Chinese brands increasing share in Turkish auto market

ISTANBUL

Chinese carmakers are fast increasing their share in the Turkish market, but subsidies the Chinese companies receive from their government may lead to unfair competition, warns Baran Çelik, the board chair of the Uludağ Automotive Industry Exporters' Association (OİB).

Chinese companies are aiming to consolidate their positions in the auto markets with the help of the large subsidies they enjoy, Çelik said.

“They have a destructive approach in competition, such as weakening competitors and ensuring that they are eliminated from the market. This may turn into an unfair competition in the future.”

Türkiye should use all its rights regarding customs investigations provided by the World Trade Organization, according to Çelik.

In the whole of 2022, only 3,456 Chinese-made cars were sold in Türkiye, but in the January-October period of this year, a total of 43,562 Chinese cars were sold.

They appeal to local consumers because they are affordable and high-quality cars. However, governments and domestic manufacturers are cautious about the risks that may arise in the foreign trade balance and the competition in the market.

The prices of those vehicles will not remain at the same level once those companies gain certain market power, Çelik said.

“Although it may seem like an advantage for consumers in the short term, in the long term, after they gain a market share, there may come a time when unfair competition begins.”

The only way to prevent this is to break the power subsidized by tariffs, Çelik argued.

The automotive industry, which has been Türkiye’s largest exporting industry for the past 15 years, had been posting a foreign trade plus. But this is about to change in 2023.

“The auto industry’s annual export revenues are over $30 billion. This year, we may post a foreign trade deficit of around $1 billion to $2 billion,” Çelik said, warning that the deficit may further increase to $3.5 billion to $4 billion in the future.

The biggest reason for this is the decrease in the share of domestic automobiles in sales, according to Çelik.

“We started selling less of what we produced to the domestic market. On the other hand, the number of vehicles we imported in the upper segment also increased. Especially electric vehicles disrupt our foreign trade balance,” Çelik said.

In order to maintain the balance in foreign trade, “we need to produce and export electric vehicles,” he added.

Electric vehicle sales skyrocketed to 890 percent in the January-October period from a year ago to 48,883, according to the data from the Automotive Distributors’ and Mobility Association (ODMD).

Electric vehicles accounted for 6.5 percent of all vehicle sales in the first 10 months.