Turkish automotive supplier Inci Holding has announced the opening of its latest domestic facility, a joint venture with Brazil's Maxion Wheels that will produce wheel rims. The EUR45mn (US$58.6mn) site was built in 10 months and will have an annual capacity of around 2mn wheel rims. About 90% of production is expected to be for export. BMI believes that Turkey will see in increasing number of investments across the supply chain as international manufacturers seek to make the country an export hub.
Bullish Long-Term Prospects
Vehicle production in Turkey has remained fairly weak in 2012, and we have maintained a relatively bearish outlook on output on the back of low domestic demand and declining exports to Western Europe. We have long maintained that over the longer term, however, Turkey may act as an international production hub for manufacturers operating in the Middle East and North Africa (MENA) and Eastern Europe ( see our online service, July 19, 'Weak Regional Sales Impact Production'). The Middle East autos market is relatively small compared with Europe and will not attract considerable production investment, although it is growing and may become more attractive in the future. Hyundai Motor sold 283,953 vehicles in the region in 2011, a 9% increase on 2010.
We also expect Turkey to reap the benefits of rising Russian demand. We have become increasingly bullish on the Russian vehicles market, and expect to see ongoing interest in the export market ( see our online service 'Sales To Register Strong Growth', August 10). Earlier in 2012, Honda Motor announced plans to expand capacity at its production facility in Turkey by 26%, to 63,000 vehicles annually to cater to growing demand in Russia. Further, in July, Toyota Motor announced it is increasing production and adding new lines at its site in Turkey.
Indeed, it is BMI's long-held view that ongoing investment from international auto manufacturers will beget growth across the supply chain. As Turkey continues to emerge as an international production hub for the MENA and Eastern European regions, we expect to see investment from auto producers continuing. This move from Inci and Maxion Wheels is in line with our view.