The Automotive Industry i n Turkey 2010 And Beyond?

1. The Automotive Industry in Turkey 2010 And Beyond? Prof.Dr.Ercan TEZER / OSD General Secretary

2. Otomotiv Sanayii Derneği / OSDAutomotive Manufacturers Association • 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/WP29 • All Relevant Information is Found in OSD Web-Site: www.osd.org.tr/

3. OSD is Organizing & Conducting Joint Actions in Different Fields

4. 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

5. Global Delocalization “To be Manufacturer in Potential Markets and Enjoy With Low Operational Cost” 1970 Japan USA 1980 1950 1960 Europe Korea 1980 1990 S.America And Others 1970 PRC

6. Global Production (1995/2009) and Future ( x Million) J.D.POWER Associates

7. World Total Production – 2008/2009(x 1.000) Ranking in EU (27) 2009 Total 7 Buses 2 LCV 1 H.Trucks 9 P.Cars 8 870.000 Units in 2009 OICA

8. 2009 Total World Production(x 1.000) OICA

9. Changes in Total Production By Regions 2008/2024 Production Moves From West To East & North To South J.D.POWER Associates

10. Production BRIC Countries 2008 / 2024(x 1.000) 38,699 16,612 Change X 2,33 2008 (%)2024 (%) 2024/2008 Russia 1.837 3.5791,59 Brazil 3.0604.8511,59 China 9.34423.002 2,46 India 2.371 7,2683,07 BRIC 16.612 (23) 38.699 (35) 2,33 Total World70.738 108.373 1,53 J.D.POWER Associates

11. 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 Turkey Keeps up With Recent Global Economic Trends in the Region

12. Customs Union Was Realized Between Turkey and EU For The Free Circulation of Industrial Goods New and More Competitive Conditions in the Market Better Incentives for the Industry Towards More Competitivenessto 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

13. Protected Market Transition Period Development of MVI in Turkey: 1960/….. 1960-1970 License ASSEMBLY 1971-1980 Localization DEVELOPMENT OF COMPONENT IND. 1981-1990 Modernization INCREASE IN CAPACITY Up-to-date Model 1991-1995 UP-TO-DATE MODEL EXPORT Entrance of Toyota, Honda, Hyundai FULL INTEGRATION MANUFACTURING BASE 1996-2000 EU/TR Customs Union Free Market Global Competition Research & Development, Design & Technology Management, Intellectual & Industrial Property 2001-….. TARGET FOR NEAR FUTURE : CENTER of EXCELLENCE

14. MV Manufacturers in Turkey 85 % of Components Manufacturers İSTANBUL İzmit Adapazarı Gölcük Bursa Ankara Eskişehir İzmir Aksaray Adana

15. MV Manufacturers in Marmara Region

16. Motor Vehicle Manufacturers (2010)

17. 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 Motor Vehicle Manufacturers (2010)

18. MVI Integration 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) 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

19. History of the Production(x1.000) Total Production: 3,000 in 1963 1,147,000in 2008 High Fluctuations In the Past Have Had A Particularly Negative Effect On The Development And Competitiveness Of The Industry

20. Changes in Last 7 Years; 2009 and 2010(x1.000) Production Exports 2002/2008 X 3,5 2002/2008 X 3,3 Total Market Exports / Million $ 2002/2008 X 5,4 2002/2008 X 3,6

21. 2003/2009 Results and 2010 Estimation

22. Crises Changes in Total Market(x 1.000) 4 Year 4 Year % 4 Year

23. % Rate of Exports in Production Total Production % 72 P. Cars % 76 Exports Share in Total Production is Over 72 % (X 1000)

24. The Automotive Market is An Unsaturated One World Bank / P.Cars/1.000 Inhabitants in 2007 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)

25. 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

26. 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 Recent Developments on R&D Activities (*)OSD, ITU (Istanbul Technical University) , TAYSAD (Assoc. of Component Manufacturers), UIB (Union of Vehicle & Component Exporters) are the Partners of OTAM

27. In The Short Term Production: Over 1,0 Million Exports: Over 0,8 Million Already Realized 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 Prospects of the Turkish Automotive Industry

28. Thank You For Your Interest INTERNET http://www.osd.org.tr e-MAIL osd@osd.org.tr