Imported, or even domestic, in the market

Since the beginning of the twentieth century, the automotive sector has contributed to the development of many countries as one of the locomotives of economic growth. It creates employment, develops technology, feeds supply chains, and directs foreign trade. It has held the same role in Turkey for many years: it is both one of the pillars keeping the industry afloat and one of the strongest items in foreign trade. In their factories in Bursa, Kocaeli, Sakarya, and Aksaray, Renault, Tofaş, Hyundai, Toyota, Ford, and Mercedes roll hundreds of thousands of vehicles off the line every year. Most of this production goes to Europe, and the sector runs a surplus in foreign trade. In other words, Turkey is strong in automobile manufacturing; especially in exports.

However, the picture in the domestic market has turned in the opposite direction: the majority of automobiles sold in Turkey are now imported. This does not mean that manufacturing has weakened. The problem is the mismatch between domestic production and domestic demand. While the domestic market wants SUVs, domestic production is still focused on the sedan-hatchback axis.

WE ARE PRODUCING, BUT WE ARE FALLING BEHIND IN OUR OWN MARKET

Data from 2024 clearly shows this tension. According to the BMD Research report from December 2024, a total of 1.24 million vehicles were sold in Turkey; only 29% of these were domestic, while 71% were imported. Indicators for 2025 show that this trend has not changed and that the import rate continues to hover above 70%. In other words, the domestic market is growing, but domestic manufacturing is not part of this growth.

To understand this trend, one must look at the direction of manufacturing. For example, Ford Otosan maintained its export leadership in 2024 with the sale of approximately 661 thousand vehicles and parts, and it generated approximately 77% of its revenue from foreign markets. The majority of vehicles produced at Renault's Bursa factory go to Europe. In short, Turkey is a supplier meeting global demand on the manufacturing side; in the domestic market, it is in the position of a demander.

This is why the question shifts to this: why is the domestic market turning to imports?

1) Segment Shift: From Sedan to SUV

In the 2010s, the backbone of the domestic market was B and C segment sedans: Fiat Egea, Renault Megane, Toyota Corolla... The global SUV wave after 2016 also entered Turkey; hybrid options for SUVs increased, and as of 2023, one out of every two vehicles sold became an SUV.

This transformation is a story not only of automotive technology but also of consumer behavior. High seating position and perception of safety, large luggage volume suitable for urban family use, the feeling of being able to cope with irregular roads, and the low consumption claim of hybrid systems have directed the consumer toward SUVs. However, the sub-industry and OEMs were not prepared for this transformation. Renault, Tofaş, and Hyundai production remained largely focused on sedan-hatchback models. SUV models such as the Tiguan, Corolla Cross, Captur, Tucson, Qashqai, and 3008 arrived as imports. Thus, the import share rose structurally.

2) Trade Regime and Relative Price Advantage

Turkey is in a Customs Union with the EU, meaning no customs duties are applied to vehicles of EU origin. FTAs signed with countries like South Korea create a similar effect. Thus, imported SUV models enter the Turkish market without tariff barriers.

Besides this, there is another factor that determines price dynamics. There was no significant increase in the exchange rate during the 2024–2025 period. This situation brought the post-tax prices of imported vehicles closer to the prices of domestic production rather than sending them skyrocketing. The economies of scale, strong logistics networks, and model variety of Europe-based manufacturing also reinforced this advantage. Offering components such as a higher seating position, larger interior space, hybrid engine, and higher safety package for the same budget, imported models moved into an advantageous position with their price/feature ratio.

3) SCT Base and Engine Displacement

There are three main variables that determine automobile prices in Turkey: engine displacement, emission technology, and the Special Consumption Tax (SCT) base.

Small-displacement turbocharged gasoline and hybrid engines developed in Europe can have lower post-tax prices in Turkey because they are optimized to fit the tax base bracket. Since the hybrid penetration of domestic sedans is low, the tax base advantage is limited; therefore, at the level of model selection, the consumer turns to imported hybrid SUVs. The SCT system does not consciously encourage imports; however, as a result, it makes hybrid SUVs advantageous.

The picture is clear up to this point: the shift of the domestic market toward imports is not about manufacturing capacity, but about segment mismatch + price architecture.

This divergence has one more long-term consequence: the automotive sub-industry, where Turkey is strong, works in synchronization with the European supply chain, not the domestic market. This limits the domestic market's capacity to reflect the hybrid and electric transformation onto the sub-industry. A model imported today means a loss of learning tomorrow.

DOMESTIC MARKET-FOREIGN MARKET DIVERGENCE AND INDUSTRIAL STRATEGY

Therefore, the issue is not nationalism; it is industrial strategy. If Turkey cannot meet the SUV segment and hybrid engine option in the domestic market with domestic production, the added value of this growth will go abroad while the domestic market grows.

Moreover, this picture becomes much more critical when combined with the demand architecture of the foreign market. Looking from the perspective of the foreign market: demand for sedans and hatchbacks has been shrinking in Europe for a long time; demand has shifted to the SUV and crossover axis and appears to be permanent. If this picture continues, Turkey may remain in a position to export only commercial vehicles in the foreseeable future and could lose its market in passenger cars. Therefore, the issue is no longer "which product should we produce?" but becomes the question of "can we align foreign demand with domestic demand?"

What follows from here looks at three technical but simple steps: establishing domestic manufacturing capacity in the SUV segment and hybrids, aligning the SCT base with industrial strategy, and integrating the domestic market with the supply chain. The issue here is not just producing; it is being able to establish a structure where the domestic market and industrial policy feed each other.

We are right in the middle of the global automotive transformation. Turkey is strong in manufacturing and ambitious in exports. Despite this, the shift of the domestic market toward imports shows that the transformation of manufacturing power into industrial strategy is at a critical threshold. The fact that the vehicle rolling off the line today does not meet the domestic market is not just a paradox, but the missing link of industrial strategy. Does Turkey want to be a producer, or a global consumer? The decision will be made here.