Automotive Sector Targets $34 Billion in Revenue

Automotive Sector Targets USD 34 Billion Revenue Turkish automotive sector total exports are expected to reach USD 34 billion in 2023. According to the "Automotive Sector Overview" report prepared by KPMG Turkey, approximately 85 million motor vehicles were produced globally in 2022, while the number of motor vehicles sold reached 81.6 million. In Turkey, 1.3 million vehicles were produced in 2022 while 827,000 vehicles were sold. According to the "Automotive Sector Overview" report prepared by KPMG Turkey, the global automotive market in 2022 recorded 66.2 million new vehicle registrations, reaching 2021 figures, supported by some relief in semiconductor supply and increased sales in the fourth quarter of the year. Meanwhile, approximately 85 million motor vehicles were produced globally in 2022, while the number of motor vehicles sold reached 81.6 million. In 2021, these figures were 80.2 million and 82.7 million respectively. In the European region, including Turkey, new passenger vehicle registrations declined by 10.4% on an annual basis in 2022. Semiconductor supply problems and the ongoing Russia-Ukraine war were among the key factors behind this development. Passenger vehicle production in the European Union increased by 7.1% in 2022 compared to the previous year. However, production in Russia and Ukraine declined by 67.4% and 79.7% respectively during the same period, leading to a 1.6% annual decline in European production in 2022.

Automotive market grew by 7 percent

In Turkey, the automotive market increased by 7% in 2022 compared to 2021, supported by base effects. Additionally, the capacity utilization rate of automotive industry companies in 2022 rose from 65% in pandemic years to 70%. Meanwhile, according to the report noting that the effects of the global chip crisis and Russia-Ukraine war continue in the sector, as production struggles to meet demand, this situation is reflected in price increases. Additionally, SCT rates created some pressure on domestic demand in 2022. In 2022, the Turkish automotive sector produced 1.3 million vehicles while 827,000 vehicles were sold. In 2021, these figures were 1.2 million and 773,000 respectively. In 2022, Turkish automotive sector exports reached 970,000 vehicles while vehicle imports totaled 454,000 units. In the January-June 2023 period, total automotive exports increased by 15% in dollar terms and 16% in euro terms compared to the same period of the previous year. During this period, total automotive exports reached USD 17.7 billion while automobile exports increased by 20% to USD 5.4 billion. Automobile exports in euro terms increased by 16% to EUR 4.9 billion. Based on end-2023 estimates, total automotive exports are expected to reach USD 34 billion. [caption id="attachment_155591" align="aligncenter"] Hakan Ölekli[/caption]

KPMG Turkey Automotive Sector Leader and Partner Hakan Ölekli made the following assessment on the matter;

"The pandemic experienced in recent years has deeply affected the automotive sector as it has all sectors. With this crisis, we were aware that the sector was entering a major transformation process. The demand shift driven by increased preference for low-carbon hybrid and electric vehicles compared to the past, along with supply chain issues and chip crises, accelerated digitalization, production process automation, innovative smart mobility alternatives and the addition of new market players offering connected vehicle features, caused the sector to enter an unprecedented transformation and transition process. However, our report also indicates that there are significant opportunities awaiting the sector. At KPMG, 83% of executives who participated in our research conducted at the end of 2022 are confident they will achieve higher profits in the next five years, compared to 53% in 2021. Another positive development is digitalization in the sector. Every process from production to sales and marketing channels is benefiting from digitalization. Production processes are now subject to smart automation, on the sales side dealerships are shifting from physical to digital to meet customer needs, connected vehicles and autonomous vehicles consist of IoT (Internet of Things) supported components. In summary, there is rapid transition from physical to digital across the sector."