Competitiveness of Turkish Automotive Industry: A Comparison with European Union Countries

Economic relations and competition process between the EU and Turkey has been increasingly accelerated with the customs union agreement in 1996. Consequently, this acceleration process has affected the industrial sector generally, as well as automotive sector, specifically. Since Turkey’s joining to the EU will create even more crucial results in international markets for specific sector, the impacts of the process should carefully be evaluated beforehand so that the necessary precautions must be taken by the sector representatives. Even though above statement is true for every individual sector, this study covers only Turkish automotive sector and its competitiveness within the EU process. Also, automotive sector has its own special characteristics, because it can be considered a locomotive for most of the remaining sectors in Turkey. Within this context, this study measures the competitiveness of Turkish automotive industry and compares the results with those of the EU member countries from 1995 to 2004. As measurement tool, we use Revealed Comparative Advantage Indexes of all the countries. In addition, a simple Least Square Regression technique has been used to show how and in what ratio exports are affected from several variables. In order for our analysis become more meaningful and applicable to the real sector, a small survey has been done to some of the automotive producers in Turkey. Even though the sampling of the survey was not statistically enough to reach certain conclusions, the results obtained from the survey helped us to construct the econometric model on more concrete bases. Results of the study showed that Turkish automotive sector has competitiveness problem with the EU. However, the medium and big size producers have more power to compete with the EU countries. Also, even though Turkey has the highest tax on automobile industry in the Europe, the sector showed very high productivity level after the customs union agreement in 1996.