Toyota Motor is planning to raise its investment in Turkey, but the level of incentives is still inadequate, the head of Toyota’s Turkish arm reportedly said on Wednesday.
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According to Reuters, the Japanese group has already invested a €730 million ($US951.7 million) in Turkey and was the country’s biggest exporter in 2004, with a volume of $1.86 billion.
Kazuhiro Kobayashi, chief executive officer of Toyota Motor Manufacturing Turkey (TMMT), reportedly said the importance given to Turkey by Toyota was evident from its exclusive production there of the Corolla Verso [small minivan/MPV] model.
“In the automobile sector, you should continuously make investments to keep capability. We will increase our investments in Turkey,” he told Reuters in an interview, though he declined to give a figure.
But Kobayashi, who took up his current post at the start of this year, reportedly indicated that Turkey could do more to promote foreign investment.
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By GlobalData“Recently the investment incentive law was changed. But it is not at the required level … If incentives increase, investments will also increase, I believe,” he told the news agency.
Reuters noted that Toyota exports 90% of its production in Turkey. It exported more than 119,000 vehicles last year, mainly to Europe and especially to Germany, Italy and France.
This year the company is planning to fully utilise its production capacity of 150,000 units, the Toyota executive reportedly said – the automaker employs 3,100 people in its factory in northwest Turkey.
Reuters noted that, while Toyota’s export markets are relatively stable, the domestic Turkish market has displayed sharp volatility in recent years – automotive sector sales jumped 88% last year to a record level of more than 750,000 units, following a plunge in sales after a 2001 financial crisis which triggered Turkey’s worst recession in decades. An economic revival, falling interest rates and incentives have since triggered the release of pent-up demand.
However, a Toyota official told Reuters the market may shrink 15-20% this year. Tax hikes introduced by the government to curb consumers’ appetite for vehicles are seen contributing to the decline.
“Obviously it (tax) has affected the sales, and the market will shrink this year … It should not be a permanent solution. The existence of a strong and stable local market is very crucial for local manufacturers,” Kobayashi told the news agency.
He also reportedly said the prospect of Turkey starting accession negotiations with the European Union would make the country more attractive for foreign automotive companies in the future, given the evidence of other countries that have joined the EU.
“I know the Turkish government is also doing its best to create a good investment environment in Turkey. This will open many doors for further growth of foreign direct investment,” he told Reuters.
