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* Recovery in European demand boosts producers in Turkey
* Ford, Fiat Chrysler, Hyundai rolling out new models
* Autos account for 14 percent of Turkish exports
By Evren Ballim
ISTANBUL, May 30 (Reuters) - New models and a recovery in European demand are set to lift automotive exports from Turkey, Europe’s fifth-biggest producer, this year and next, industry representatives predicted, shoring up economic growth and boosting new investment.
The sector’s strength will be a fillip for Prime Minister Tayyip Erdogan’s government, with growth in the broader economy slowing after a decade of unprecedented expansion.
The government is expecting growth of 4 percent this year, although most economists see that as optimistic.
Global carmakers such as Toyota and Ford have shifted some of their production to the nation of 77 million largely to take advantage of its geographical position as a bridge between Asia and Europe and its relatively cheap labour costs, serving a growing range of foreign markets.
Toyota began producing a new version of its best-selling Corolla in Turkey last year, while manufacturers including Ford, Fiat Chrysler and Hyundai have new model launches in conjunction with local joint venture partners this year and next.
German truck maker MAN meanwhile announced last week that assembly of its coaches and public-service buses would move from a plant in Plauen, Germany to Turkey by March 2015.
Automotive sales account for some 14 percent of Turkey’s overall exports. The country exported 828,000 vehicles worth $21.5 billion last year, with European markets accounting for 70 percent of that total.
“The European Union market is growing beyond our initial expectations,” Automotive Industry Exporters’ Association President Orhan Sabuncu told Reuters in an interview this week.
“If this momentum continues, export revenues will reach a total of $23 billion this year,” he said, a 7 percent increase on 2013.
New vehicle registrations in the European Union and the countries of the European Free Trade Association rose 6.3 percent in the first four months.
“Turkish commercial vehicle producers are shifting to new models, causing a temporary slowdown, but with stronger demand in European markets, year-end export figures will be closer to 900,000 units,” Automotive Manufacturers Association Secretary-General Ercan Tezer said.
As European markets stabilise, Turkish producers are rolling out new models and expanding capacity to tap the rising demand.
Ford Otosan, a joint venture with Turkish conglomerate Koc Holding, is the sole global producer of Ford’s new Courier commercial vehicle and is expecting a sharp increase in exports of the light truck from a current 200,000 a year.
“We aim to reach 300,000 units of exports in the coming period with the recovery in European markets”, General Manager Haydar Yenigun said last week at the opening of a new plant.
Tofas, a joint venture between Fiat and Koc Holding, will start exporting its Doblo light commercial vehicle to North America in the fourth quarter, while production of a new passenger car will begin next year.
Tofas has said it plans to produce 580,000 units of the car between 2015 and 2023, a third of that volume for export.
Fiat Chrysler announced this month it will spend 48 billion euros ($65 billion) over the next five years on the revamp of its existing models, and analysts expect Tofas to benefit.
“Ford Otosan and Tofas will achieve higher export figures in 2015 with the new models. We expect Doblo and Courier exports to rise with Europe’s recovery,” said Esra Suner, an analyst at Istanbul-based brokerage Is Invest.
Hyundai is meanwhile set to enter the European commercial van market with its Turkish partner Karsan and will begin production at the end of this year.
It plans to build more than 200,000 of the large vans during the first seven years.
Hyundai’s separate Turkish venture Hyundai Assan, which started production of its small i10 passenger car at the end of 2013, expects to reach full production capacity of 200,000 vehicles this year, with 78 percent going to export markets.
“Since March, we have been working around the clock. The increase in orders from British and German markets gives us hope,” Hyundai Assan General Manager Onder Goker said.
($1 = 0.7345 Euros)
$1 = 2.1018 Turkish Liras Writing by Ece Toksabay; Editing by Nick Tattersall and Erica Billingham