why invest in turkish automotive industry?¹´7月5... · engineering, and certification services...
TRANSCRIPT
WHY INVEST IN
TURKISH
AUTOMOTIVE
INDUSTRY?
Ethem Tokgözlü
Project Director – ISPAT
5th July 2018
• Executive Summary
• Turkish Automotive Industry Outlook
• Suppliers and Engineering in the Industry
• Growth Drivers in Turkey
• Success Stories
2
Content
Turkey - A strong production and engineering hub for the global automotive value chain
Turkish
automotive
industry
Growth
drivers in
Turkey
Suppliers and
engineering in
the industry
• Strong macroeconomic growth with increasing income per capita and a bourgeoning middle-class
• Favorable demographics with a dynamic, young, and skilled labor force supporting the industry
• Cost-competitive labor and energy prices
• Strong government support through incentives
Strong
international
presence
• Giants of global automotive value chain benefit from Turkey’s location, cost, and competitive
advantages
• Because of their profitable business in the country, companies in Turkey continue to invest in the
country’s future
Executive
Summary
3
• Quality products with high export rates
• Hundreds of Tier 1 companies working directly with OEMs
• Center of excellence in automotive engineering and R&D, in which new technologies are developed
• High level of integration into the global automotive industry
• 14th major automotive producer in the World, with 78% average export rate
• Vehicles of Turkish origin hold the leading position among the vehicles coming from outside of EU
• Production, export, and engineering hub of global brands for international markets
• Executive Summary
• Turkish Automotive Industry Outlook
• Suppliers and Engineering in the Industry
• Growth Drivers in Turkey
• Success Stories
Content
4
511603 640
577634
733791
951
1143
359
491549
496492
437
568
535
553
2009 2010 2011 2012 2013 2014 2015 2016 2017Passenger Cars Commercial Vehicles
8%
Source: Automotive Manufacturers Association, Automotive World Production Databook
Production
Development of Vehicle Production
Thousand Units
Performance in Recent Years
Thousand Units
298
784
1,214
1,696
1990_1999 2000_2009 2010_2016 2017
CAGR
2009-2017
5
Turkey has become an important part of the global value chain of international OEMs in the last 25 years
Average Production of Period
➢ 9 R&D centers support not only the local
operations, but also the operations in other plants
of parent companies.
➢ Ford Otosan’s R&D department is one of Ford’s 3
largest global R&D centers.
➢ R&D center in Bursa is the only center of Fiat
outside of Italy serving the European market.
➢ For Courier, Ford’s new light commercial vehicle, the
Yeniköy plant is the sole production center in the
world.
➢ Toyota’s C-HR Hybrid is produced in Turkey for
World markets
➢ Daimler R&D is the center of competence for some
parts and carries global responsibility.
➢ With more than 40 thousand employees,
automotive OEMs are one of the major employers in
the manufacturing industry.
İzmit - Sakarya
Bursa
Ankara _Aksaray
İzmir
Adana
OEMs in Turkey
6
The engagement of 15 OEMs is not limited to production. They are also benefiting from the engineering skills of Turkey
1,696
1,420
1,002
690
505
376 359
190
Source: OICA
Automotive Production in 2017
Thousand Units
World Auto Production in 2017
Million Units
0 10 20
Russia (15)
Turkey (14)
UK (13)
Thailand (12)
Canada (11)
France (10)
Brazil (9)
Spain (8)
Mexico (7)
S. Korea (6)
India (5)
Germany (4)
Japan (3)
USA (2)
China (1)
Turkey in CEE &
the World
7
Turkey, the leader of CEE in vehicle production, climbs theranks in the World Auto Production list as well
#1 in CEE
#5 in Europe
#14 in the World
800,000
1,250,000
1,650,000
2,000,000
2000 2006 2012 2017
Source: Automotive Manufacturers Association of Turkey, ACEA
Investments
OEM Investment Stock - Billion $
Development of Production Capacity
Automotive Plants in Europe
8
Almost $14 Billion invested between 2002-2017; OEMs developed their R&D skills as well as manufacturing capabilities
2,10
3,943,61
4,33
2002_2005 2006_2009 2010_2013 2014_2017
Source: Turkish Statistical Institute (Turkstat), OICA
Change in Vehicle Sales
Thousand Units
Market
Top Emerging Vehicle Markets
Million Units
9
464
624
852
957
2002_2005 2006_2009 2010_2013 2014_2017
14%
CAGR
2002-2017
2,86 2,84
2,30
1,51
1,16
0,83 0,82 0,780,67
Annual Average Sales
(2005-2017)
