Dear Stakeholders, 

The automotive industry approached 2023 with cautiously, much like it has in recent years. The chaotic landscape we inherited from the previous year, the semiconductor crisis, production constraints resulting from raw material problems, logistics problems, the Ukrainian-Russian war, high production costs caused by the energy bottleneck, high inflation in Europe, and the uneasiness created by the expectation of economic stagnation throughout the world, have left the automotive industry facing uncertainties that were difficult to predict at the beginning of the year, a scenario common across many industries.

The earthquake catastrophe that struck 11 provinces at the beginning of the year had a profound impact on Türkiye, both psychologically and economically. The election process that immediately followed, along with the renewal of economic management and the implementation of tighter economic policies, had varied effects on the sector’s performance. While there was a decrease in interest in foreign currency due to the significant increase in loan and deposit interest rates, a contraction was observed in industrial production and domestic demand.

Record growth in the automotive market

However, the automotive industry, known for its ability to swiftly react to crises and develop plans and strategies for the future by drawing insights from such experiences, exhibited a generally good performance by effectively adapting to changing conditions in 2023. By the end of the year, the total market for automobiles and light commercial vehicles in Türkiye surpassed 1.2 million units, marking a historic 57 percent growth compared to the previous year. Automobile sales reached 967 thousand units, representing a 63 percent increase. Notably, the growing trend towards electric vehicles contributed to their market share rising to 7.5 percent.

The substantial increase in the market share of electric cars, from a mere 0.39 percent in 2021 and 1.05 percent in 2022 to 7.5 percent in 2023, underscores the strong interest in electric vehicles within Türkiye. This heightened interest has attracted numerous manufacturers from outside Europe to enter the Turkish market, with Chinese brands, in particular, experiencing rapid growth last year. The inclusion of BYD, a global leader in electric car manufacturing, brought the total number of Chinese brands in the Turkish automotive market to nine. Furthermore, the domestic automobile brand TOGG emerged as the top performer in electric car sales in 2023.

Historical achievements from Doğuş Otomotiv brands

In 2023, our brands under Doğuş Otomotiv achieved remarkable success, meeting their targeted objectives for the year. Audi Türkiye recorded its highest-ever sales volume, reaching a sales figure of 22,878 units. Porsche marked its 75th anniversary by achieving a remarkable 73% increase in sales, reaching 1,158 units for the first time in its history. Similarly, Škoda achieved its highest-ever sales volume in Türkiye, totaling 35,041 units, with a similar growth rate of 80%. CUPRA, recognized as the fastest-growing brand in 2022, continued its upward trajectory by increasing its sales by an astounding 264% compared to the previous year, securing its position as the second fastest-growing brand in Türkiye. Meanwhile, Volkswagen Passenger Cars maintained its position as the third-largest brand in the passenger vehicle market, holding a market share of 7.3%. The SEAT brand witnessed a significant surge in sales, increasing by 78% compared to the previous year, with approximately 11,000 units sold.

Volkswagen Commercial Vehicles, which managed to reach 500 thousand vehicle sales by 2023 in Türkiye, one of Europe’s largest light commercial vehicle markets, increased its sales by over 66% in 2023. Scania also made strides in the heavy commercial vehicle market, securing a 7.2% share with the sale of 2,775 vehicles in 2023.

In 2023, we expanded our brand portfolio by welcoming two new brands. Firstly, we rekindled our collaboration with Meiller, with whom we had previously established a joint production facility in Sakarya in 2008 but mutually ended our cooperation in 2015, to provide sales and service services at nine different points in Türkiye. Meiller is renowned as one of the world’s leading players in hydraulic systems, tippers, and semi-trailers, boasting 170 years of experience. The fact that Meiller had a 3 percent market share in Türkiye with its sales realized in only the last 5 months of 2023 gave us positive signals about the future of this union of forces.

Subsequently, in November, we entered into a distributorship agreement with Wielton, one of Europe’s top three trailer manufacturers based in Poland. This collaboration is set to bolster our presence in the Turkish trailer and semi-trailer market, as we plan to offer Sales and Aftersales Services for Wielton products at 20 locations across Türkiye in 2024.

Expansion of the Doğuş Otomotiv Family

Another significant development of the year occurred in March 2023 when Doğuş Otomotiv acquired Doğuş Holding’s shares, representing 93.7% of the total capital of Doğuş Gayrimenkul Yatırım Ortaklığı A.Ş. (Doğuş REIT). Doğuş REIT, which operates in real estate projects and portfolio management consisting of real estate-based assets and rights, has an investment property portfolio including Doğuş Center Maslak, D-Ofis Maslak, Doğuş Etiler Sports Center, Gebze Center Mall, Gebze Center Hotel, and Gebze Center Automotive Showroom and Service, totaling a leasable area of 195 thousand square meters. As of the end of 2023, the total appraisal value of Doğuş REIT’s real estate reached 9.88 billion TRY, with rental income of 548.5 million TRY, operating profit of 1.9 billion TRY, and net profit of 1.8 billion TRY.

Continued commitment to renewable energy investments

As Doğuş Otomotiv, we aim to constantly improve ourselves with the desire to enter the league of the best in the world in the field of sustainability. Creating long-term value and ensuring strong financial growth while also supporting sustainable development has been the basis of our sustainability approach since day one. Since 2009, we have consistently communicated our progress in this direction to our stakeholders through our sustainability reports, which adhere to the highest standards.

