Turkish Automotive Suppliers Reduced Production Due To Covid-19 Outbreak!

Turkish Automotive Suppliers  Reduced Production Due To Covid-19 Outbreak!
25 Mart 2020, Çarşamba 05:37

Alper Kanca, Chairman of the Board of the Automotive Suppliers Association of Turkey (TAYSAD), which is the sole representative of the Turkish automotive suppliers with over 400 members in Turkey, made important statements about the consequences of the Covid-19 outbreak on the automotive and supply industry.

According to Mr. Kanca, the reduction experienced during March in the European automotive market would rise even further, and he said “vehicle manufacturers have started to take a break in production and therefore Turkish automotive industry is forced to take measures at different levels”. “80 percent of our members will reduce production in the last week of this month," he said, adding that TAYSAD is constantly sharing updates with its members about the crisis management. 15 percent decided to close their business for 2 weeks starting from 20th of March. 5 percent of our members continue their activities as normal because they work for the main industrial companies or especially Far East-oriented companies.”

Covid-19 outbreak, which rocked the European automotive market after China and caused the most important players of the market to shut down their factories, also affected the Turkish automotive industry. Mr. Alper Kanca, Chairman of the Board of the Automotive Suppliers Association of Turkey (TAYSAD), made statements about the effects of the outbreak that has engulfed the whole world and clarified the fact that the automotive industry is among the most affected ones. Mr. Kanca has pointed out that automotive production and sales in China decreased by 80 percent whereas this decrease is 10 percent in European market and, predicted even further decrease in March. He said, "In Europe's major markets, people often stay at their homes to protect public health, so buying vehicles in this kind of extraordinary conditions would not be one of people's priorities."

“Our 2020 exports are at risk of a reduction by appx. 20 percent”

“As a reflection of this fall in vehicle sales, Turkish Automotive Suppliers are also forced to take measures at different levels." said Mr. Kanca, recalling that vehicle manufacturers started to take a break from production due to deceleration in vehicle sales. Given the current outlook of the crisis, it would not be wrong to say that our 2020 exports are at risk of a reduction by appx. 20 percent. We are trying to do our best to minimize the effects of the crisis for the sector and our country,” he said. Entering this year,  automotive sector contraction is predicted in global automotive industry because of Chinese market. Mr. Kanca pointed out that we, as TAYSAD did not foresee a gloomy picture for the Turkish market, but added that what we have experienced in the last several weeks makes it difficult for us to predict the future".

Covid-19 outbreak hits EU automotive market!

Mr. Kanca said "almost all of the vehicle manufacturers in EU cut their factory productions for 1 to 4 weeks" and added that some of our members had not clarified date yet when they would start production. Ford and BMW announced stop for 4 weeks and according to the news circulating in the industry, one of the world's largest vehicle manufacturers will be shut down by midst of May and another manufacturer from the top five is planning 8 weeks partial stop by July in an on-and-off manner. Given the extent of the outbreak and its spreading pattern, what is certain is that for the next 2 weeks, the European automotive sector will be largely closed. In this extraordinary period, in such a crisis, it is common for firms to decelerate production. The ultimate customer in EU, in other words the car users, is grappling with the epidemic, unable to leave their homes. In Germany and Italy, one of our biggest export markets, the situation is getting worse each passing day. Buying vehicles in this situation can't be on people's agenda.”

"Supply sector will have to do partial work”

Mr. Kanca said "as of this week, the crisis has begun to affect the Turkish market. As in Europe, almost all of the vehicle manufacturers in the Turkish market has stopped production for a certain period of time." Tofaş and OYAK Renault, considering their orders from both domestic and non-viral markets, they would continue production as long as they do not experience supply shortages. In addition, some European original equipment manufacturers have announced that they are ceasing production, but continue to buy parts from their suppliers in order to make safety stock. He said "this means that our suppliers will also have to do partial work without stopping production altogether,”

It will take a few months, the factories will be ‘closed’ for more than a few weeks!

Emphasizing that all companies have changed their manufacturing schedules for 2020 due to the crisis environment on our agenda, he said: “it is very difficult to forecast a figure in regards to how the performance would be by the end of the year. Everyone's wondering how long this would continue. We think that we have entered a period of several months through which the factories remain ‘closed’ for more than a few weeks. It is also possible that conditions would turn to normal as vehicle sales get to normal levels in the European market. This is only possible if solution for Covid-19 is found. Until the problem is solved, it is difficult to normalize sales and therefore production in both Turkish and European markets."

In this period as TAYSAD, Mr. Kanca said that the information about the crisis management have constantly been shared with all members, and adding the survey results they conducted with the focus member group last week. Kanca said, "80 percent of our members are planning low-tempo production in the final week of March. Most of these companies plan to spend the next week in this way and monitor the situation, developing strategies for the first week of April and beyond. Due to production technologies or customers production break, 15 percent of our members stopped all company activity for 2 weeks starting March 20, closed their businesses,” he said. 5 percent of our members continue their activities as normal because they work for the main industrial companies or especially Far East-oriented companies.”

"Short-term work allowance legislation should be updated”

"Because it is unclear how long the crisis would last, the short-term work allowance legislation should be updated urgently so that employees are not victimized in terms of income, applications should be processed very quickly. When we look at the package of measures announced in European countries, in Turkey too the measures and support for industrial companies and businesses, which have an important value, need to be taken care of very seriously. The crisis we are in threatens first the health of society but afterwards the serious deterioration of the economy and the increase of unemployment. We all expect the Covid-19 outbreak to be taken under control as soon as possible and handled with minimal damage for our country and the world,” he said.