The increase in the purchasing power of Turkish people pavedthe way for record levels of sales in the recent period
Annual Average Sales
358
486
602566
655586
746 746 742
2009 2010 2011 2012 2013 2014 2015 2016 2017
197
269
327
271234
210
285248 264
2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: Turkstat, Automotive Distributors Association of Turkey 10
Market
Passenger Car Sales
Thousand Units
Commercial Vehicle Sales
Thousand Units
Sales by Engine Size (2017)
96%3%
1%
<1600cc 1601cc-2000cc >2000cc
Consumer preferences of Turkish drivers seem to shift towards passenger cars. Small engine cars dominate the market
The markets around Turkey –From Western Europe to Central Asia - have a combined annual sales volume of over 25 million vehicles
11
Markets Around
Turkey
A Market of 25 Million Vehicles: from Western Europe to Central Asia (2017)
Source: OICA
Europe
21 M
North
Africa
1 M
Middle East
& Central
Asia
3 M
Source: Automotive Manufacturers Association of Turkey, ACEA
4,418
11,122
12,397
18,847
2001_2005 2006_2010 2011_2016 2017
16%
CAGR
2001-2017
Development of Vehicle Exports
Million $
Exports
Deliveries to the EU Market
985,434 units
577,703 units
403,007 units
263,498 units
217,967 units
12
Turkey is the largest export base of global OEMs in the region outside of the EU, with an average export rate of 78%
Turkey (1)
Japan (2)
S. Korea (3)
USA (4)
Morocco (5)
Average Exports of Period
• Executive Summary
• Turkish Automotive Industry Outlook
• Suppliers and Engineering in the Industry
• Growth Drivers in Turkey
• Success Stories
Content
13
9
105
BURSA
İZMİT&SAKARYA
İZMİR & MANİSA
80
36
İSTANBUL
97
o Engine
o Body&Structural
o Interior
o Transmission
o Axles, Driveshaft's
o ClimateControl&Engine
Cooling
o Suspension
o Electric Components
o Braking
o Steering
o Wheels&Tires
o FuelSystem
o Audi&Telematics
o Plastic Components
o Exhaust
o BodyGlass
o Die-castingParts
o ForgingComponents
o RawMaterial
o Small/GeneralParts
Component
Manufacturing
400+ Tier 1 suppliers working directly with OEMs contribute
greatly to the high localization rates of the cars
manufactured in the country
##
# of suppliers in the city
965
2,382
3,8053,990
2001_2005 2006_2010 2011_2015 2016_2017
Source: Turkish Statistical Institute (TurkStat)
49
50
52
64
124
136
151
176
183
211
218
283
285
344
868
Japan (15)
Holland (14)
Slovenia (13)
Czech Rep (12)
Iran (11)
Russia (10)
Poland (9)
Romania (8)
Spain (7)
USA (6)
Belgium (5)
England (4)
Italy (3)
France (2)
Germany (1)
15
Component
Exports
Development of Component Exports
Million $
Top 15 Export Markets (2017)
Million $
In line with global developments, component exports haveincreased by 13% CAGR over the past 16 years, reachingdiversified markets all around the World
13%
CAGR
2001-2017
Source: Social Security Institution (SGK)
16
Global Suppliers
There are more than 250 global suppliers using Turkey as a
production base. 28 of them are among the 50 largest global
suppliers
İzmit - Sakarya
Bursa
İzmir
37
203
2008 2018
Employment (x1000)
*Employment data includes all the firms in motor vehicle industry
Rank Major Suppliers Products
2017 Revenue
(Million $)
1 Bosch Brake systems, boosters, power limiters & regulators, repair kids,
brake shoes, wheel brake cylinders, drum & disk brakes 1,051
2 BrisaTires, batteries, coverings
572
3 Yazaki Group Electrical and electronics components432
4 Maxion İnciWheels
420
5 Goodyear Tires400
6Steering wheels, seat belts, air bags
375
7Tires
366
8 Wheels324
9 Delphi
Cables, electrical/electronic architecture systems and
components, fuel pumps, fuel injectors, nozzles, valves
300
10 Beyçelik GestampMolds, chassis systems, lock technologies
292
Source: Istanbul Chamber of Industry: Top 500 Industrial Enterprises Study
Major Suppliers 10 automotive suppliers with USD 200 Million+ revenue in 2017
18
Automotive industry leads the country in R&D
and patent applications R&D
32%
24% 24%
15% 14%
12% 12%
10% 10%9%
8% 8%7%
6%5%
Share of Automotive in R&D Spending (Selected Countries)
119
735
Automotive Others
R&D Centers (2018)
R&D Employment
2015: 4088
Change (2010-2015): 96%
Patent Applications
2016: 1325
Change (2010-2016): 165%
Source: Automotive Manufacturers Association of Turkey (OSD), Ministry of Industry, Science & Technology, Turkish Patent Institute (Turkpatent)
R&D employment data consists of OSD members
Company Description Operations in Turkey
AVL ❖ Established by Hans List in 1948 in Austria.
