OTOMOTİV SANAYİİ DERNEĞİ AUTOMOTIVE MANUFACTURERS ASSOCIATION

The Automotive Industry in Turkey

2010 And Beyond?

Prof.Dr.Ercan TEZER / OSD General Secretary

Founded in 1974

Main Objectives Are:

To Represent MV Sector In Public Authorities, Local and International Organisations

To Gather and Publish Various Information on MVI of Turkey

To Organize & Conduct Joint Actions in Different Fields

Is an Active Member of:

OICA ACEA Liaison Committee

ODETTE GAID Group

ENX

OSD is a Partner of

ACEA / EUCAR, EU ERTRAC and EU Motor Vehicle Technical Committee

UN / WP 29

All Relevant Information is Found in OSD Web-Site:

www.osd.org.tr/

Otomotiv Sanayii Derneği / OSDAutomotive Manufacturers Association

OSD is Organizing & Conducting Joint Actions in Different Fields

OSD Working Groups

Technical Legislation

Environment

Human Recourses & Safety

Quality

Supplier Management

Marketing

Finance & Investment

Export & Imports

IT

Global

(70 Mio Production / 62 Countries)

Intensive

(10 Companies / % 90 Production)

Multiple Effect-Creates

(Value Added / Revenue / Jobs)

High Competition / Costumer Expectation

(Better Safety/Higher Comfort/Rock Bottom Price)

Product Differentiation

(P.Cars-Status / CV-Investment)

Globally Under Heavy Legislation

(Emission/Safety/Climate Change)

Innovation Oriented

Automotive Industry

Global Delocalization“To be Manufacturer in Potential Markets and Enjoy With Low Operational Cost”

USA

S.AmericaAnd

Others

Europe

Japan

Korea

1950

1970

1980

1990

1970

1960

PRC

1980

Global Production (1995/2009) and Future ( x Million)

50 5254 53

56 58 5659 61

6567 69 70

61

67

73

108

73

40

50

60

70

80

90

100

110

120

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2024

J.D.POWER Associates

7.935

5.712

5.210

3.513

3.183

2.633

2.170

2.050

1.557

1.490

1.300

1.090

968

975

879

870

843

724

523

13.7911) CHINA

2) JAPAN

3) USA

4) GERMANY

5) S.KOREA

6) BRAZIL

7) INDIA

8) SPAIN

9) FRANCE

10) MEXICO

11) CANADA

12) IRAN

13) ENGLAND

14) THAILAND

15) CZECH REP.

16) POLAND

17) TURKEY

18) ITALY

19) RUSSIA

20) BELGIUM

Ranking in EU (27) 2009

Total 7

Buses 2LCV 1H.Trucks 9P.Cars 8

870.000 Units in 2009

World Total Production – 2008/2009 (x 1.000)

Chnc.1 JAPAN 11.576 1 CHINA 13.791 48,3%2 CHINA 9.299 2 JAPAN 7.935 -31,5%3 USA 8.694 3 USA 5.712 -34,3%4 GERMANY 6.046 4 GERMANY 5.210 -13,8%5 S.KOREA 3.827 5 S.KOREA 3.513 -8,2%6 BRAZIL 3.216 6 BRAZIL 3.183 -1,0%7 FRANCE 2.568 7 INDIA 2.633 12,9%8 SPAIN 2.542 8 SPAIN 2.170 -14,6%9 INDIA 2.332 9 FRANCE 2.050 -20,2%

10 MEXICO 2.168 10 MEXICO 1.557 -28,2%

2008 2009

OICA

2009 Total World Production (x 1.000)

2008 2009 Chng.

