Alarm bells are ringing in the automotive industry in Turkey. The Turkish automotive industry, which was unable to attract a new brand investment from Europe, received the first bad news from the Chinese automotive manufacturers, on which it had pinned its hopes to maintain its production power.
According to the news of Aysel Yücel from Ekonomim, Great Wall, one of the Chinese brands with which intensive public contacts were made to invest in Turkey, announced that it had suspended its investment decision in the country last Thursday.
While frequently changing regulations and increasing labor costs were also effective in this decision, other brands that plan to invest, such as Chery, Skywell and MG, continue their negotiations. However, these brands are waiting for “guarantees” and attractive incentives to invest in Turkey instead of the European countries from which they received invitations. On the other hand, the decline in production and exports has already begun in the sector, where a 35 percent contraction is predicted at the end of the year.
China, which embarked on an aggressive growth spurt in the global automotive market, became the world’s largest automobile exporter, leaving Japan behind. Chinese brands, which started selling in Turkey one after another, started to rise rapidly by gaining a share from domestic manufacturers in the domestic market. Parallel to this development, the Turkish automotive industry experienced a foreign trade deficit in 2023 for the first time in years. Domestic industrialists, who see no escape from China’s aggressive growth, see their Far Eastern rivals’ production in Turkey as the only way out. This issue has also become an important public agenda. On the one hand, government officials have signed various legal regulations to slow down imports from China, and on the other hand, they have been carrying out intensive contacts for a while to encourage Chinese brands to invest in factories in Turkey. Although relevant ministry officials made statements that negotiations with Chinese brands were progressing positively, it will not be that easy to attract these investments to Turkey. Because while many EU countries are trying to persuade the Chinese to invest in the country, production costs in Turkey are gradually increasing.
Following SAIC, China’s largest automotive manufacturer, which entered the Turkish market with the distributorship of Doğan Trend Automotive with the MG brand in 2021, Skywell and Great Wall Motors took action to invest in Turkey, and the details of the meeting with the Presidential Investment Agency on this subject were revealed.
Then, the officials of Chery, which has gained an important place in the Turkish automotive market and a significant share in sales, announced that they were willing to invest in Turkey and started negotiations with government officials.
FREQUENTLY CHANGING REGULATIONS AFFECTED THE DECISION
According to information provided by sources close to the industry, Chinese automotive manufacturer Great Wall Motors, which visited Turkey about two weeks ago and examined the investment conditions on site, announced to the Turkish authorities that it had suspended its factory investment plan in Turkey last Thursday.
According to the information obtained from sector representatives and industry circles who follow these negotiations closely, the increasing costs in Turkey as well as the frequent changes in regulations were effective in the Chinese brand’s abandonment of its investment decision.
The government, which imposed various additional taxes on vehicles imported from China, introduced a number of conditions, such as the obligation to establish at least 20 service points in 7 different regions, for electric vehicles coming from this country, with a recently published communiqué. There are many issues that are expected to be unclear in the communiqué. Another important reason why Great Wall Motors suspended its investment is that its electric models did not achieve the desired success in Europe. Gasoline vehicles do not have EU TYPE approval.
An industry representative who is in close contact with Chinese automotive manufacturers stated that these brands are not as brave as they used to be in investing in Turkey and said, “Investors want guarantees. Because they are afraid. I invest today, there is concern that the regulation will change tomorrow. “They’re not sure the regulations won’t change,” he said.