❖ Employs 9000+ engineers in its 40+ affiliates.
❖ The world's largest independent company for the
development of powertrain systems with internal
combustion engines as well as instrumentation and
test systems.
❖ Has an office in Istanbul with 140+ engineers
❖ Aims to become a ‘global engineering hub’
❖ One of the two exporting affiliates of AVL
❖ Planning to establish 3rd R&D center and to employ more than
200 engineers by 2018
❖ started to work on Hybrid and autonomous car technologies.
(Electric car for 2018, autonomous car for 2020)
❖ is supported by Tubitak for its works on electric and
autonomous car projects
FEV GmbH ❖ Established in 1978 in Aachen, Germany
❖ Employs 4000+ researchers and developers
❖ Focusing on powertrain components engineering
(mainly engine design, turbo-charger and transmission)
❖ Expanded into Turkey in 2011 with 10 engineers working in the
Turkey office
❖ The main focus is design and R&D consulting of powertrain and
ICE for the automotive sector
❖ Works on design, simulation, software development, and
engine/Vehicle calibration with 50+ engineers
Idiada ❖ Established in 1973 with its headquarters in Santa
Oliva, Spain
❖ Employs 2100+ employees
❖ Present in 25 countries, focusing on design, testing,
engineering, and certification services in automotive
❖ Expanded into Turkey in 2000
❖ There are 4 full-time engineers in the Turkey
office
❖ Focus is on testing of R&D consulting for
automotive
Ricardo ❖ Established in 1927 with its headquarters in Shoreham-
by-Sea, England
❖ Employs ~3000 engineers
❖ Operating in 15 countries with focus on engines,
transmissions, and intelligent transportation systems
❖ Works together with Anova (a Turkish engineering house) for
powertrain development and R&D consulting in Turkey
19
Engineering &
DesignTurkey as a key location for automotive R&D andengineering
Source: Press Excerpts, ISPAT Team Analysis
• Executive Summary
• Turkish Automotive Industry Outlook
• Suppliers and Engineering in the Industry
• Growth Drivers in Turkey
• Success Stories
Content
20
100
120
140
160
180
200
220
240
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
Source: TurkStat, OECD, World Bank, IMF, CIA World Factbook, PPP: Purchasing Power Parity
A track record of growth and a bright future…
13th largest economy in the world Forecast
5.7
3.8
3.7
2.8
1.8
Average
Annual GDP
Growth
2003-2017
%
Actual
3.4
3.3
3.4
2.7
Average
Annual GDP
Growth
2017-2019
%
2.4
19,4
9,4
5,4
4,2
4,0
3,2
3,2
2,9
2,8
2,4
2,3
2,1
China (1)
US (2)
India (3)
Japan (4)
Germany (5)
Russia (6)
Indonesia (7)
Brazil (8)
UK (9)
France (10)
Mexico (11)
Italy (12)
Turkey (13)
23,1
Robust Economy
2017 GDP ($Trillion, PPP)
Turkey
Poland
Romania
Czech
Rep
Hungary
Real GDP Growth (Index: 2002=100)
21
Source: IMF, TurkStat, Euromonitor
Turkey’s economic growth has paved the way for the emergence of a sizeable middle-class…
High (>$55K)
Upper-middle ($25K – $55K)
Middle ($10K – $25K)
Low ($5K – $10K)
Poor (<$5K)
2016
Among countries
with population
over 50 million,
only 8 countries
have GDP per
capita over
$10,000
I n c o m e G r o u p s (Annual disposal income per capita)
Bourgeoning
Middle Class
GDP per capita in countries with population over 50 million (2017)Tripling Income per capita
(GDP per capita, current prices)
The Rise of Turkish Middle Class
2002
22
21.3 million
23 million
17.8 million
3.3
1
3
10.8 million
40 million
3.3
million
5
$3.581
$10.597
2002 2017
$59,501
$44,550
$39,869
$39,735
$38,440
$31,984
$29,891