NAFTA 12.944 8.759 -32,3%

SOUTH AMERICA 3.938 3.799 -3,5%

EU 27 COUNTRIES 18.432 15.235 -17,3%

OTHER EUROPEAN COUNTRIES AND TURKEY

3.339 1.759 -47,3%

JAPAN 11.576 7.935 -31,5%

SOUTH KOREA 3.827 3.513 -8,2%

TOTAL 70.520 61.366 -13,0%

CHINA 9.299 13.791 +48,3%

INDIA 2.332 2.633 +12,9%

OICA

7,93,0 2,3 3,7 2,8 5,1 7,3 7,9

4,7 3,4

53,8

20,7

-24,9

-2,8

-36,2

-18,8

-4,8

-50,0

-40,0

-30,0

-20,0

-10,0

0,0

10,0

20,0

30,0

40,0

50,0

60,0

2006

Q1

2006

Q3

2007

Q1

2007

Q3

2008

Q1

2008

Q3

2009

Q1

2009

Q3

2010

Q1

2009 Q1 2010 Q1 Chng.

NAFTA 1.738 2.953 69,9%

SOUTH AMERICA 749 958 27,9%

EU 27 COUNTRIES 3.260 4.370 34,0%

OTHER EUROPEAN COUNTRIES

197 249 26,4%

JAPAN 1.610 2.541 57,8%

SOUTH KOREA 688 974 41,6%

TURKEY 143 258 80,4%

TOTAL 12.126 18.647 53,8%

CHINA 2.567 4.554 +77,4%

INDIA 594 870 +46,5%

Changes in Total Production By Regions 2008/2024

Production Moves From West To East & North To South

1,011,031,09

1,361,36

1,632,192,25

1,591,95

2,463,07

2,331,53

0 1 2 3 4

Japan

Korea

W.Europe

Mercosur

N.America

E.Europe

Asia/Pasific

Others

Brasil

Russia

China

India

BRIC

World Total

J.D.POWER Associates

Production BRIC Countries 2008 / 2024 (x 1.000)

0

10.000

20.000

30.000

40.000

50.000

2008 2024

Russia Brazil China India

2008 (%) 2024 (%) 2024/2008Russia 1.837 3.579 1,59Brazil 3.060 4.851 1,59China 9.344 23.002 2,46India 2.371 7,268 3,07BRIC 16.612 (23) 38.699 (35) 2,33Total World 70.738 108.373 1,53

ChangeX 2,33

J.D.POWER Associates

16,61216,612

38,69938,699

Turkey Keeps up With Recent Global Economic Trends in the Region

Longest Practice of Global Market Economy Emerging Economy Applying the International Rules of Free Trade

Such as Competition Law, Property Rights And Etc. International Capital Movements are Liberalized Up to Date Infrastructure for Commercial and Financial Activities,

Telecommunication and Transportation Competitive Industrial Products for the World Market

Long Term Relation With EU Within The Association Agreement Dated 1963

Candidate Country in Negotiation Process For EU Membership

Customs Union Was Realized Between Turkey andEU For The Free Circulation of Industrial Goods

New and More Competitive Conditions in the Market

Better Incentives for the Industry Towards More Competitiveness to be a Global Player

Closer Integration of MVI’s Between Turkey and EU

More Share in the MVI Market for EU

Customs Union/1996 and MVI

For the Free Movement of Industrial Goods

Tariffs and Non-Tariff Measures Were Wholly Abolished

for Non-EU Countries CCT and CTP Were Implemented

Series of Technical and Commercial Legislation Were Adopted

ASSEMBLY

DEVELOPMENT OFCOMPONENT IND.

INCREASE INCAPACITY

UP-TO-DATE MODELEXPORT

FULL INTEGRATIONMANUFACTURING BASE

Research & Development, Design & Technology Management,Intellectual & Industrial Property

1960-1970

1971-1980

1981-1990

1991-1995

1996-2000

2001-…..

TARGET FOR NEAR FUTURE : CENTER of EXCELLENCE

License

Localization

Modernization

Up-to-date Model

Transition Period

EU/TRCustoms Union

Free MarketGlobal

Competition

Protected Market

Development of MVI in Turkey: 1960/…..

