Dear Friends,

On 19 February 2019, we all learned Honda’s decision to halt Turkish production in 2021. This decision was a surprise for everyone who deals with this sector in Turkey.
The reason for the decision was explained as production shift to Far East factories and Honda’ s focus on new generation cars using electric power.
I also followed this news in the international press as much as in detail. Of course, we all need more details on why Honda took this decision. Based on findings at hand, the following factors seem to have been effective on this decision.:

1. Honda Turkey production plant which started production in 1997, operates with an annual production capacity of 50 thousand units since 2008. About 38,000 vehicles were produced last year.
2. Last year, locally produced 23,800 Civic sedan cars were sold in our country. As known, local car sales in 2018 slumped by 33% compared to 2017.On contrary, thanks to this new Civic sedan model, which is produced locally, Honda has attracted attention as a brand that increases its total sales compared to 2017.  However, the year 2019 did not start well for any brand in our country. Honda was also affected by 40% shrinkage compared to January 2018. Sales continue to decline during this year, as forecasted.
3. Honda’s European sales were not bright In 2018 as well, The brand was able to sell only 136,191 units with all models. In other words, the civic HB model produced in its UK factory with a capacity of 150,000, which is said to be shut down in 2021, could not reach the sale required for efficiency.
4. According to the economic partnership agreement between UK and Japan, which came into force on 1 February 2019, the 10% customs duty on imports of Japanese cars to UK will be eliminated in 10 years time. This will ensure that Japanese cars are imported at a lower cost compared to their UK production. It is clear that this agreement is effective on Honda’s decision.
5. The fact that the production lines are increasingly becoming more and more producing electric motor cars. Honda has announced that it supports the goal of converting two-thirds of its sales to electric motor vehicles by 2030.

In short, Honda’s decision to halt its production in Turkey by 2021 stemmed from these reasons. First of all, this factory where 770 qualified Turkish workers and engineers work provides an important workforce. Although Honda does not benefit from our suppliers industry at the level of other domestic manufacturers, production and R & D activities at the factory in Gebze , logistics and distribution activities, export revenues and our economy adds significant value.

Since 1997, there is no new automotive brand that comes to our country and invests directly on local production. Despite intense efforts being made to attract brands, Honda’s decision is truly regrettable.  We hope and wish that global brands that produce other local products will not be affected by this decision.

However, I think it might be possible to turn this into an opportunity. In order to meet European sales, the production of the civic HB model can locally be made at a much lower cost compared to the UK.. Capacity of Gebze factory can be increased accordingly. With attractive incentives, the cost of capacity increase would be reduced to a minimum.

On the other hand, our country has introduced the production of Renault Fluence ZE model which consumes electrical energy in last decade. A know-how was, acquired by this production with qualified workforce. Unfortunately, in those years enough sales could not be made in local market..But currently, sales of electric cars are booming in European Markets. The situation in our local market is not like the one 10 years ago. as well. Over time Gebze plant can easily adapt to the production of an electric Honda model.

We have seen that every car produced in our country can provide 1000 – 1200 euros of productivity compared to the production cost of the same car in Europe. Then we have to convince Honda that Gebze factory may offer new opportunities. Hence, I think it would be useful to reconsider this decision .

See you soon in my next articles,

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