Turkey’s automotive sector has always been a key player in the country’s economy, contributing significantly to its growth and development. In the first five months of this year, the sector has shown a mixed performance, with a slight decline in overall output but an increase in certain items in the domestic market. While this may seem like a cause for concern, there are several positive factors that we can take away from this situation.
According to data from the Automotive Manufacturers Association (OSD), Turkey’s total automotive production decreased by 2% in the first five months of 2021 compared to the same period last year. This decline can be attributed to the global shortage of semiconductors, which has affected the production of vehicles worldwide. However, when we look at the domestic market, the picture is quite different.
Despite the overall decline in production, the domestic market saw an increase in certain items, such as passenger cars and light commercial vehicles. Passenger car production increased by 16% and light commercial vehicles by 27% in the first five months of this year compared to the same period in 2020. This is a clear indication of the strong demand for vehicles in the domestic market, which is a positive sign for the sector.
One of the main reasons for this increase in demand is the government’s stimulus measures, such as the temporary reduction in value-added tax (VAT) and special consumption tax (SCT) on automobiles. These measures have made it more affordable for consumers to purchase vehicles, leading to a surge in demand. Additionally, the government’s efforts to support the sector through various incentive programs have also played a crucial role in boosting domestic demand.
Another factor that has contributed to the growth of the automotive sector is the increasing trend towards electric and hybrid vehicles. In the first five months of this year, the production of electric and hybrid vehicles increased by a staggering 262% compared to the same period last year. This is a significant development, as Turkey aims to become a major player in the production of electric and hybrid vehicles in the coming years.
The government’s support for the production of electric and hybrid vehicles is evident in its investment incentives, which include tax exemptions and subsidies for research and development activities. These incentives have encouraged automotive companies to invest in the production of electric and hybrid vehicles, which will not only contribute to the growth of the sector but also help Turkey achieve its environmental goals.
Moreover, the automotive sector has also been a major contributor to Turkey’s exports, with a share of 16.7% in total exports in the first five months of this year. Despite the challenges posed by the pandemic, Turkey’s automotive exports have increased by 16% compared to the same period last year. This is a testament to the sector’s resilience and its ability to adapt to changing market conditions.
In addition to the positive developments in the domestic market, the automotive sector has also made significant progress in terms of technology and innovation. Turkish automotive companies have been investing in research and development activities, with a focus on developing new technologies and improving the efficiency of production processes. This will not only enhance the competitiveness of the sector but also contribute to the country’s technological advancement.
In conclusion, while the automotive sector in Turkey may have shown a mixed performance in the first five months of this year, there are several positive factors that we can take away from this situation. The increase in domestic demand, the growth of electric and hybrid vehicles, and the sector’s contribution to exports are all indications of its strength and potential for growth. With the government’s continued support and the sector’s focus on innovation, we can expect to see a stronger and more resilient automotive industry in Turkey in the coming years.
