Our Dear Stakeholders,
After a period full of difficulties in which COVID-19 caught the whole world unprepared, we left behind a year in which normalization trends predominated, but the effects of the pandemic continued to be felt, especially on commodity markets and supply chains. Despite the territorial and sectoral differences, 2021 was a year of partial economic recovery across the world. According to estimates, the world economy grew by 5.6 percent in 2021. On the other hand, inflationary pressure was felt in all economies due to the difficulties in production chains and the negative impact of bottlenecks in energy, food, and commodity markets on prices. The Omicron variant, which surrounded the world in the last quarter of the year, caused all the attention to turn to the pandemic again. Due to the rapid spread of the variant, the reappearance of closure measures in some countries once again increased the uneasiness.
The chip crisis caught the automotive industry off guard
The global automotive industry also suffered from the supply bottleneck that continued in 2021. The chip crisis caused by the supply-demand imbalance and the effects of rapid increases in raw material prices and contraction in global production has brought the automotive industry to its knees. Throughout the year, many automotive manufacturers announced that they were cutting down on production as they could not procure enough chips. This situation also caused some disruptions and delays in the procurement of our brands. Despite the shrinkage in production due to the chip crisis, the total automotive market is expected to reach 84.2 million units in 2021, an increase of 3.8 percent compared to the previous year.
Loss of momentum in the Turkish market
Despite the pandemic the previous year, the Turkish automotive market, which had a very active year and grew above expectations in both the new and second-hand vehicle markets, could not maintain the same performance in 2021. The automotive sector, which started the year with a fast pace of sales, started losing momentum in the second half of the year. Foreign exchange-related market movements during the last period of the year also negatively affected automobile sales. This situation also makes it difficult for us to make predictions for 2022.
As of the end of the year, automobile and light commercial vehicle sales in Turkey decreased by 4.6 percent compared to the previous year and amounted to 737,350 units. The contraction in the total automotive market, including heavy vehicles, was 2.9 percent. In 2021, a total of 772,722 vehicles were sold in Turkey. The second-hand market also shrank by about 10.2 percent.
Doğuş Otomotiv increased its market share
As Doğuş Otomotiv, we made a strong start to the year. Despite various supply problems, our automobile and light commercial vehicle sales reached 120,846 units in 2021 with an increase of 1.2 percent compared to the previous year. While our total sales, including heavy commercial vehicles, were 123,038 units, we increased our market share by 1 point to 16.4%. The increase in our sales and market share despite the fact that the share of imported automobiles in the total sales in the Turkish market in 2021 has decreased to 44% renders the success we have achieved as Doğuş Otomotiv even more meaningful.
We power electric mobility
Electric mobility plays a key role for a sustainable world. This situation causes our investment focus to shift to electric vehicles in our brands, as is the case in the entire automotive ecosystem. Although the number of electric vehicles on the roads is still far from sufficient, a rapid increase is observed in sales in this segment. Electric vehicle sales in Turkey increased by 3.5 times in 2021, reaching 2,846 units. Of these vehicles, 353 were Porsche. Within the scope of its “Road to X” strategy, Porsche plays a leading role in the transformation to electric cars and the Turkish automotive industry.
In line with this strategy, we give priority to sustainability practices at our Porsche centers. At Doğuş Otomotiv, we do not only bring electric cars but also contribute to the development of the necessary infrastructure. Our electric charging station installations, which we started last year, continued in 2021, accelerating. We established Turkey’s first battery repair center and the fastest electric charging station at Doğuş Oto’s Kartal location. With a total of 117 charging stations, we became the brand with the most charging stations in Turkey. By establishing three more battery repair centers in 2022, we aim to become the country with the highest number of battery repair centers in the Central and Eastern Europe region, and to increase the number of charging stations installed in Turkey to 200.
Swift steps in digital transformation
The importance of our investments in digital transformation as part of our company strategy since 2017 has come to the fore even more with the pandemic conditions. Thanks to our digital transformation and CRM projects spread throughout the company, we have been able to ensure the integrity of communication of our employees who work remotely and in the office/field for their job, and to provide several services to our customers without interruption. We base digital transformation on three main pillars: an agile management approach, increasing the digital competencies of human resources, and a data-based quality business philosophy. We have made significant progress in all these three areas in recent years. The digital project works we have executed together with Doğuş Teknoloji carried us forward with increasing momentum in 2021. As of the end of the year, a total of 60 digital projects were completed, while software development works for 54 projects continued. In addition to processes such as sales, after-sales services, and marketing, we significantly increased our efficiency by using digital technologies such as robotic process automation, internet of things, ERP, machine learning, and artificial intelligence in areas such as Value and Care Center (Değer ve İlgi Merkezi, DİM) and spare parts and logistics, where we are in direct touch with our customers.
