Starting in March 2020, the pandemic forced a pause in production and brought the automotive industry through a difficult period. Yet the sector rebounded quickly and, despite a Europe-driven drop in exports, finished the year as the leading exporter with $26 billion in shipments.
As production resumed, the industry moved forward with new model investments and increased employment, achievements reached by the end of 2020. Entering 2021, the automotive sector did so with expectations of larger gains. After a challenging mid-2020, early 2021 brought encouraging developments for the industry.
How Did 2020 End?
The Automotive Manufacturers Association (Otomotiv Sanayii Derneği, OSD) released full-year figures at the end of 2020, confirming that exports closed at $26 billion. Despite the withdrawal of a major investor such as Volkswagen, Turkey secured a 15% share of exports and achieved notable success. Reaching these targets helped maintain and create essential jobs within the automotive industry. As a result, employment in the sector rose in January 2021.
OSD President Haydar Yenigün commented: “After the significant decline in European automotive markets from 2019 through January 2020, we aimed for growth in 2020. We expect our growth to exceed 16% in figures that will reflect in 2021. Recovery in Europe, our largest export market, will translate into more than 16% growth in automotive exports.”
What Are Mid‑2021 Expectations?
Focusing on economic growth prospects, Yenigün noted: “Apart from China’s progress in the second half of 2020, there was no notable success in other countries. Turkey is among the least-affected economies. We defend a growth expectation of 2.9% for 2020 and above 3.2% for early 2021. I believe this figure will be higher by the end of 2021.”
Why Did Volkswagen Withdraw Its Investment?
Addressing Volkswagen’s high-profile decision to liquidate its Turkish entity, Yenigün explained: “There are other reasons behind Volkswagen’s move. Plans had called for producing 300,000 units of a new Passat model in Manisa in cooperation with another brand, but that investment was canceled. They expect the pandemic to depress demand. To prevent losses during the pandemic, the company aims to secure profits by shifting toward electric investments in 2020 and 2021, targeting around €1 billion.”
Other major industry organizations and economists echoed this view, saying that no country is currently unwilling to work with China in the automotive field, so Volkswagen’s decision was not entirely unexpected.
With the start of January 2021, the Turkish automotive sector drew attention for both capacity increases and investments in new models. A $477 million investment whose effects carried from 2020 into 2021 is already noted. In 2021, major moves by manufacturers emphasize electrification. Rapid steps are planned in the supply industry toward electric components, a critical segment of the automotive value chain.
Mercedes‑Benz Statement
Mercedes‑Benz Türk reported more than €1.3 billion in total investments in its Turkish operations by the end of 2020. Despite the pandemic, the company achieved export revenues of €422 million from buses, €479 million from trucks, and €41 million from R&D and other services. Süer Sülün, CEO of Mercedes‑Benz Türk, stated: “In 2021, we will maintain our leadership in the intercity bus and truck markets.”