Chip shortage will not ease until second half of year

ISTANBUL

The Turkish automotive sector will continue to suffer a setback caused by the global chip shortage at least in the first half of this year, the head of the Automotive Manufacturers Association (OSD) has said.

“Last year, 10.3 million less vehicles were produced because of the chip crisis. There was a groundless optimisin at the start of this year but nothing has changed on the production side,” Ford Otosan CEO Haydar Yenigün told reporters.

“The chip crisis will continue. We hold supply chain meetings every evening and we see a different picture every day. I think it will be the same for the first six months of this year. Somehow, we have optimism for the second half,” he added.
Semiconductor chip shortage and supply chain problems will ease completely at the end of the first quarter of next year, the OSD head also said.

Last year, Turkey’s total automotive output dropped by 2 percent to 1.27 million and car production decreased by 8 percent to 782,835 units, according to the OSD figures.
In 2021, automotive sales dropped by 3 percent compared to 2020, to 772,722 units, while car sales decreased by 8 percent to stand at 561,853 units.

Meanwhile, commercial vehicle production increased by 11 percent on an annual basis in 2021.
Overall automotive exports were up by 2 percent in 2021 versus 2020, while car exports posted a decline of 5 percent over the same period.
Turkiye exported 937,000 vehicle units and earned $29.9 billion, while car exports totaled 565,361 units worth $9.3 billion.
Foreign exchange rate fluctuations and high inflation rate, which hit 36 percent in December 2021, also affect automotive companies, according to Yenigün’s remarks.

“Sectoral costs soared between 100 percent and 300 percent. For instance, some 20 percent of a car is made of sheet metal. The price of imported sheet metal rose by 160 percent and locally produced sheet metal increased by 274 percent in the last year,” he said.
Although the Turkish Lira recovered from its all-time low level at around 18.40 against the U.S. dollar last month to below 13.50, the inflation rate and energy costs are still high, he added.
Turkey’s total road vehicle production capacity, including trucks and tractors, is 2 million units per year, but in recent years annual production has been about 1.3 million.

Top international automakers - including Ford, Honda, Hyundai, Mercedes, Renault, and Toyota - have factories in Turkey, one of the world’s top auto sales markets.
Last year, automotive companies made investments of more than $650 million.
The automotive sector took the lion’s share in the country’s total exports volume at 13 percent.
Last year, Turkey’s exports to Germany increased by 17 percent compared to the previous year, hitting $4.1 billion.
The automotive industry also posted rises in its exports to France and the United Kingdom with 14 percent and 39 percent, respectively.

There was also a 22 percent increase in exports to Morocco.
While exports to the Middle East fell by 15 percent last year, they rose 38 percent to the Commonwealth of Independent States, 28 percent to the North American Free Trade Area and 21 percent to African countries.