AUTOMOTIVE INDUSTRY

Emrah KUTLU Zeynep AVCIOLU

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

1800s Europe
US Mass production 1990s Globalization

TURKEY
mid 1950s 1954 Trk Willys Overland Ltd. Tofa, Renault, Ford

Joint ventures

MARKET STRUCTURE
Highly labor and capital intensive
Majority of costs for producing - Labor - Materials - Advertising

MARKET STRUCTURE
PORTERS 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 yl ilk 500 firma sra no. 2003 yl 500 Byk Firma Sra No Firma ve Messese Ad Bal Bulunduu Oda STANBUL zel Firma Sra No retimden Satlar Net (YTL) 4,445,190,178

2 3 4 9

2 11 4 7

FORD OTOMOTV SAN. A.. TOYOTA OTOMOTV SANAY TRKYE A.. OYAK-RENAULT OTOMOBL FABRKALARI A.. TOFA TRK OTOMOBL FABRKASI A..

1 2 3 7

ADAPAZARI

3,348,031,394

STANBUL

2,966,839,536

STANBUL

2,146,938,617

16

17

MERCEDES BENZ TRK ANONM RKET

STANBUL

12

1,218,993,109

Source: ISO, 500 Byk Sanayi Kuruluu Anketi, 2004

CONDUCT
LEADING EXPORTING COUNTRIES
France Germany Italy UK

Table- 4
Source: www.wbr.co.uk, About the Turkish Automotive Industry

Table- 5 Automobile Imports( in units)

Years 1997 1998 1999 2000 2001

Imports from EU 93,811 93,549 102,662 236,902 66,405

Total Imports 135,795 110,552 121,309 272,110 74,165

Share of Imports from EU 69% 84% 84% 87% 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

Tofa- 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 Export experience and strong export markets Easy access to potential emerging markets

b) c)

PERFORMANCE
The Weakness of the Turkish Automotive Industry a) Unstable domestic market b) Loss of quality and quantity in manpower as a result of the crises caused by the weak economy of the country c) In adequate investments in the sector d) High costs of raw materials due to capacity utilization and production below economies of scale e) High sales taxes and gasoline prices f) Lack of international strategy g) Excess capacity h) 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 worlds 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