Competitive cost, design and uniqueness gain an edge in US and European bus markets

Once a new government is finally in place in Turkey, what would you say are the key steps that can be taken to help Turkey recover its momentum?

Turkey’s great potential does not deserve today’s slowdown. To recover, the new government must reduce polarization, build trust among all citizens, and create a new and widely accepted vision for the country. The new government should make it easier for 77 million people with different ideas and visions to live together. At least, there has to be some common platform that aligns people to Turkey’s vision. Without reducing polarization, it would be difficult for the country to reach its targets and please its citizens. So it is not only the new government’s duty to do this, but also the other parties must get closer to give people hope. Nobody asks you to change your ideology, but we have to find a way to work together.

How do you assess the potential of the Turkish automotive sector to reach its ambitious targets for 2023?

The targets have to be ambitious. It is normal to set visionary targets. Having set such high targets, one expects that the necessary support and the resources will also be there. The Turkish automotive market this year is going to be 1 million vehicles, which will be a record year, if this happens. If not 1 million, maybe a little bit less than that. But this year probably will be a record year because the domestic vehicle market is about 40% better than last year. The bus market is also around 15 to 20% better than last year, so the bus market is also doing well. In 2020, the domestic market could reach a maximum of 2 million. Any more than that does not seem achievable. Where will the rest of the growth come from? Obviously from exports. For that, we need three or four times the existing investment. We need to attract a lot of FDI. So this is a huge step that has to be taken. In eight years, it will be more difficult to reach the target if we lose time now.

How do you assess the investment climate in the automotive sector at present?

Money always goes to safer places. With the geo-political situation, some of the neighboring countries are not safe and this has affected Turkey as well. The Middle East is our natural, closest export market. When we cannot export to or trade with Syria, Iraq, Iran; this shrinks our export basket as these markets normally have huge potential for the Turkish automotive industry. There is an embargo in Iran, so Turkey cannot do business with Iran yet. In North Africa, we await things to go back to normal to improve our trade with countries like Egypt and Libya. In our region, many countries are naturally interconnected to do trade with each other. Once these places get back to normal, Turkey´s exports will also become normalized.

Temsa sells its products to 64 countries in addition to Turkey, with Europe and America being your main export markets. Going back 10-15 years it would have been perhaps unthinkable to have Turkish-made buses on the streets of England or Germany. Quite simply, what changed? How was Temsa able to establish itself in such sophisticated, competitive markets?

Temsa started to do business in the European markets in 2002-2003. At that time, maybe we did not have the right products, so it took quite a bit of time and effort to get to where we are today. High quality demanded in European markets make things rather difficult for producers away from the center of the industry (Germany, France and Belgium). Temsa has sales and marketing offices in Belgium and Germany and has developed strong distribution networks to work closer to customers. Lately we have a more focused market selection along with the right segmentation. In addition, we invested heavily in our product mix and quality. We now have about 16 new products in our European product portfolio. Additionally, in five years’ time, we will have introduced three new products for the US market, and we are the only one to have three different sizes in US by the way. And when I say the only company, referring to the product specifics we have, we are really very different from the rest.

Next year, we will have about 20 different products that we can sell domestically and also to Europe. In addition, we will have Euro 3 and Euro 5 products that we can sell to North Africa as well as other countries. So, on the product side, we have great potential. There is no other company in the world that sells domestically, to Europe, to the Middle East, and to the US at the same time, plus serving three segments. The complexity is very high, and managing this is tough. Some companies can have this complexity if they are five or 10 times our size. But not at our size.

This year, we are producing 2,500 buses. Serving these many different markets with these many different products is difficult, and I think experts in this sector understand what I mean. In these markets, a high level of complexity management, quality management and a high level of design and market sense are required. You have to be better than the others to convince buyers to consider buying your products. Why should they buy our products when there are many local producers? In some products, we are very competitive on cost, and in some others we compete on design and meeting the customer’s needs. This, I guess, summarizes our differentiation; Temsa is not only competitive on cost, but also competitive on design and uniqueness as well.

Are these all products designed and engineered entirely in Turkey?

Yes, with our own people and without outside help. Of course we have collaboration with universities and design partners, but everything is managed by Temsa.

Do all these collaborations take place here in Turkey?

Yes

One of the products you launched this year was the electric bus. To what extent are your R&D and innovation activities guided by the need for environmental sustainability?

The first thing I should mention here is that the number one reason that we are the bus market leader in Turkey is the fuel efficiency of our buses. Our midi-bus has the lowest fuel consumption; owners say that it is 7-8% lower than some other buses sold. Our city bus, compared to the rest of the producers, is around 4-5% better than the competition’s. This is not our measurement. This is measured at several municipalities. What I am saying is that Temsa has already achieved low-level emissions with its diesel buses.

With such a high level of emissions performance, Temsa is well positioned to serve the markets with its diesel and CNG buses for many years to come. So all the buses we are producing are environmentally friendly.

