German DKV to enter Iran market via Turkey
Despite initial skepticism, today 90 percent of Turkish transport companies use fuel cards for their drivers in Europe. Drivers can pay for things like fuel, highway tolls, customs payments, roadside assistance services, and other necessities while on the road with these cards, avoiding the need for cash. At the request of Turkish transporters, DKV Euro Service, a German company which has operated in the Turkish market for 10 years, is expanding to the Middle East and Commonwealth of Independent States (CIS), including Iran. Speaking to DUNYA Executive, DKV Euro Service Turkey Country Director, Deniz Cokcos Sezer, explained their goals in Turkey and the broader region.
Established in Germany in 1934 with the idea of purchasing fuel without using cash, DKV is now Europe’s leader in the sector with its services provided by nearly 70 suppliers in 16 countries. Now into its tenth year of operations in Turkey, DKV generated 7.2 billion euros globally in transactions in 2017 and has three million cards circulating in Europe, Turkey and CIS countries. There are three thousand DKV cards in Turkey where the company grew in double digit rates by turnover, more than 20 percent in highway payments, and 10 percent in fuel. 40 percent of Turkish transporters working in Europe use DKV cards.
Sezer said their first office outside the European Union, in Turkey, is of critical importance. “However, we can offer services to only 30 percent of the potential. The big pie is in the Middle East and an expansion should be planned through Turkey,” she said. “If DKV paves the way for the domestic market and the Middle East, we believe that the Turkey office will grow rapidly.”
Russ a and Georg a expans on
The expansion that Sezer envisions has already begun. Only 30 percent of Turkish road exports are made to Europe while 55 percent go to the Middle East, where DKV does not exist. The operation in CIS countries, which accounts for 15 percent of Turkish road exports, began last year. And today, Iran is on the agenda. “The Georgian market was opened for Turkey,” Sezer said, stressing that as of 2018 Turkey makes the most sales among all European countries in the Russian market since DKV arrived in 2016. “Currently, Kazakhstan is about to start. The DKV office is established, our cards will be valid this year. This expansion will be followed by Kyrgyzstan and Azerbaijan.”
The Iran expansion was also driven by the demands of the Turkish office. “There is a market there that cannot be ignored,” Sezer noted. “DKV does not ignore customer requests. We said that Turkish transporters demand this and put the scenario in front of them. Russia and Georgia are investments entirely made with Turkish transportation in mind. Target volumes have been reached. In a company event we told them about Iran. Work has begun and it will become clearer next year.” The only factor slowing the company down in this regard is the fuel quality in Iran. When the work is concluded and an agreement is reached with an Iranian fuel company, Turkish logistics companies will be able to benefit from the services provided by the DKV card in Iran together with other countries.
German army and pol ce have DKV cards
Another important difference between Turkey and other DKV countries is that while the offices in Europe can make sales in the domestic market, this is still not possible in Turkey, according to legislation. In other words, Turkish transporters can only make overseas purchases with this card. In fact, DKV cards are also valid at a fuel brand in Turkey but only foreign transporters can make purchases there. However, there is great potential in domestic car rental and cargo companies. For example, one of the biggest customers of DKV in Germany is the army and the police, which were some of its first clients. 9 of the biggest 10 clients taken this year are cargo companies. DKV is also considering entering the Turkish domestic market as soon it resolves the licensing requirements of the Energy Market Regulatory Board. “No other branch has the domestic market potential Turkey has,” said Sezer, adding that the company is currently lobbying the government for legislative changes. “In fact, DKV needs to loosen its current business model by taking an important decision, which it has never done for any country for 80 years. It is important to tell the authorities that we never own the fuel, and that we are working like a financial intermediary institution.”
Deniz Cokcos Sezer