Fiat Auto's Turkish joint venture Tofaş has just reported strong results for the 2005 full-year as it gears up for rapid a expansion that will see the arrival of the much awaited D200 and 'Minicargo' projects in 2007.

Sales hit an all time high for the second year in a row, although the overall momentum slowed, compared to 2004, as the Turkish new car market life cycle approaches maturity. The passenger car market contracted by 2.8 percent although this was offset by a 13.3 pct rise in the light commercial vehicle sector, which combined to give Tofas a stable 2.9 pct growth.

Last year Tofaş sold 36,259 passenger cars and 44,205 light commercials on their home market, compared to 2004 when production was 40,774 and 37,047 respectively. This raised their total market share from 11.1 pct in 2004 to 11.5 pct in 2005. Of this they had a 9 pct share of the passenger car sector (down 0.7 pct year-on-year) and 15.8 pct of the LCV market (up 0.8 pct year-on-year). Although the results for the passenger car segment may appear discouraging, they do reflect the general trend witnessed in Turkey by competitors. The strong, offsetting, increase in commercial vehicle sales provides for a healthy outlook for the introduction of the new models next year. 

The Doblò Cargo van range, recently facelifted, was once again Turkey's best-selling LCV, a position it has gripped tightly ever since being introduced in 2001, although its market share has in recent years slipped from the 43.1 pct stake of the market it achieved in 2002, as the sector has grown six-fold and competitive new market entrants have emerged. Last year the Doblò took a 28.1 pct share of the domestic market, up 1.9 pct year-on-year, ahead of its rivals: the Ford Connect (24.5 pct), Renault Kangoo (17.8 pct) and VW Caddy (12.2 pct). This was achieved despite a full run down of stocks ahead of the arrival in the showrooms of the facelifted model last autumn.
 

Comparing year-on-year LCV segment share values with competitors for the 2004 to 2005 period, Tofaş performed very well with the Doblò, markedly better than the Peugeot Partner (down 26.5 pct), Renault Kangoo (down 12.4 pct) and Citroen Berlingo (down 21 pct). It is interesting to note that the latter two competitors offer a product that belongs to the same family as the Doblò, reflecting a strong difference in perceived value amongst Turkish consumers.

Tofaş raised its exports by 5.7 pct last year, from 82,481 vehicles in 2004 to 88,195 last year, with the bulk of these (73,467) being drawn from the Doblò range. 4,753 Palio and Siena models were also shipped out of Turkey as total export revenues grew from 663 million euros (2004) to 687 million euros last year.

The outlook for 2006 is promising, believes Tofaş, which has seen the arrival of the new Fiat Grande Punto in February instantly spurring their slack passenger car segment sales. The month of February saw their share of the passenger car market climbing to 10.5 pct, a figure that rose even further to 11.3 pct last month. The Grande Punto claimed second place (14.8 pct) in B-segment during February and by March it had overhauled the market leader, the Ford Fiesta, to become the segment's best-seller.

After taking a 16.7 pct share of the LCV segment in January 2006, Tofaş was hit by discounted pricing by rivals during February (13.1 pct) but this climbed to 14.2 pct last month and Tofaş believes this price war is now over.

Next year will see a head start with the production of the new D200 being advanced by two months, from the originally planned month of July to May, in order to be ready for the high season. Tofaş have also signed a deal with Russian based Severstal to deliver 45,000 complete knockdown kits (CKD) annually, starting from 2007, an agreement which will reflect positively in Tofaş' export statistics. Meanwhile changes are also being implemented in the capital structure to improve relationships with suppliers and dealers in the competitive business. These consist of direct debiting for domestic dealer receivables, resulting in a reduced collection cycle, as well as extended payment terms for suppliers from 45 to 60 days.

by Edd Ellison & Paddy Granger