While we began integrating our report in 2021, we were also among the first companies to publish the SASB (Sustainability Accounting Standards Board) index. Our main goals, aligned with our sustainability strategy and the UN’s Sustainable Development Goals, cover topics such as energy efficiency, transition to renewable energy, business continuity and non-financial risk management, business ethics and compliance, electric vehicles, digital transformation and equality in competence, sustainable supply chain management, and gender equality and inclusion, which we have implemented to minimize the effects of climate change in line with the sustainability practices of leading companies worldwide.

In 2023, our top priority was to take concrete steps in the social, environmental, and management domains aligned with our sustainability strategy. We have made significant progress in this regard. By 2030, we aim to continuously reduce our Scope 1 and Scope 2 emissions. To achieve this goal, we are continuing the investments we initiated in 2020. Notably, our solar power plant in Şekerpınar now provides 115 percent of our electricity needs from renewable sources. Additionally, we are actively encouraging our Authorized Dealer and Service network to transition to renewable energy. By completing this transition by 2030, we will be one of the largest renewable energy producers in Türkiye.

Developing and implementing new digital business models

The digital transformation process, which we started in 2018 as one of the primary areas of focus under the umbrella of Doğuş Otomotiv, continues at full speed. As a company, our goal is to evolve into an organization that quickly identifies and adapts to data-based analytical changes, leveraging machine learning and artificial intelligence across all aspects of our operations to innovate and implement new digital business models.

For this purpose, the Digital Competence Development Program, which we designed to prepare our human resources for digital transformation and to support our colleagues’ mastery of basic and advanced technological applications, continued intensively in 2023. On the other hand, 2023 witnessed many innovations in terms of software development investments and digital project works. While the number of digital projects completed by the end of the year reached 100, significant contributions to business efficiency were made, particularly through data-oriented projects tailored to meet the needs of various business units.

Electric vehicles shaping the future of the automotive market
Electric vehicles are critical in combating climate change on a global scale. The transformation that started with the global automotive industry turning to electric vehicles to respond to sustainable mobility demands and achieve zero-emission targets has also become a driving force for the emerging global energy economy. Electromobility has also created new opportunities for new brands entering the market.

Although I predict that 2024 will be a more “electric” year for the Turkish automotive market, I believe we need more encouraging regulations to achieve the desired levels of such adoption. Charging and service networks will also play an important role in the spread of electric vehicles. To address this need, we have established Türkiye’s first battery repair center at Doğuş Oto Kartal, dedicated to serving electric vehicles. Our ongoing investments aim to expand the number of these centers.

In 2023, we established Doğuş Şarj Sistemleri Pazarlama ve Ticaret A.Ş., in which we have a 100 percent share, to operate in establishing and operating a network of charging stations throughout Türkiye and providing charging services. Considering the rapidly growing electric vehicle park, it is predicted that there will be more than 100 thousand charging stations across Türkiye before 2030. With its registered D-Charge brand, the company will primarily ensure the installation and operation of charging units at Authorized Dealers and Service points of all brands represented by Doğuş Otomotiv. Through D-Charge, we plan to provide charging services to all electric vehicle users, aiming to deploy nearly 800 charging sockets across various geographical regions by the end of 2024.

Supply and demand rebalancing
Although 2023, which started with various uncertainties and concerns, witnessed record sales due to high demand in the automotive industry, we expect a 30 percent contraction in automotive sales in 2024. Last year, we witnessed various processes affecting the balance of supply and demand. While there were problems in supply despite the high demand at the beginning of the year, we saw that the supply issues gradually resolved in the last periods of the year. I predict that as the crisis on the supply side is resolved and demand decreases, the market will gradually rebalance. If we evaluate it in terms of sales performance, our priority in the new year will be not to fall below our market shares in 2023. Assuming no unexpected disruptions occur in production, supply, and logistics, I anticipate that we will exceed our current market share rates in 2024, driven by the impact of the new models that our brands will introduce to the market during the year.

2024: A Year of New Models
As Doğuş Otomotiv, we will carry out a full model offensive in 2024. With the facelifted T-Cross, Passat Variant, and Tiguan models in the first quarter; the ID.4 and ID.5 models in the second quarter; the ID.7 model in the third quarter; and the ID.3 model in the last quarter, Volkswagen Passenger Cars will offer six new models to consumers. Our Audi brand will launch the Q4 e-tron and Q6 e-tron models in the second half of 2024. Porsche will launch its second electric model, the Porsche Macan, after Taycan this year. Our Volkswagen Commercial Vehicles brand will start selling the ID.Buzz model in the last quarter of the year. Our CUPRA brand will introduce two electric models to the market, the CUPRA Born and CUPRA Tavascan models.

After a successful year, we look forward to 2024, the 30th anniversary of Doğuş Otomotiv’s establishment. In this special year, we will continue to work determinedly to add value to our stakeholders with a long-term and sustainable approach, without compromising our priority of world-class sustainability performance. I would like to express my sincere gratitude to all my colleagues who accompanied us on our journey to achieve our goals and to all our investors who never gave up their trust in us.

Best regards,

Emir Ali Bilaloğlu

Chairman of the Board of Directors and the Executive Board