Thanks to the digitalization steps we have taken in the processes of ship unloading, stock area management, and vehicle delivery to Authorized Dealers, we have successfully shipped approximately 120,000 vehicles in 2021 despite the restrictive conditions of the pandemic. We shipped 17,564 vehicles in March alone, reaching the highest monthly shipment volume of the last four years. Similarly, with the support of our strengthened digital infrastructure, we managed the shipment of up to 11 million parts with the most optimum solutions.
The “Data Strategy and Data Roadmap” practices initiated within the Doğuş Group to ensure that “Big Data” is managed effectively and professionally, once again demonstrated the progress made by Doğuş Otomotiv, which was primarily included in the practice. We have also tightened our steps in security, which is a different dimension of digitalization. In the coming period, one of our main priorities will be to provide our Authorized Dealers with secure technology infrastructure.
Sustainability is our new normal
While the pandemic revealed how fragile many structures that are considered immutable in the world are, it also clearly showed that sustainability is not an option, but a necessity for our common future. In this period, where the responsibilities of companies are redefined with the concept of stakeholder capitalism, we have no choice but to make sustainability the new normal, both as institutions and individuals.
In the Global Risks Report prepared by the World Economic Forum, communicable diseases have now been added to climate change, which was in first place until last year. It is expected that issues such as fluctuations in commodity prices, circular economy, protection of limited resources, and environmental pollution will be added to the priorities of the concept of sustainability, which requires us to completely change our view of the world, our environment, our responsibilities, and our lifestyles. Current trends such as digital transformation, reducing carbon footprint, investing in renewable energy sources, sustainable products, and ethical business processes will increasingly continue their importance.
As Doğuş Otomotiv, we deem our understanding of sustainability based on continuous improvement, efficiency, stakeholder participation, and respect for the environment as the most fundamental element that will carry our company into the future. While we review all our operations in accordance with sustainability standards, we accept climate change as a financial risk. In 2021, we completed our ISO 14001:2015 Environmental Management System installation works, which we attach great importance to, and received our certificate. We started to invest for a solar power plant to be installed on the roof of our logistics building in order to provide the energy we consume from renewable sources. Thus, while reducing our carbon emissions significantly, we will also be setting an example for our Authorized Dealers and Service Centers to switch to renewable energy.
Happy employees for happy customers
As Doğuş Otomotiv, we consider our human resources as our most valuable capital and believe that investing in this resource is a necessity for the success of our company, based on the notion that “We must have happy employees first to have happy customers”. With this understanding, we continued our training for the personal and professional development of our employees in 2021 as well. We carried out more than 17 hours of training and development activities per person throughout the year. The GO-DGTL Akademi, which we designed for the development of digital competence and skills, gave its first graduates in 2021.
With the awareness of a responsible corporate citizen, we published our “Workplace Policy Against Domestic Violence” in 2021 to provide a healthy and safe working environment away from all kinds of violence and threats. We started working on confirming and, when necessary, updating our priorities in our Corporate Human Rights Policy, which we first announced in 2010. In addition, during the year, we received many awards for our human resources practices from both Turkish and international organizations.
Our efforts to strengthen our corporate structure continued in 2021 as always. Thanks to the improvements we made in the fields of human resources, digitalization, and sustainability, we increased our Corporate Governance Principles Compliance Score from 9.67 to 9.70. As a fruit of our sustainability efforts, we became one of the six pilot countries selected for VW AG’s Sustainable Supply Chain Program. The fact that according to different surveys we were chosen among the employers that students and young professionals most want to work with made us happy, since young people see Doğuş Otomotiv as a contemporary workplace where they can develop themselves and convey their dynamism.
Innovations to continue
While our brands closed 2021 with extremely successful results, we also made significant innovations during the year. In April, we introduced our new brand CUPRA to Turkey. In addition, we launched Doğuş Marine Services to carry our corporate business approach to the maritime sector. While we strengthened our product portfolio with many new models we launched during the year, we crowned our achievements with numerous awards.
The year 2022, in which we will continue this dynamism, will be another active and productive year in terms of launches and projects. Mobility, digitalization, service-oriented studies, operational efficiency, and optimum profitability will continue to be on our agenda. We will continue our leadership in many areas with our new products, especially electric vehicles, with our digitalization process that continues at an increasing pace in every field, and our entrepreneurship projects.
As we leave behind a year full of success as a natural result of solidarizing as a team, working with devotion, cooperation, and keeping up with new conditions with high energy and agility despite the effect of the pandemic that increased distances, I would like to thank all our stakeholders who contributed to this success and express my gratitude to all our investors who supported us on this path with their trust in us as always.
Sincerely,
Emir Ali Bilaloğlu
CEO & Chairman
Doğuş Otomotiv
