INTERVIEW-Toyota Turkey shifts export focus to emerging markets

Fri Oct 11, 2013 10:10am EDT

* Company focuses on alternative markets as Europe weak

* Decision expected by year-end on production of new model

* CEO says current lira level reasonable (Adds quotes, details, background)

By Evren Ballim

ADAPAZARI, Turkey, Oct 11 (Reuters) - Toyota Motor Corp's Turkish subsidiary aims to increase output by some 46 percent next year to 150,000 vehicles and focus more on exports across Africa and the Middle East in response to weak European markets, its chief executive said.

The production increase, bringing the plant to capacity, will reflect the full-year impact of output of the Corolla passenger car, which it started producing in June, CEO Orhan Ozer told Reuters in an interview.

He also said the company expected its Japan head office to decide by the end of the year whether to launch production of a new model in Turkey, but he did not give more details.

Turkey's automotive sector is the country's largest exporter, with the other major players being Oyak Renault, Ford Otosan and Tofas, all joint ventures between Turkish companies and foreign carmakers.

Toyota Motor Manufacturing Turkey's plant in Adapazari, northwest Turkey has a capacity of 150,000 vehicles and produces the Verso and new Corolla passenger car models and exports to 52 countries.

The group is looking more at export markets in North Africa, the Middle East and Central Asia because of weakness in European markets. The auto market in western Europe has had its weakest year in two decades.

"I do not see much of a prospect of Europe recovering in the short- and medium-term. This puts exporters in a difficult situation," Ozer told Reuters.

"In response to this, we expanded to cover North Africa, the Middle East, Central Asia and other African countries. We increased our exports to these regions with the Corolla."

The Turkish subsidiary aims to produce 67,000 Corolla cars this year, aimed mostly at the Russian, Turkish and Israeli markets. "Kazakhstan in particular is a growing market. Russia and Ukraine is a growing region. These countries are very attractive when you look at the number of vehicles per thousand people," he said.

But some 90 of its exports of the Verso model are still destined for European countries such as Germany, France and Spain.

Turkish automotive exports rose 12 percent in the first nine months of the year to $15.7 billion, with a full-year figure of $21-22 billion expected, according to data from the Automotive Industry Exporters Association.

The company expects exports to account for 86-88 percent of its sales this year. Output in the first nine months of the year amounted 67,497 vehicles.

The Turkish lira has weakened sharply against the dollar this year due mainly to concerns about the U.S. Federal Reserve reducing its monetary stimulus but it has rebounded in recent weeks. Ozer said the current lira level was reasonable.

"As far as exports are concerned this is a factor which strengthens our competitive power. However volatility is the worst thing for exporters," he said.

"An end-year level of 1.9-2 lira (against the dollar) will be positive for the automotive sector as far as exports are concerned. I think full-year exports to be around $21 billion," he said. (Reporting by Evren Ballim, Writing by Ece Toksabay. Editing by Jane Merriman)