East has met West in what is now modern day Turkey for nearly 4,000 years. Since as far back as the second millennia B.C., traces of what would become the Silk Road were established, bringing rare gems from Asian mines to ancient Europe. Through the time of the Ottoman Empire, Europeans traded their wealth for fine Asian luxuries such as silks and spices. In the early 21 century, not a lot has changed.
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Turkey is still looked upon by Westerners as a gateway to the East. And for many in Asia, Turkey is often the first destination for their exports. But Turkey itself, by virtue of it’s straddling of two continents, has transformed itself into a key player on the world stage. It has become a manufacturing base for Europeans; it’s a regional political leader, and a key NATO ally in a politically unstable part of the world.
By virtue of its geography, Turkey considers itself neither European nor Middle Eastern. It’s both. And it’s neither. This has allowed Turkey to develop its unique character. This divided self has permeated all sectors of Turkish life. Though it is an Islamic republic, Turkey prides itself on its secular institutions. Its economy, while currently very strong, is often subject to fits and starts. And this dichotomy plays out into the automotive aftermarket segment as well. While segments of the aftermarket are highly brand conscious and loyalty driven, there is large and growing segment that is entirely price driven.
Turkey is the world’s 17th largest economy, with a GDP just over U.S. $ 1.7 billion. In the five years after the global economic crisis, Turkey has seen strong economic growth average 5.6 percent per year. In 2014, the growth moderated to about 2.9 percent. However, according to the World Bank, Turkey is considered a “middle class” country, as the average income for a high school graduate averages $10 per hour.
But keeping with its tradition of duality, Turkey is also a country of very rich and very poor. Turkey has more than 35 billionaires, which is good for fifth place in the world. Still, 15 percent of Turks live below the established poverty line. In a country of 81 million people, that’s still a very big number. Demographically speaking, Turkey does have an important advantage over its neighbors in Europe. More than 40 percent of the Turkish population is less than 24 years old, while only 6.7 percent of the population is over age 65. By contrast, Europe’s elder population is already topping 17 percent and will top 20 percent by 2020.
Having a financially sound population of young drivers will be very important in driving the growth of the aftermarket for many years to come. Turkey’s motor vehicle population has tripled since 1990, to about 18.5 million cars and trucks currently in operation. This makes Turkey double the size of Saudi Arabia, which has just over 9 million registered vehicles. With strong locally based manufacturing plants operated by Ford, Renault, Hyundai, Kia and Honda among others, the automotive industry in Turkey has become the second largest industrial sector behind textiles. These manufacturers are producing mostly for the local market, but more than 1 million vehicles per year are exported, mostly to Europe. Some models, like the Ford Transit Connect, are global platform vehicles. The Transit Connect is sold worldwide, including the U.S.
The car parc in Turkey is quite varied. The market share leader in Turkey is Renault, with approximately 18 percent of the market. Following close behind is the Volkswagen Group, then GM (Opel) and Hyundai. The top four brands represent 58 percent of the market. Owing to Turkey’s proximity to Europe, it’s no surprise that the luxury segment of the market is dominated by Mercedes Benz, BMW and Jaguar/Land Rover, with a combined 6 percent of the overall market. Fords, Toyotas, Nissans and Hondas are considered middle market vehicles, and together they represent another 20 percent of the market.