The rapid increase in petroleum prices in the Turkish market has changed the way the consumer thinks about purchasing an automobile. Turkish petroleum and fuel prices are the highest in Europe. In Turkey, diesel prices are 17% cheaper compared to gasoline prices. As a result, the diesel-powered automobiles market share is almost 40% (5.7 million of the total 14.3 million) of the total Turkish market. This is a significant increase as diesel powered automobiles held only a 2% share two years ago. Many foreign automobile manufacturers have focused their attention on the Turkish market, including Citroen, Fiat, Adam Opel, Peugeot and Renault.
The existing market for diesel parts and services is around $3.1 billion, and most of this market is met by imports. A 10-15% increase is expected in the coming years. German Bosch is the first firm that became aware of this market and it started its operations in Turkey almost 40 years ago. More U.S. firms are taking advantage of the Turkish market and neighboring markets by investing in Turkey. Delphi is one of the first to implement this strategy and Cummins will start operations in the next few years. Injectors, power units, oil filters, injection nozzles, other injection parts, valves, high-pressure rail parts, diagnosis and test equipment for pumps and injection are best prospects.
The fuel efficiency of diesel engines is not the only reason for the increasing demand of diesel vehicles. Even though diesel fuel prices have increased in the last few years, as a result of the increase in demand, diesel is still 17% cheaper compared to unleaded gasoline(TL3524/liter versus diesel: TL2929/liter). Consumers are also more conscious of the effect of fuel consumption on the environment and perceive diesel to be more environmentally friendly.
In the first three months of 2010, there was an increase of 14% in diesel vehicle sales compared to the same period of 2009. Commercial vehicles are almost exclusively diesel powered. Total sales of passenger cars was 67,203 and the 51% of these sales were diesel vehicles.
Higher sales of diesel automobiles have led to an increase in diesel parts and services sales. The current market is around $3.1 billion, and most of these are met by imports. A 10-15% increase is expected in the coming years.
The diesel engine market is dominated by the 1.4 liter common-rail diesel engine. Bosch was the first to enter the market and enjoys a 50% market share. Delphi is second with 20%. The rest of the market is shared equally by Denso and Continental/Siemens.
There are a number of major wholesalers for different diesel engine brands:
??For MAN: Celikler of Istanbul supplies diesel parts to both busses and trucks
??For BMC: Cakmak of Izmir supplies diesel parts to both busses and trucks
??For Mercedes: Aksaray-trucks, and Egemer & Mengerler of Istanbul for buses
??For Ford: Otokoc of Ankara
The quality of the diesel fuel used to be an issue in Turkey for a long time because the type of diesel fuel refined in Turkey was of a low grade (Euro 1). Due to new regulations and improved local production which comply with new standards, the sulfur content of the existing fuel was decreased to 10 PPM. Our contacts tell us these new improvements in the quality of diesel will increase the life for diesel engines.
Service stations used to provide service to specific brands, i.e. if the vehicle is a Mercedes bus, then only Mercedes branded station could provide service to a Mercedes vehicle. However, a new regulation now allows all service stations to serve different brands. Fuel pumps are the exception, because they need specific expertise. If a fuel pump is a Bosch one, then the service station sends it to a Bosch station and Delphi likewise. Currently, there are 100 Bosch stations, and 60 Delphi stations throughout the country. Bosch has benefitted greatly from a first mover advantage in Turkey.