu

Oda

Özel Firma

Sıra No

Üretimden

Satışlar Net

(YTL)

2 2 FORD OTOMOTİV SAN. A.Ş.

İSTANBUL 1 4,445,190,178

3 11 TOYOTA OTOMOTİV SANAYİ TÜRKİYE A.Ş.

ADAPAZARI 2 3,348,031,394

4 4 OYAK-RENAULT OTOMOBİL FABRİKALARI A.Ş.

İSTANBUL 3 2,966,839,536

9 7 TOFAŞ TÜRK OTOMOBİL FABRİKASI A.Ş.

İSTANBUL 7 2,146,938,617

16 17 MERCEDES -BENZ TÜRK ANONİM ŞİRKETİ

İSTANBUL 12 1,218,993,109

Source: ISO, 500 Büyük Sanayi Kuruluşu Anketi, 2004

LEADING EXPORTING COUNTRIES

• France

• Germany

• Italy

• UK

CONDUCT

Table- 4

Source: www.wbr.co.uk, About the Turkish Automotive Industry

Table- 5 Automobile Imports( in units)

Years Imports from EU Total Imports Share of Imports from EU

1997 93,811 135,795 69%

1998 93,549 110,552 84%

1999 102,662 121,309 84%

2000 236,902 272,110 87%

2001 66,405 74,165 89%

2002 53,121 61,294 86%

Source: OSD, 2005

CONDUCT

PRODUCT DESIGN-Design of Textile and Textile-Based Products Used in Automotive

-Designing Commercial and Public Transport Vehicles Like Trucks, Buses,etc.

- Development and Redesign Work for Currently Produced Automobiles Towards New Markets

-Design Work Towards Developing Accessories and Products of Special Functions

- Prototype Processes of Vehicles Designed Abroad and Design Work Concerning Test Production

CONDUCT

PARTNERSHIPS

• Tofaş- Fiat

• Otosan- Ford

• Oyak- Renault

PERFORMANCE

SWOT ANALYSIS

The Strength of the Turkish Automotive Industry

Economically

a) Third major sector in Turkish manufacturing industry

b) Leading private sector investor

c) Driving force in manufacturing industry with its high value added

d) A reliable source of tax revenue with its totally registered production

PERFORMANCE

Human Knowledge a) High-skilled human resources both in production and management

b) Sustainable and improvable competitive workforce with low labor cost and culture of productivity

c) Accumulated technological know-how and rapidly growing investments in R&D

d) Quality management systems

e) Widespread distribution and marketing networks

f) Integration with world automotive industry since 1990s

PERFORMANCE

Geostrategic Importance

a) The most developed automotive industry and a unique export and production base in the region with close bilateral relations with EU, G8, Eurasia

b) Export experience and strong export markets

c) Easy access to potential emerging markets

PERFORMANCE

The Weakness of the Turkish Automotive Industry

a) Unstable domestic marketb) Loss of quality and quantity in manpower as a result of the crises caused

by the weak economy of the countryc) In adequate investments in the sectord) High costs of raw materials due to capacity utilization and production

below economies of scalee) High sales taxes and gasoline pricesf) Lack of international strategy g) Excess capacityh) Insufficient export incentives

GROWTH AND FUTURE

- The automotive industry in Turkey has a significant potential for progress and export capacity. With the completion of global vehicle projects currently under progress, Turkey will soon reach an annual vehicle export capacity of at least 500,000 units.

- In the near future, Turkey will be the world‘s alternative production center of vehicle and parts, and the automotive sector will become one of the leading sectors of the manufacturing industry, with exports of $8-8.5 billion.

GROWTH AND FUTURE

Basic elements of the national export strategy to reach these goals are;

• Exporting of knowledge-intensive products with high added value

• Focusing on markets with high purchasing power

• Reaching the end consumer

• Adopting quality by all industrial institutions

• Establishing sales prices based on market conditions and customer

requirements

• Following new developments

• Focusing on R&D

• Investing more in technology, human resources, information,

and quality training

CONCLUSION Globalization will continue increasingly in the automotive sector.

The automotive industry in Turkey is in a position where it can produce at global standards. It has developed its competitive capabilities, and a structure that can apply common marketing strategies with licensing countries.

The sector is able to create more added values.

Having a competitive structure, having the power to manufacture quality and consistent products with new technologies, and most effectively, having the cost-price advantage, puts Turkey in a position of being an important manufacturing base and an important market, from the perspective of the global automotive.

THANKS FOR YOUR ATTENTION…