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Business

Turkish auto exports hit 1m for first time in 2016

New record set thanks to improved European market

Fiat's Egea is manufactured at a plant in Bursa, near Instanbul.

ISTANBUL -- Turkey's annual auto exports, including trucks and buses, surpassed 1 million units for the first time in 2016 as foreign automakers' investment in new models and a recovery in its mainstay European market lifted shipments.

According to industry group the Automotive Manufacturers Association, or OSD, Turkey exported 1.14 million units last year, up 15% from the year before. Auto exports hit a record high for the fourth straight year.

Turkey's customs union with the EU means that it can export vehicles to much of Europe without paying tariffs. It is a major auto production base for the European market. Major automakers from Europe, America and South Korea produce vehicles in the country through joint ventures with local companies. Japanese automakers Toyota Motor, Honda Motor and Isuzu Motors also have plants in Turkey.

Production grew 9% year on year in 2016 to 1.48 million units, setting a new record for the second consecutive year. Nearly 80% of vehicles produced in Turkey were exported. Auto exports, including parts, were worth about $24 billion last year, accounting for some 17% of Turkey's overall exports, according to the Turkish Exporters Assembly, another industry group.

Many automakers invested in Turkey in 2016 to produce new models, including Toyota's C-HR, the Honda Civic and the Egea by Fiat Chrysler Automobiles NV.

In particular, the Egea -- marketed as the Tipo elsewhere in Europe -- was a major export driver. The strategic compact car was designed in Italy and is produced by Tofas Turk Otomobil Fabrikasi, a joint venture set up by FCA and Turkey's largest conglomerate Koc Holding.

Given the popularity of the vehicle in Europe and Mexico, Tofas shifted to a three-shift schedule to produce Egea sedans, hatchbacks and station wagons in March last year. Last fall, the company said it will invest 50 million euros ($52.8 million) to increase production capacity for the model from 190,000 units to 250,000 units.

Meanwhile, Toyota improved an existing production line at a plant in western Turkey. In October, the automaker began producing the C-HR small SUV at the plant.

Toyota plans to produce over 160,000 units of the model's hybrid and gasoline versions there, some 90% of which are to be shipped to over 50 countries in Europe, North America, the Middle East and elsewhere.

The top five exporters accounted for 98% of Turkey's total auto exports by volume in 2016. Tofas had the largest share, shipping 279,000 units, followed by Renault, with 270,000 units; Ford Motor, with 256,000 units; Hyundai Motor, with 207,000 units and Toyota, with 109,000 units.

By contrast, Turkey's domestic sales of passenger vehicles and small commercial vehicles increased by a modest 1.6% in 2016 from a year earlier to 983,000 units. Sales were up thanks to a weaker lira and a last-minute surge in demand ahead of an expected rise in the prices of vehicles due to an increase in a special consumption tax. Sales hit a record high for the second straight year but are expected to fall back this year.

According to an auto dealers' association, Volkswagen held 13.6% of the Turkish auto market, followed by Renault's 12.3%, Ford's 11.1% and FIAT's 10.7%. The largest share held by a Japanese automaker was Toyota's 5.3%.

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