According to the Automotive report of the Sectoral Overview series prepared by KPMG Turkey, the automotive industry, which suffered a great loss in 2020 due to the pandemic, started 2021 with the chip crisis and production disruptions. While the game is being re-established with the effect of rapid digitalization in the industry, plans for change are still insufficient. Sustainability has become one of the most important agenda items in the sector, and the importance of cyber security has increased more than ever
The details of the report are as follows: The automotive sector, which suffered a great loss in 2020 due to the pandemic, started 2021 with the chip crisis and production disruptions. While the game is being re-established with the effect of rapid digitalization in the industry, plans for change are still insufficient. Sustainability has become one of the most important agenda items in the sector, and the importance of cyber security has increased more than ever
The Automotive report of the Sectoral Overview series prepared by KPMG Turkey has been published. The report provides an assessment of the paradigm shift in the automotive industry, as well as the policy recommendations needed to ensure the industry's sustainable growth and greater contribution to the economy. The chip crisis and the disruptions in the ongoing production are pushing the industry, which closed 2020, which it started with hope, with great loss due to the epidemic. The speed of digitalization also says that we will see a very different automotive sector in the near future.
Evaluating the report, KPMG Turkey Automotive Industry Leader Hakan Ölekli stated that the industry is trying to adapt to the new era and said, "We entered an irreversible change with the first Covid-2020 case seen in China at the beginning of 19. "The automotive game is being rebuilt, the paradigms are changing" approaches, which have been put forward for a while, find more and more supporters, but on the other hand, it becomes clear that there are no plans suitable for this change. Olekli continued:
“The global automotive industry is trying to exist and reach the future in an environment of threat and change, such as the absence of chips, rapid increases in raw material prices, a 16 percent contraction in global production, the extinction of diesel vehicles due to the compression of emission criteria. Beyond these, the climate crisis and environmental problems increase the pressure and responsibility on the sector. These changes around the world have enabled the industry to enter the era of electric and hybrid motor vehicles at full throttle. These developments will radically transform our current vehicle-centric system into a more efficient, data-driven, driverless and customer-centric ecosystem. The importance of cyber security in the industry has increased more than ever.”
SCT regulation will increase sales
Hakan Olekli drew attention to the following issues:
With the Presidential decision published in the Official Gazette, the SCT base limits that will apply to passenger car purchase and sale transactions have been changed. Accordingly, up to 1600 cm3 cylinder volume, the tax base limit in the 45 percent SCT segment was increased from 85 thousand liras to 92 thousand TL. The new tax base limit of motor vehicles whose tax base limit exceeds 85 thousand liras but does not exceed 130 thousand liras and is within the 50 percent SCT limit has been increased to between 92 thousand and 150 thousand TL. For passenger cars with an engine cylinder volume exceeding 1600 cm3 and not exceeding 2000 cm3, the tax base has been increased from 85 thousand – 135 thousand TL to 114 thousand – 170 thousand TL. The SCT segments of 45 percent, 50 percent and 80 percent applied to the vehicles in question were preserved. The regulation made in this period, when automobile sales were affected by the exchange rate increase and interest rates, will have a very positive effect on sales.
For hybrid vehicles, the SCT base, which was between 85 thousand and 135 thousand TL, was increased to 114 thousand - 170 thousand TL. We think that this arrangement will have a positive impact on sales. We should also say that making a similar arrangement for electric vehicles will make a great contribution to the sector in the local sense. Encouraging the consumer to electric mobility is of great importance in the current period.
With climate change concerns, rapid population growth and urbanization, new forms of mobility are critical to support future population centers and economic activities. As the mobility ecosystem evolves, its global value is estimated to reach over $2030 trillion by 1.
The phenomenon of creating value with technology resources and data is increasing day by day. Many organizations carry out intensive data transfer with their stakeholders while carrying out their business processes. For this reason, the security of shared data and the importance of third-party risks become more critical.
Some highlights from the report are:
The sector, which closed 2020 with 78 million vehicle sales, experienced a decrease of 2019 percent compared to 14. This decline was felt more deeply in Europe. The European Union (EU) automotive market closed 2020 with a contraction of more than 20 percent.
The Turkish automotive industry completed 2020 with a total production of 1 million 336 thousand units, domestic sales of 796 thousand units and exports of 26 thousand units with a total value exceeding 916 billion USD. Sales increased by 2020 percent in 62, while production decreased by 11 percent and exports by 27 percent.
