Limited pandemic impact on Turkey’s automotive sector expected: Trade group

Limited pandemic impact on Turkey’s automotive sector expected: Trade group

Limited pandemic impact on Turkey’s automotive sector expected: Trade group

The turnover loss of the Turkish automotive sector due to the coronavirus crisis will be limited to $5 billion, according to the Transport Vehicles Supply Industry Association (TAYSAD).

Turkey will produce between 250,000 and 300,000 fewer vehicles this year because domestic and foreign demand has fallen drastically, TAYSAD Vice Chair Kemal Yazıcı told reporters in a video conference.

“An important source of income for the automotive supply industry firms is the export of [vehicle] parts. In this area, the total loss was around 19 percent in March, but we expect it to rise to some 70 percent in April,” he said.

“The turnover loss of the supply industry caused by the pandemic will be around $3 billion,” he added, pointing to the decrease in exports and domestic market sales.

“When the entire automotive industry is included in the calculation, we can say that the total turnover loss will reach around $5 billion,” said Yazıcı.

Meanwhile, Turkey could replace China to supply parts to European producers in the near future, TAYSAD Chair Alper Kanca said in the video conference.

“Several major industry firms in Europe turned to Turkey when they weren’t able to get products from China. European producers started asking Turkish counterparts to supply parts they couldn’t procure from China. However, trade [broke down] when the pandemic spread to Europe. All the production and sales came to a halt,” Kanca said.

“The coronavirus pandemic suddenly shook all [aspects] of international trade. Now, for a period of time, the most reliable and closest suppliers will be preferred. Maybe the deepest effect of this crisis will be localization. Nobody can take a chance on producing something in 20 various countries and then assembling them in a short time period,” he added.

More than a third of TAYSAD’s 450 member firms had suspended production as of April 6. The ratio of firms suspending production decreased to 7 percent on April 20 and 5 percent on April 27.

“Everyone is planning to resume production in the week starting May 4. In terms of automotive production, the capacity utilization rate is around 20 percent in April. We expect the rate to gradually increase from 60 percent to 85 percent between May and September,” Yazıcı said.

Commercial vehicle producer Anadolu Isuzu, a joint venture bringing together Turkish conglomerate Anadolu Holding, Isuzu Motors and Itochu Corporation, resumed production at its factory in the northwestern industrial province of Kocaeli’s Gebze district on April 13. It had halted production on March 30.

Türk Traktör, an agricultural machinery manufacturer owned by Koç Holding and CNH Industrial, also reopened its plants on April 20 – the same day as other automotive firms like Honda, Mercedes-Benz, Hyundai Assan, Otokar and Karsan.

Ford Otosan, a Koç Holding and Ford Group joint venture that is one of the biggest Turkish automotive companies, resumed production on April 27.

Meanwhile, Toyota Turkey and Tofaş, a joint venture of Turkey’s Koç Holding and Italy’s Fiat Chrysler, have said they plan to reopen on May 4, whereas Oyak Renault has not yet set a date.

Turkey’s automotive exports decreased by 10 percent to $6.98 billion year on year in the first quarter due to the pandemic, according to the Uludağ Automotive Industry Exporters Association.

Monthly automotive exports also decreased by 28.5 percent to $2.1 billion in March, it said.