Türkiye faces rising costs, export challenges: Mercedes-Benz Turk CEO

Mercedes-Benz Turk CEO Suer Sulun addressed challenges in Türkiye’s automotive sector, citing rising costs and profitability erosion.

Speaking on Bloomberg HT’s program, Sulun stated, “Türkiye has become an expensive country as of today,” attributing the shift to inflation and increased production costs impacting both domestic and export markets.

Automotive market performance in 2024

Sulun provided insights into the market’s performance in 2024, noting that the anticipated tightening in the market was less severe than expected:

• Over 1 million vehicles, including cars and light commercial vehicles, were sold by the end of November.
• Heavy vehicles saw a 12% decline in sales compared to 2023, though Sulun clarified that the previous year had unusually high performance levels.
• Bus sales remained stable, with slight declines in public transport purchases linked to municipal budget constraints.

In 2024, we actually planned accordingly, expecting a tightening and a decline in the market. It was a less difficult year than we expected, less tightened. On a segment basis, we cannot say that there was a contraction in the automotive sector. As of the end of November, more than 1 million vehicles, including light commercial and automobiles, were sold in Türkiye.

In 2024, we will close almost parallel to 2023 in terms of sales. The heavy vehicle side behaved a little differently, there is a contraction of around 12 percent in trucks; but there was already a market performance above normal last year and it is still good. a market.

There is no narrowing of the bus, only in the city there is some contraction in municipalities with regard to public savings.

Mercedes-Benz Turk CEO Suer Sulun

Export, competitiveness concerns

Sulun highlighted the automotive sector’s growing export challenges, driven by rising production costs and currency imbalances:

• “For exports, competitive manufacturing costs are essential. This balance has been deteriorating over the last three years,” he said.
• While Europe remains the primary export market, Mercedes-Benz Turk’s truck exports fell by 44% in 2024, compared to a 7% contraction in the European truck market.
• Export volumes dropped significantly, with only 33% of total production exported in 2024, down from 50% in 2023.

If I make a general assessment, the automotive sector did not experience a major contraction in the domestic market in 2024.

Of course, we are experiencing serious problems in profitability. High inflation definitely has a negative effect. In the domestic market, you can reflect this to some extent on prices with inflation, but you have no chance of doing this in the foreign market.

There is also a serious increase in costs, so there has been a serious erosion in profitability. While this erosion affected profitability in the domestic market, it affected the competitive power of the country and producers in the foreign market. Therefore, Türkiye has become an expensive country as of today.

Mercedes-Benz Turk CEO Suer Sulun

Role of electric vehicles, future goals

Türkiye’s electric vehicle (EV) market shows promise, with around 70,000 EVs sold in 2024, including over 20,000 units of the locally produced Togg. However, Sulun identified gaps in infrastructure and regulation, particularly for commercial EVs:

• “More investment in infrastructure and government incentives are needed for EV adoption to grow, especially in the commercial segment.”

Around 70 thousand electric vehicles were sold this year. TOGG exceeded 20 thousand vehicles, so we are doing well on the automotive side. But I cannot say the same for the commercial side. The commercial side is very limited because there is a need for some regulations.

Special consumption tax (SCT) is lower for electric vehicles, but this is not the case on the commercial side. We need more infrastructure investments and public incentives on the electric vehicle side

Mercedes-Benz Turk CEO Suer Sulun