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Despite Araba Sevdasi (Car Love) by poet Recaizade Mahmut Ekrem being one of Turkish literature’s most popular works, the country has never had its own car

Dunya Executive - - COVER PAGE - by Mehmet Filoglu

Turkey gears up finances and options for historic journey to first national car

1 Since when has Turkey wanted to produce a domestic car?

Turkey’s automobile adventure began with the establishment of Ford’s first assembly plant in 1929. Later, many other brands established their own assembly lines. In 1961, the then-military administration started the ‘Devrim’ (revolution) project. Two prototypes were produced in four months but serial production was never made. Later, domestic automobile attempts were made with some licensing agreements but none succeeded.

2 Why did these attempts fail?

Turkey has never been able to implement a decisive industry-focused development program. This was due to the insufficient capital of the country and low levels of education among its workforce. Moreover, the unstable political climate, which was interrupted by military coups, hindered the implementation of long-term plans. Providing income from the business relations it entered into with the state, the bourgeoisie formed in the Republican years never placed a risky breakthrough onto its agenda.

3 What is the present condition of Turkey’s automobile sector?

In spite of everything, Turkey has succeeded in being one of the manufacturing bases of international companies in the automobile sector to some extent due to its proximity to domestic and European markets. Currently, the country plays host to companies such as Renault, Fiat, Ford, Toyota and Hyundai. Some of these companies’ car models are produced and marketed with the participation of local partners. There is also a large network of subsidiary industries clustered around the parent industry. In 2016, the total exports of the automotive sector were $19.8 billion, with imports at $17.8 billion.

4 What is the goal of this latest initiative?

The project has economic and political objectives. Among the economic targets, Turkey’s primary goal is to take a share of the automobile market and to increase the foreign trade surplus in this sector. Moreover, the fact that the value added for automobiles produced by international companies to Turkey is rather low is another factor that increases the motivation to create a locally made car. The project’s political goals include the idea to use it as a success story in the forthcoming election campaign.

5 Who will build Turkey’s first domestic car?

A joint venture group has been established to produce domestic automobiles. The group includes Anadolu Group, Kiraca Holding, BMC, Zorlu Holding and Turkcell. While the first three companies have investments in the automotive sector, Zorlu Holding is engaged in consumer electronics and Turkcell is in the mobile communications sector. The distribution of shares and duties of these companies has not yet been decided. The new company is expected to work independently of shareholder groups.

6 What about its technical specifications?

This area is as yet undecided. The general view is to make an electric car but that could change as the process evolves. Deputy Prime Minister Fikri Isik said the makers would be using battery technology developed by TUBITAK, which allows 100 kilometers of travel in metropolitan traffic at a cost of TRY 2. “In inter-city journeys, a small generator in the car will kick-in and charge the battery, which will cover 1,000 kilometers with 20 liters of fuel. One of the most prominent features of our vehicle will be its use of autonomous vehicle systems. We aim to adapt the ‘Real-Time Operating System’ we use in aerospace vehicles in the defense industry to the new car as well,” he said.

7 How much is likely to be invested in the new venture?

An official investment figure remains unknown. The estimated amount required for a car with the features of industry leaders varies from $500 million to $10 billion. Apart from the participants to be involved, the financing model has not yet been announced.

8 How much will the car cost?

Government announcements indicate that the price of the car will be in line with the purchasing power of the middle-lower section. Currently, the price of the lowest segment of vehicles sold in Turkey varies between TRY 40,000-60,000. The fact that the new car will be electric will play a part in raising its price. In addition, the fact that the accumulation of knowledge is low, but the cost, which is particularly difficult to realize, may lead to the sale price of the car being much higher than these levels.

9 How much public financial support can be expected?

“I will be on your side as the president at the point of solving the problems that will arise. Be confident that we will give you all kinds of support for marketing this product starting with our region,” said President Recep Tayyip Erdogan. Support such as land acquisition, financing support, tax discounts and public procurement options are available.

10 What are the car’s chances of success in international markets?

It has to prove itself in the Turkish market in the first place. Even after that, it seems unlikely to compete with international brands without public support. In the long-term, the Middle East and Central Asia stand out as the priority external markets for the new brand. In this, Turkey’s political relations with these countries will be more determinant than commercial factors.

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