$10,608
$10,597
$9,895
US (1)
Germany (2)
France (3)
UK (4)
Japan (5)
Italy (6)
Korea (7)
Russia (8)
Turkey (9)
Brazil (10)
5 3 1 1 3 5
0-4
10-14
20-24
30-34
40-44
50-54
60-64
70-74
80-84
90+
Female Male
5 3 1 1 3 5
0-4
10-14
20-24
30-34
40-44
50-54
60-64
70-74
80-84
90+
Female Male
90
100
110
120
2014 2017 2020 2023 2026 2029 2032 2035
Europe
Turkey
Source: TurkStat, Eurostat, UN, 2016
Ag
e
Gr
ou
ps
(%
)
45
50
55
60
65
70
75
2014 2017 2020 2023 2026 2029 2032 2035
Europe
Turkey
...half of population under age 30A
ge
G
ro
up
s(
%)
Favorable
Demographics
Turkey’s Population Pyramid Europe’s Population Pyramid
Working Age Population (15-64)
Index: 2014=100
Total Dependency Ratio (%)
(Age 0-14 & Age 65+) / Age 15-64
23
Turkey’s education system has been upgraded to support a
skilled labor pool...
High School and
below 90%
University
10%
High School and
below 77%
University
23%
2002 2017
Electronics & Automation
Mechanical
Motor Vehicles, Ships, etc.
TOTAL50,799 177,437
515,465
2002 2016
Skilled &
Cost-competitive
Labor Force
Annual Number of University Grads in
Automotive Related Fields (2017)
Number of Grads from Vocational & Technical
High Schools
Labor Force by Education Level
24Source: Higher Education Council of Turkey, Turkish Statistical Institute
Required skills are readily available in Turkey with a competitive
cost advantage…
Availability of Qualified Engineers, 2017(10=Available; 0=Unavailable)
Skilled &
Cost-competitive
Labor Force
Availability of Competent Senior Managers,
2017 (10=Available; 0=Unavailable)
Labor Cost per hour in Manufacturing, 2017Turkey vs. USA (US=100)
Labor Cost per hour in Manufacturing ($) 2017
Source: IMD World Competitiveness Yearbook Executive Opinion Survey based on an index from 0 to 10; Eurostat, OECD, BLS, TurkStat
25
6,86 6,706,02 5,74
5,404,68
Turk
ey
Pola
nd
Rom
ania
Slo
vakia
Cze
chia
Hungary
5,725,44
4,834,39 4,36
3,09
Turk
ey
Pola
nd
Czechia
Slo
vakia
Rom
ania
Hungary
45,443,0
41,5
27,8
12,9 12,810,2 9,5
6,3 6,1
Germ
any
Fra
nce
USA
UK
Slo
vakia
Cze
chia
Hungary
Pola
nd
Turk
ey
Rom
ania
151
120 107
87
69 62
45 42 39 35
Germ
any
USA
Fra
nce
UK
Slo
vakia
Pola
nd
Hungary
Turk
ey
Cze
chia
Rom
ania
26
Strong collaboration between industry and
education institutions...
Industry &
Education
İhsaniye Automotive
Vocational High School
In 2014, a 2-year automotive
vocational high school affiliated
with Kocaeli University was
established as a result of strong
cooperation of the university,
an OEM, a foundation, and the
local municipality.
Now, the high-school provides
the company and the whole
industry with qualified
employees having strong
capabilities.
There are many examples of
that kind of collaboration in the
Turkish automotive industry.
Qualified employees, qualified
products...
İhsaniye Automotive Vocational
High-School
Ford
Koç Foundation
Local Municipality
Kocaeli University
Lucrative
IncentivesAutomotive investments in manufacturing and R&D can
benefit from various lucrative incentives…
Source: Ministry of Economy 27
General Scheme
Regional
Large Scale
Priority
Strategic
Technology Level
Inve
stm
ent
Sup
po
rt S
chem
es
Sector & Product Investment Amount Region
Investment parameters
Region 1 Region 2 Region 3 Region 4 Region 5 Region 6
Regions
Tax Support
Social Security Support
Interest Support
VAT & Custom
Duty
Lucrative
IncentivesAutomotive investments in manufacturing and R&D can
benefit from various lucrative incentives…
Source: Ministry of Economy 28
Tax
Support
Social
Security S.
