This is painful news. Last July the Chinese car manufacturer BYD decided to build a plant in Türkiye with an annual capacity of 150 thousand electric and hybrid vehicles which will be able to employ up to five thousand people. Production is expected to start at the end of 2026. The agreement was signed in Istanbul by BYD President Wang Chuanfu and the Turkish Minister of Technology, Mehmet Fatih Kacir, in the presence of President Recep Tayyip Erdogan. Just over three months later, in early October, word spread that Turkey was concluding negotiations with another Chinese automaker, Chery, for an investment in the country.
In the meantime, Italy is desperately searching for a car manufacturer to join Stellantis in an attempt to revive the asphyxiated car sector in our country. Where in 2023, 880 thousand vehicles including cars and vans were manufactured while Turkey churned out almost double: 1.46 million of which 952 thousand cars and 515 thousand commercial vehicles. Commenting on the agreement with Ankara, the Chinese BYD highlighted «Turkey’s unique advantages, such as its developing technological ecosystem, a strong supplier base, an extraordinary location and a qualified workforce».
Stellantis, Ford, Mercedes, Renault, Toyota and Hyundai have been present for years in the country between Europe and Asia, making it the thirteenth vehicle manufacturer in the world. And to protect this heritage, the government imposed a 40 percent tariff on car imports from China. A severe stick combined, for those who want to come and open factories, with the sweet carrot of extensive tax breaks, land assignments, low salaries and ease of dismissal: the average annual net salary in Turkey is, based on Eurostat data, around nine thousand euros, compared to the 28 thousand continental average (and 24 thousand in Italy). Furthermore, being part of the customs union, a Chinese company that produces locally can export its cars to Europe without them being burdened by tariffs. The result obtained is the landing of BYD and probably Chery. «We are planning an incentive package of 4.5 billion dollars» announced the Turkish president «to increase our automotive production capacity, reaching at least one million electric cars per year». And he specified: «We have created ten model factories that lead the efficiency-oriented transformation of our industry. We will bring this number to 14 by adding four new factories. We have paved the way for global automotive companies and other large-scale vehicle manufacturers to direct their investments in electric vehicles in Türkiye.” In fact, behind the image of a country afflicted by very high inflation (52 percent) and the devaluation of the lira, led by an autocratic government that is not very complacent with the West and known to Italians above all for gulet holidays, the Turkey hides a highly respectable industrial fabric in the motoring field which represents an opportunity but also a competitive threat. Thanks, among others, to the Agnellis who in 1968 inaugurated a car factory in the city of Bursa created together with the very powerful local Koç group: in the Seventies the Fiat 124 was produced there, today the Egea (our Tipo) is manufactured and always Stellantis has one of its research and development centers here. In Bursa there is also the Oyak Renault plant, founded in 1969, which produces not only cars but above all engines.
In addition to cars and trucks, one of the leading sectors in the country’s industry is machinery, which represents 10 percent of exports, with Germany, the United Kingdom, France and Italy as the main destinations. A strong metalworking sector requires steel and for this reason Turkey has become the seventh largest steel producer in the world. At the beginning of 2024, Turkish steel mills even overtook Germany, the European leader until now. The increase in steel production was facilitated by the reduction in energy costs, thanks to the good relations maintained with Russia at war with Ukraine despite Ankara’s membership in NATO.
Very strong in textiles, where it is the sixth largest global supplierTurkey is however suffering the consequences of the restrictive policy adopted by the government to curb inflation with high interest rates. Furthermore, the minimum wage has been doubled and so for clothing companies such as H&M and Inditex the country is increasingly less competitive compared to Vietnam, India and Bangladesh: overall production costs are almost 40 percent higher than those in Asia. In the first seven months of 2024 alone, almost 15 thousand companies in the sector declared bankruptcy, forced to close their doors and send their workers home. This is also why Ankara is trying to raise the level of its economy by focusing on technology: now over a third of exports from the manufacturing sector are technological products. In the agri-food sector it is known that Turkey is the world’s leading producer of hazelnuts (see also article on page 32). Less known is that it holds the second position in Europe after Italy in pasta, and the third in the world after us and the United States: its production has increased tenfold in the last ten years to exceed two million tons, of which 1 ,4 destined for export. The country is also number one in the Mediterranean in table grapes, with 2.1 million tonnes, more than double Italy.
Overall, the Turkish economy is doing well: the gross domestic product has increased on average by 5.4 percent per year between 2002 and 2022, with per capita income more than doubling in the same period, while public debt is stuck at 30 percent of GDP. For this year, economic growth of more than 3 percent is expected (Italy is below 1 percent). Perhaps the most important characteristic of the country in the last two decades has been its extraordinary resistance: it has been able to amaze economists and disprove the Cassandras who at the end of 2018 doubted Turkey’s ability to stabilize its economy. Instead, things have gone better than anyone might have expected, increasingly becoming an attractive manufacturing hub for companies looking to find alternatives that are safer and closer to China. In the World Bank’s latest ranking of the nations where most easy to do business, dating back to 2020, the country is in 33rd place while Italy is in 58th. In addition to the simplicity of starting production on site and the proximity to Europe, among the advantages of operating in Turkey is the good workforce, thanks to a large and well-trained young population: the nation has 87 million inhabitants with an average age of around 33 years and every year around 900 thousand students graduate from more than 200 universities.
A favorable environment that over the years has attracted over a thousand Italian companies to the countryfrom Assicurazioni Generali to Barilla, from Benetton to Danieli, from Merloni to Recordati. And on the Bosphorus the construction company Astaldi has built the widest suspension bridge in the world. Erdogan’s government, as always, has great ambitions. Its strategic-economic vision for the next few years is contained in the twelfth «Multi-year development plan (2024-2028)», designed on five axes: stable growth and strong economy; competitiveness through green and digital transformation; training and support for families; prevention of natural disasters; democratic governance. Based on this program, between now and 2028, GDP will have to grow by 5 percent per year, unemployment fall to 7.5 percent (now it is 9 percent) and inflation collapse to 4.7 percent. Difficult objectives, but if Ankara manages to achieve them we will only have to review and correct the famous saying, exclaiming: “Mom, these Turks!”.
