23008_Nearshoring Report

Türkiye’s export of vehicles, particularly light commercial vehicles, is the largest element of trade between Türkiye and Europe. Many European automotive manufacturers and OEM suppliers have established facilities in Türkiye including Volkswagen, Stellantis, Mercedes-Daimler and Ford, driven by the lower costs and supportive investment environment but also the burgeoning production ecosystem of suppliers, knowledge and skills . Businesses are actively investing in Türkiye to transform the production of vehicles to new EV models in particular. The majority of primary vehicle and OEM production facilities are located in the north west of the country particularly near Bursa, Gölcük and Adapazarı.

In March 2021, Ford Otosan, a joint venture of Koç Holding, Türkiye’s largest conglomerate, and US automotive giant Ford, announced it would be making a EUR 2 billion investment to manufacture new generation commercial EVs and EV batteries at its factory in north-western Türkiye. Ford will also be building commercial vehicles for Volkswagen at the plant in an alliance between the automakers. FORD OTOSAN

Türkiye’s low costs of production (particularly where processes are more labour intensive) and close proximity (which means that lead times are shorter and transport costs lower) means that it is attractive to some consumer goods businesses to diversify their product sourcing to Türkiye, either in whole or in part to add resilience and reliability of sourcing to supplies coming from Asia. reduce transport distances, environmental impact and cost and improve supply reliability. In May 2022, Mitsubishi Electric Corporation announced a USD 113 million investment in a new facility at its air conditioner manufacturing plant in Manisa, near Izmir in Western Türkiye, particularly focusing on increasing production of air-to water heat pumps (with demand being driven by decarbonisation efforts in Europe) and air conditioning units to supply European customers. MITSUBISHI ELECTRIC CORPORATION

Europe imports significant volumes of machinery, electrical & electronic goods made in Türkiye and many businesses have established operations in the country to supply products to Europe and the wider region. Key areas of manufacturing activity include agricultural machinery, lifting and handling equipment , HVAC machinery, textile machinery, pumps and compressors and motors and engines. These products, needing to built to specific technical standards for the European market as well as their bulky and heavy nature, mean that, being made closer to markets of consumption, will result in lower transport costs, shorter lead times and greater flexibility in ordering and specification. Manufacturing locations are governed by appropriate dynamics such as availability of appropriate labour and land or facilities as well as transport links. Locations of concentrations of activity include areas across the North West of Türkiye as well as Izmir-Manisa in the West and Konya and Kayseri in Central Türkiye.

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