VAT
Exemption
Interest
Support
Region1 Region2 Region3
SUPPORT
RATE
Region4 Region5 Region6
Automotive supply industry is
supported either by technology or
priority areas support programs.
• All the component investments
do enjoy technology support
program.
• Engine component investments
have access to the priority areas
support program.
Technolog
y Support
Priority
Areas
30% of total
invesment
25% of total
investment
18%
%55+
40% of total
invesment
35% of total
investment
18%
%75+
Region 1 Region 2 Region 3 Region 4 Region 5 Region 6
Regions
29
FDI projects Turkey has attracted 150 automotive FDI projects whose
value exceeds 16 billion USD in total
Sum of Capital
Investment
(Billion $)
Sum of Jobs
Created
Total 16,3 66877
OEM Side 13,4 50046
Components 2,9 16831
New 3,6 22872
Expansion 12 41352
Sum of Capital
Investment
(Billion $) Sum of Jobs Created
Total 2,9 11750
OEM Side 2,4 7650
Components 0,5 4100
New 0,5 3652
Expansion 2,4 8098
Automotive FDI projects in Turkey (2003-2016) Automotive FDI projects from Japan to Turkey (03-16)
Sum of Capital Investment Sum of Jobs Created
Total 18% 18%
OEM Side 18% 15%
Coponents 18% 24%
Share of Japanese Companies in Automotive FDI Projects in Turkey
Source: FDI Intelligence
30
Investor
CompaniesJapanese automotive companies use Turkey as a production
and export hub
Content
• Executive Summary
• Turkish Automotive Industry Outlook
• Suppliers and Engineering in Turkey
• Growth Drivers in Turkey
• Success Stories
31
• Operational in Turkey since 1992
• Production of Civic model started in 1997
• Izmit factory, 50,000 annual production capacity with
almost 1500 employees
• Invested almost $ 500 million since the beginning
• Exports ‘Civic’ to 46 countries throughout the World
• Stepped into Turkish market in 1990
• Started to manufacture in 1997 in Izmit factory
• Has production capacity of 245,000 vehicles annually
• 3000+ employees
• Positioned as the manufacturing hub for European
markets
• The facilitiy was established in 1968
• Has the capacity of 450,000 vehicles per year
• Employs more than 7000 workers
• Only factory in the country that manufactures both
passenger and light commercial vehicles
• R&D center in Bursa is the only center of Fiat outside
Italy serving the European market
• Foundation of first factory was laid in 1959
• Has total capacity of production of 415,000 cars per year
• Commercial vehicle manufacturing hub of Ford Europe
• Has Turkey’s largest R&D center located in a single
campus in Istanbul
• Exports worth $ 3.8 billion in 2016 to 83 countries
• One of the 3 largest R&D centers of Ford Global
• Operational since 1967
• First production in 1968, first export in 1970
• Has two facilities: Bus factory in Istanbul, Truck factory in
Aksaray
• Almost EUR 1 billion total investment with 6000
employees
• Invested almost $2 billion since entering the country
• Over 3500 staff, 280,000 annual production capacity
• Almost 85% of the production exported to more than
50 countries
• Started the production of first hybrid vehicle in Turkey,
C-HR, with an investment worth EUR 350 million
• The German giant began operations in Turkey in 1966
• MAN’s first factory outside Germany
• Largest integrated bus company of MAN Global
• Has 2000 annual bus production capacity, 2000+
employees
• Production base of premium Neoplan bus brand
• Exports to 41 countries including European ones.
Turkey as an international center of excellence for
automotive giants
• One of the biggest factories of Renault with annual
production capacity of 360,000 cars and 750,000 engines
• Total exports in last 15 years exceed $30 billion
• Flagship company in passenger car production for years
• 6300+ employees, almost 1500 of which are white-collar
Success stories
32Source: Company Websites, Press Excerpts
Strong international presence in Turkey...Success stories
33
Private sector approach with public sector capabilities
Acting as your solution partner
OUR SERVICES
ISPAT assists investors before, during, and after their entry in Turkey, providing them with professional
consulting services including but are not limited to:
✓ General and customized business information
✓ Sectoral analysis and reports
✓ Site selection support to find appropriate location/land for your investment
✓ Arrangements of meetings with governmental bodies and other stakeholders
✓ Matchmaking with local partners and establishing business linkages
✓ Facilitating your investment at all stages
✓ Aftercare Services
✓ Project Launch Services
✓ Facilitating your visit to Turkey
34
