Posted on 22 April 2011
The Prime Minister of Turkey recently announced his ambitions to build a 100% domestic car brand, but when examined more carefully this idea is quite challenging, as all the parts need to be produced domestically. Turkey last tried to produce its own automobile brand in 1961, but only made four of them before dropping the idea.
Part of the current challenge is the lack of a comprehensive study on the import side of the sector. It is thought that the industry is up to 65% dependent on imports, and that up to 75% of material spending is on imports. This doesn’t mean that Turkey isn’t capable of producing parts, it is simply a reflection on the number of foreign companies operating in Turkey, which have licensing agreements with their foreign counterparts to supply the parts. When questioned, all the leading experts in the auto sector agreed that Turkey has the capacity to produce all the parts domestically.
However they also said that Turkey needs to create a brand that has a competitive advantage so that production numbers make it economically viable. In addition Turkey must make sure that vehicles produced can be absorbed domestically and by neighbouring countries, as these countries with which Turkey has a good relationship have a total population of around 800 million people. Government backing will be necessary to make sure that Turkey can meet this type of demand.
For its part the government has already announced an action plan which outlines the necessary steps to support the creation of a national brand, which includes allocating extra funds for research and development, so that companies have the necessary technology and innovation for competitive advantage.