Auto industry needs to diversify export markets, says association

ISTANBUL

In the face of the weak demand in Europe, Türkiye’s automotive industry needs to diversify its export markets, says Cengiz Eroldu, the head of the Automotive Manufacturers’ Association (OSD).

“The market in Europe shrank by 13 percent in the first six months of the year, while the rate of contraction accelerated to 15 percent in June alone. The contraction is gathering pace there. And on top of that inflation is on the rise in Europe,” Eroldu said in a press conference.

He also cited the ongoing war between Russia and Ukraine and expected interest rates increase by central banks as other factors which adversely affect demand for cars.

“All those suggest that demand in Europe will further decline, that’s why we need to diversify our export markets,” Eroldu said.

Referring to the “distant countries strategy,” which the Trade Ministry unveiled earlier this month aimed at boosting exports to the world’s largest 18 economies, Eroldu called for taking quick actions to implement policies to support companies to enter new markets.

The sales on the local market may compensate for the contraction in exports, he added.

“One in two cars sold in Türkiye was domestically produced, this is not very common in a number of European countries.”

Europe accounts for some 80 percent of the local automotive industry’s exports.

Türkiye’s automotive production increased by 2 percent in the first half of 2022 to reach 649,311 units, Eroldu said.

The industry’s passenger car output fell by 8 percent in January-June compared with the same period of 2021 to 382,947 units, he added.

The automotive sector’s overall exports increased by 1.2 percent on an annual basis to 466,995 units, while passenger car exports declined by 9 percent year-on-year to 271,000 units in the first six months of 2022, Eroldu said.

Last year, local carmakers manufactured 1.28 million vehicles, down from the previous year’s 1.3 million units. Passenger car production also fell 8.4 percent in 2021 to 783,000.

The industry’s export revenues, however, grew more than 15 percent last year from 2020 to $29.9 billion, but passenger car exports fell 0.4 percent to $9.3 billion.

Aging vehicles with emissions

Meanwhile, the OSD prepared a report on the age of cars on the country’s roads and their impact on air pollution.

Some 48 percent of vehicles in Türkiye are older than 11 years, and those cars are responsible for 80 percent of the hazardous emissions, such as carbon monoxide, the report found.

Around 36 percent of those vehicles - or 6.7 million - were produced before 2000, according to the study.

There were 21.5 million vehicles in Türkiye at the end of 2021 and the average ages of passenger cars and light commercial vehicles are 13.6 years and 13.1 years, while it is 14 years for heavy commercial vehicles and 24.3 years for tractors, Eroldu said.