Istanbul- The Turkish market is attracting more and more automotive brands as it has become a strategic destination for the promising industry.
Chinese companies have been among the car manufacturers that have sought to establish a foothold in the Turkish market in recent years, taking advantage of competitive advantages including advanced technology, competitive prices, and a variety of models that meet the needs of different consumer segments.
New dynamics
The growing Chinese presence reflects new economic and trade dynamics between Beijing and Ankara, and raises growing interest in the potential impact on the local market, both in terms of competition and joint cooperation in production and development.
This comes in conjunction with the Turkish presidential decree to ease additional customs duties on imported Chinese vehicles, providing automakers investing in Turkey with a customs duty exemption.
The Turkish presidential decree comes after the United States announced on May 14 that it would raise tariffs on electric cars imported from China from 25% to 100%, and the European Union decided to take a similar step to protect domestic electric car manufacturers.
The Turkish newspaper “Daily Sabah” indicates that Turkey has long been trying to attract car manufacturers to the country, and has put Chinese companies in particular on its radar, which has now borne fruit.
In December of last year, Beijing witnessed talks between Turkish Minister of Industry and Technology Mehmet Fatih Kacir and a number of executives from several Chinese automakers, during which he called on Chinese companies to invest in Turkey.
New companies entering
In a sign of China’s growing presence, China’s BYD signed a deal with Turkey’s Industry and Technology Ministry to build a $1 billion factory, while Chinese automaker SWM also has investment plans.
According to the Turkish newspaper “Hurriyet”, BYD intends to launch a factory with a capacity to manufacture 150,000 vehicles annually, in addition to a center for mobility and research and development with total investments of one billion dollars. The company is expected to start its actual production at the end of 2026 and provide 5,000 direct job opportunities.
The signing ceremony of the agreement took place at Dolmabahce Palace in Istanbul, in the presence of President Recep Tayyip Erdogan, Minister of Industry and Technology Mehmet Fatih Kacir, and BYD Chairman and CEO Wang Chuanfu.
“This investment in the production of new generation vehicles with high local added value will boost our automotive industry,” Kajir said in a statement.
He stressed that Turkey, the third largest car manufacturer in Europe, sees the shift towards next-generation environmentally friendly electric vehicles as a priority goal in the automotive sector, which is Turkey’s leading export sector.
Yahya Al-Sayed Omar, a researcher in economics and business administration, believes that China’s presence in the Turkish market is consistent with its economic orientation, to strengthen its presence in several vital regions of the world, especially since Turkey has a distinguished strategic location linking Asia and Europe.
Speaking to Al Jazeera Net, Mr. Omar identified several factors that make Turkey a preferred destination for Chinese car companies, the most prominent of which are:
- Turkey’s geographical location close to Europe, which reduces shipping costs, compared to the high shipping costs from China.
- Benefit from Turkey’s extensive trade relations with many countries, especially Europe, as the two parties have signed an agreement on the free movement of goods, especially cars, since 1995.
- Bypassing European restrictions on importing cars from China, Chinese factory exports to Turkey will be treated as Turkish products, thus bypassing European obstacles, especially customs duties.
For his part, Turkish economic and investment expert Jalal Bakar says that Turkey has the infrastructure for industries from raw materials to skilled labor that receives reasonable wages for manufacturing in the automobile market.
Speaking to Al Jazeera Net, Bakkar supports what Mr. Omar said about Chinese companies benefiting from Turkey’s agreements with the European Union regarding car exports and circumventing European Union laws regarding taxes and restrictions on Chinese electric cars.
Bakkar expects that Chinese companies will contribute to supporting the Turkish industry with regard to advanced and complex Chinese technology in the field of manufacturing electric cars, and transferring some expertise to the Turks working in electric car factories in Turkey.
Electric cars
Over the past four years, the Turkish market has witnessed a significant increase in the entry of Chinese electric car brands, attracting increasing interest from Turkish consumers.
Observers attribute this growing interest to the appeal of high-quality, high-performance Chinese vehicles at affordable prices, along with comprehensive service offerings and energy-saving features.
Since the MG brand was launched in Turkey in 2021, a group of other Chinese brands have quickly followed suit, bringing the total number to 12 by February 2024, the Automotive and Mobility Distributors Association (ODMD) revealed in its latest sales report, Xinhua reported on March 11.
The awareness of the Chinese brand “MG” rose to 79% last year, earning it the title of “fastest growing brand” in Turkey according to the Automotive Distributors Association.
The BYD Atto 3 and MG 4, two Chinese electric car models, ranked third and fourth in the country’s best-selling electric cars in February.
“The attractiveness of Chinese cars and the growing interest in them from Turkish consumers is due to the price-performance ratio,” Xinhua quoted auto industry expert Semih Eryuksaldi as saying.
According to the expectations of those in charge of the automobile industry, the share of Chinese brands in the Turkish market, which exceeded 4.5% in 2023, is likely to reach 10% this year.
“If Chinese brands maintain their current pricing strategies and continue to offer high-quality products in Turkey, they are poised to secure a significant market share in the near future,” Eryukseldi believes.
Global Brands
Turkey’s manufacturing appeal is not limited to Chinese electric cars, but includes many well-established global factories such as the American Ford, the Italian Fiat, the Japanese Toyota, the Korean Hyundai, the French Renault, the German Mercedes, and others.
The Turkish Investment website points out that Turkey has more than 250 global automotive suppliers that use the country as a production base, with 30 of them ranking among the top 100 global suppliers.
Turkey exported more than one million vehicles to international markets in 2023, and became the second largest exporter of cars to European markets after the United Kingdom in the same year.
Regarding the impact of Chinese companies entering Turkey on competition with other existing global companies, Mr. Omar believes that competition is a positive factor in the market, not a negative factor.
He added that competition in the Turkish car market is relatively low for BYD cars, considering that they are electric cars, which reduces their competition with fuel cars.
Regarding the future impacts of the Chinese presence in the Turkish automotive market, Mr. Omar expects that this will contribute to stimulating foreign investment in the country and enhance the interest of major international companies in the Turkish market.
This is expected to reinforce the idea that Turkey will become a regional hub for supply chains, especially in light of the trends towards abandoning global supply chains and moving towards regional chains.
In turn, Bakkar believes that the growth of Chinese factories in Turkey will stimulate the electric car industry for brands such as Ford, Mercedes and others, which will open up prospects for global investments, not just Chinese investments.