Entrance ofToyota, Honda,

Hyundai

İzmir

Adapazarı

Ankara

İSTANBUL

Gölcük

Aksaray

İzmit

Bursa

Eskişehir

Adana

85 % of Components

Manufacturers

MV Manufacturers in Turkey

MV Manufacturers in Marmara Region

Motor Vehicle Manufacturers (2010)

Motor Vehicle Manufacturers (2010)

TOFAŞ/FIAT JV FIAT 400.000O.RENAULT JV RENAULT 360.000TOYOTA FDI TOYOTA 150.000HYUNDAI ASSAN JV HYUNDAI 100.000HONDA FDI HONDA 50.000

1.060.000FORD OTOSAN JV FORD 330.000HYUNDAI ASSAN JV HYUNDAI 25.000KARSAN Local PEUGEOT 28.000B.M.C. Local Local 20.000M.BENZ TÜRK JV M.BENZ 18.500ANADOLU ISUZU JV ISUZU 13.155TEMSA Local Local 10.500OTOKAR Local LAND ROVER 8.800M.A.N. FDI MAN 1.700

455.655

1.515.655

Capacity Vehicle/Year

CV

Ownership

TotalCV Total

P.Cars

Companies Partner

P.Cars Total

Product

● Japanese Interest Was First Shown In Car Industry In 1994 With Toyota And Then Honda

● Toyota Brought New Concepts And A Remarkable Motivation To The Industry

● Toyota-Turkey Became One Of The Important Manufacturing Centres Of Toyota In Europe

● Isuzu, Hino And Mitsubishi Are In Commercial Vehicle Sector

MVI Integration

Link With EU Manufacturers FIAT GROUP JV FORD JV MAN FDI M.BENZ JV RENAULT JV ROVER GROUP

L PEUGEOT L

Link With Non-EU Manufacturers

ISUZU JV TOYOTA

FDI MITSUBISHI L HONDA FDI HYUNDAI JV

Number of Manufacturers 13 Link With Non-EU 5 (% 17 of 2009 production) * JV/FDI 4 * License 1

Link With EU 6 (% 82 of 2009 production) * JV/FDI 5 * License 2

Local 2 (% 1 of 2008 production)

0

200

400

600

800

1.000

1.200

1963

1964

1965

1966

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Passenger Cars

Total

11047

421348

431297

1.100635

3 243213

271175

870510

Total Production: 3,000 in 1963

1,147,000 in 2008

History of the Production (x1.000)

High Fluctuations In the Past Have Had A Particularly Negative Effect On The

Development And Competitiveness Of The Industry

4,66,9

10,612,6

15,516,8

2021,2

24,7

0

5

10

15

20

25

30

2002 2003 2004 2005 2006 2007 2008 2009 2010

174

398

741 759666

576

770

634

527

0

200

400

600

800

1.000

2002 2003 2004 2005 2006 2007 2008 2009 2010

262359

508 552

697630

850820910

0

200

400

600

800

1.000

1.200

2002 2003 2004 2005 2006 2007 2008 2009 2010

347

534

823 879988

870

1.0501.099 1.147

0

200

400

600

800

1.000

1.200

1.400

2002 2003 2004 2005 2006 2007 2008 2009 2010

Production

Total Market Exports / Million $

Exports

Changes in Last 7 Years; 2009 and 2010 (x1.000)

2002/2008 X 3,6 2002/2008 X 5,4

2002/2008 X 3,5 2002/2008 X 3,3

2003/2009 Results and 2010 Estimation

2003 2008 2009 2010Production

(1.000)534 1.147 870 900 - 1.000

Exports (1.000)

Exports (Mio-$)

359 630

6.900 16.800 18.000 - 22.000

700 - 850910

24.700

2009 2010 (%) 2009 2010 (%)