We do not work on hybrid buses as hybrid technology is mainly controlled by a few companies, so you have to work with them. We wanted to have full control in the design of our next generation buses. This is why we turned towards electrical buses. Our design team have partnered with suppliers from Turkey, China, Europe, and so on. We now have two projects on electrical buses: One with the 9-meter city bus, and one with the 12-meter city bus. With these two buses, we expect to be the market leader again in the coming four to five years and we plan to serve various markets, including Europe.

In Turkey, we see a lot of interest in e-buses. We work with the majority of municipalities in Turkey. They are very conscious about the air quality of their cities. Nowadays e-buses are almost 2.5 times costlier than diesel ones. But the cost difference will decrease with time and I would say that in five to 10 years, we will see a lot of electrical buses in a lot of cities in Turkey, but not earlier.

What role will smart technology play in the future of public transportation, and to what extent is Temsa embracing this technology?

In Istanbul and other big cities, people spend a lot of time on buses. So the mobility period is getting longer and longer. In addition, in Turkey, there are a lot of service buses moving people to and from work. This means people will want to make better use of their time on the bus. This will give people a better mobility experience and to also make more people use buses. Bus builders have to design buses on which passengers can really enjoy their time and be productive. You can at least communicate with your friends, watch a movie, or use social media or do your homework. And then, when you go home, you forget about work and spend quality time with your wife, children, or do whatever you like to do. Our team is working on different scenarios. We have two packages; one for passengers, and one for the driver. We have a lot of safety packages with which we will make buses move safer and give the driver more control. Plus, more tools of communication between the driver and headquarters.

In this context, we are changing our motto to: Smart Mobility. Temsa has decided to be a smart mobility company.

What role has the Turquality program played in your international expansion?

This is a really interesting program that Turkey has introduced to help companies create brand awareness and support marketing activities outside Turkey. Temsa is the number one company that achieved this certificate for the first time from this programme. This certificate is given for five years. Outside Turkey, a company like Temsa which sells to 64 countries, needs to engage in in-depth marketing activities and develop brand awareness. In previous years, Temsa attended a number of fairs, made numerous marketing activities, and held product launches for which we received great support from this program. A lot of Turkish companies are using this program to create brand awareness outside of Turkey.

As of today, in France, for example, we have 4,000 buses, in Germany 700 buses, and in Belgium, also 700. So in all big-size bus market European countries, according to the awareness measurements we made, 100% of the people in the sector know the Temsa brand. In other words, in Germany, France, Italy, Belgium, Austria and England, we are very well- known.

In the USA, we have been present for five years. The country is huge but the bus sector community there is not very crowded. And they all know one another. Temsa has been present at US fairs for the last four years, we have attracted a lot of attention and everybody knows us. If you had asked me five or six years ago, I would have told you that Temsa is a great brand, but today, definitely, we are labelled as a global brand in the bus world. Again, I will reiterate that Temsa is the only company which has products in three different segments, and is the only bus company that has one plant in Turkey but serves four different markets.

The lira has fallen to a record low against the and it looks like uncertainty will persist as we had towards another election. How will this affect your exports in 2015-2016?

When we look at our cost structure, we procure about 50% of our materials locally, but the other 50% is imported and priced in either euros or dollars. Meaning, we are very sensitive to the exchange rate due to the cost of those parts that we import. On the balancing side, we have almost same amount of income in exports – foreign currency. So actually, we have a sound business model where we can operate even in such difficult times. In short, we rely on our business model, our technology and the quality of our buses, as well as the quality of the components that we use.

How do you expect your export markets to change in composition in the coming years?

I hope the Middle East and North Africa return to normal soon, because these are our natural markets. In Istanbul, there are many tourists from the Middle East, and they are spending a lot of money in restaurants, shops, etc. Turkey, this summer, is full of tourists from the neighboring countries which are only one to two hours away by airplane. If things get normalized, we foresee a lot of trading potential in those countries, like Syria, Lebanon, Jordan, Egypt, etc.

We have ambitious export income targets, which means, we have to have several baskets for export destinations. So, Turkish companies will not only need to widen the export territory but also grow the value of the products exported. Knowing this fact, the real sector is aware that companies should work more on design, branding, technology and innovation. We are not there yet, but so much is being done and we believe that there are several Turkish companies have taken the right path towards having more value-added products and services. So, Turkey has the potential to fill these baskets even when so much happens at different time zones in different parts of the world.

Finally, who is the man behind this impressive growth and expansion of Temsa; what makes you different from other executives in this country?

When I look back, I was not really aware of my strengths in the earlier days of my career. I believe, the capacity and skills of leaders are tested over time, by various responsibilities during difficult tasks and cases he/she is exposed to. The key is to deliver results and at the same time keep your team in good shape, ready to handle new challenges ahead.

I can mention a few outliers that characterizes my way: a good understanding of the business environment to execute today’s agenda and build the agenda for the future; while leading, stay with the team and remove hurdles; simplify, prioritize; always work as if you’re the owner of the company.