In the first quarter of 2021, the European automotive market experienced one of the rarest contractions in its history, such as 23 percent. In the first quarter of the year, nearly 1,7 million cars were sold in Europe.
In the first quarter of 15, the outlook is positive for Turkey, the world's 2021th and Europe's fourth country in production. The production capacity, which is currently just over 2 million units, will increase significantly with an additional 2023 thousand units capacity to be put into operation in 200, announced by Ford (IS:FROTO) Otosan in March.
In the first 2021 months of 7, automotive production increased by 11 percent compared to the same period of the previous year and reached 705 thousand 79 units, while automobile production increased by 2 percent to 449 thousand 550 units.
Local market on the rise
Total automotive exports in 2020 is 930 thousand. As the main and sub-industry, exports of 2020 billion dollars were realized in 26. In the first quarter of 2021, 265 thousand vehicles were exported, generating a revenue of 7,8 billion USD. The export forecast of the sector for the end of 2021 is at the level of 30 billion USD.
The local car market continues to rise. The domestic market, which grew by 58 percent in the first quarter of the year, exceeded 206 thousand units. This level indicates a growth of 60,6 percent compared to the same period last year. The year-end expectation is in the range of 750-800 thousand.
As of March 2021, revenues from automotive reached the highest level in history. In March, the automotive market grew by 93 percent on a monthly basis. In the same period, SCT collection increased by 242 percent and exceeded 8 billion TL. SCT in the first three months of 2021 increased by 97 percent and reached 15,1 billion TL.
Employment continues to rise
The volume of direct and indirect employment in the Turkish automotive sector is at the level of 50 thousand. This number exceeds 500 thousand when dealerships and peripheral units are also engaged in addition to manufacturing. TOGG, a domestic automobile initiative, continues with 375 personnel. It is expected that the total employment will reach 6 people after the factory, which is currently under construction, becomes operational.
Ford Otosan created an additional employment area for 6 thousand 500 people with its new electric vehicle factory. Employing 700 new employees due to the epidemic, the institution continues to grow in this area. Apart from this, it is known that Toyota has requested additional employment of 2 people from İŞKUR for its Adapazarı factory.
The chip crisis expands to 2023
The most important problem of the sector in the short term is the semiconductor production, namely the chip crisis. The main causes of the chip crisis are the pandemic and the resulting increase in demand for home working and distance education. On the other hand, the rapid recovery of the automotive sector, which was expected to contract, caused an increase in demand that was difficult to meet.
Another important point is the water consumption required by chip production. Taiwan Semiconductor Manufacturing Company (TSMC), the largest manufacturer in the world, announced that it has regained full capacity to meet demand across all industries. However, the drought in the island country of Taiwan makes it difficult to meet the demand. TSMC shared that it needs 156 thousand tons of water daily. In this case, the view that the chip crisis will return to normal in 2022 is gradually expanding to 2023. It highlights the expectation that if the water stocking problem cannot be solved in the face of global warming, the problem will be repeated in the coming years.
New generation vehicles are rising
Due to the Covid-19 restrictions, global automobile sales fell by 15 percent from the previous year, according to the International Energy Agency's (IEA) estimates. Despite this, sales of electric cars caught the trend and exceeded market expectations. In the first quarter of 2021, global electric vehicle sales reached approximately 500 thousand units in China and 450 thousand units in Europe. This trend was also observed in commercial areas such as buses and trucks, apart from passenger cars.
Thanks to existing policy support and additional incentives, the IEA estimates electric car sales to exceed 3 million vehicles globally, reaching a market share of over 4 percent. This equates to over 2019 percent growth over the 2,1 million electric cars sold globally in 40.
The global electric car park grew from 7,2 million to over 10 million, while the number of vehicles registered increased by 41 percent. According to the IEA's projections, the global electric passenger car park will reach 2030 million by 125. This volume increase represents a 17,5% share in sales and a 7,5% share in stock.
TOGG will bring radical change
The mobility ecosystem in Turkey will also change radically. The ecosystem to be built around electric, connected new generation cars developed by TOGG will include many new services, from charging infrastructure to location-based applications, from connecting with other smart devices to smart parking applications, from membership-based transportation services to wireless updating of the car's software.
Lithium-ion battery production factory, the foundations of which were laid by Aspilsan last year, is another step that will support electric vehicle production in Turkey. This investment is of great importance in the electric vehicle market, both locally and globally.