Total 86.271 96.453 11,8 615.997 784.302 27,3

P.Cars 50.320 54.046 7,4 374.927 443.236 18,2

Total 59.589 64.333 8,0 435.303 560.962 28,9

P.Cars 36.899 37.375 1,3 278.519 332.224 19,3

Total 83.403 66.585 -20,2 433.164 484.237 11,8

P.Cars 52.162 42.477 -18,6 281.032 312.403 11,2Market

September January - September

Production

Exports

0

20

40

60

80

100

120

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

Crises Changes in Total Market (x 1.000)

%4 Year

4 Year4 Year

Exports Share in Total Production is Over 72 %

(X 1000)

3 2 512 13

8 9

7164 62 62

7175

7972

30

22

73

0

200

400

600

800

1.000

1.200

1.400

1.600

0

10

20

30

40

50

60

70

80

90

100

Exports 10 8 15 37 42 31 37 91 104 202 262 359 508 552 697 820 910 629

Production 345 453 269 326 329 400 405 326 468 286 357 562 823 879 988 1.100 1.147 870

Exports (% ) 3 2 5 12 13 8 9 30 22 71 73 64 62 62 71 75 79 72

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Rate of Exports in Production

Total Production % 72

P. Cars % 76

%

The Automotive Market is An Unsaturated One

Approximately 15 Million Vehicles Are To Be Sold In Turkey

To Reach To The Level Of Bulgaria In 10 Years

(Whose GDP Per Capita Are Rather Similar)

566485 429 383

299 257

87

0

200

400

600

800

Ge

rma

ny

Sp

ain

Gre

ec

e

Po

lan

d

Hu

ng

ary

Bu

lga

ria

Tu

rke

y

World Bank / P.Cars/1.000 Inhabitants in 2007

Automotive Culture 50 years of production tradition High Sense of Quality TQM, Lean Production, 6 Sigma Labour Peace unionized work force / collective bargaining since

1963 Qualified, Well-Trained, Motivated Labour Force at Competitive Cost Flexible Working Hours 7.5 hours / shift - 3 shifts / day - 6 days / week;

Rate of Absenteeism < 1.5 % Entrepreneurship $ 10 billion worth of Investment Partnership With World-Leading Manufacturers Experienced Local Component Industry / Supplier Base Unsaturated Domestic Market With High Potential of Demand More Incentives on R & D and New Investments Developed Infrastructure & Services in the Region

Logistics, Energy, Transport, Banking, Communication

Manufacturing Facilities With State-of-the-Art Technology

The Assets & Potential of MVI of Turkey

Recent Developments on R&D Activities

A New Incentive Scheme is Now Covering R&D Activities in Companies to be Effective This Year Such As:

100 % Deduction of R&D Expenses From Corporate Tax Came into Operation in 2008

Tax and Social Security Funds Payment Exemption for Those Working in R&D Activities

Government Assigned Yearly $ 300 Million to TUBİTAK in Order to Support R&D Activities and Targeted to Increase R&D Expenses up to 2 % of GNDP in 5 Years

Automotive Technology and R&D Center – OTAM(*) was Established in Istanbul Technical University-ITU with $ 12 Million to Start off

TUBİTAK-MAM is Providing Large Scale of Basic Services for R&D

(*) OSD, ITU (Istanbul Technical University) , TAYSAD (Assoc. of Component Manufacturers), UIB (Union of Vehicle & Component Exporters) are the Partners of OTAM

Prospects of the Turkish Automotive Industry

o In The Short Term Production: Over 1,0 Million

Exports: Over 0,8 Million Already Realized

o In The Medium Term Production: 2,0 Million

Exports: 1,5 Million Can be Achieved

Direct Employment Of 600,000

Total Exports Of $ 50 Billion

By Means of Additional Investment At Least $ 5 Billion

OTOMOTİV SANAYİİ DERNEĞİ AUTOMOTIVE MANUFACTURERS ASSOCIATION

INTERNEThttp://www.osd.org.tr

e-MAILosd@osd.org.tr

Thank You For Your Interest