Türkiye's automotive production fell 8% year-over-year in the first seven months of 2026, while exports by volume declined 14%, as weaker passenger car output and fewer working days weighed on the sector, data showed Monday.
But industry officials said the decline partly reflects preparations by automakers to introduce new models and expand capacity, with the impact of those investments expected to become more visible in the final quarter and particularly in 2027.
Automotive Industry Association (OSD) Chair Cengiz Eroldu said some of their members were preparing their production lines for new models and capacity investments.
"When a new product is introduced to a production line, the existing production pace has to be reduced for a certain period. We consider the production loss to be a normal consequence of the transition to new investments," Eroldu said.
Hyundai, Opel and Peugeot just recently announced new investments and launches of production of new models in Türkiye.
Hyundai on Friday started mass production of its new all-electric IONIQ 3 model at a factory in Türkiye's northwestern Kocaeli province.
Earlier this month, Opel said it was moving production of its light commercial vehicle model Combo to Türkiye from the third quarter of this year.
In late July, Peugeot announced it would begin producing its Rifter light commercial vehicle in Türkiye beginning in the third quarter.
Production falls as passenger car output weakens
Eroldu, meanwhile, said the sector also lost around five to six working days in the first seven months compared with the same period last year because of public holidays and administrative leave.
Total automotive production reached 767,216 vehicles in January-July, down 8% from a year earlier, the OSD data showed. Passenger car production declined 19% to 424,667 units.
Commercial vehicle production, however, remained more resilient, rising 9%. Within the segment, production increased 16% for midibuses, 15% for light trucks, 8% for buses and 1% for trucks, while minibus production fell 9%.
The industry's overall capacity utilization rate stood at 62%, with utilization at 63% for light vehicles, 69% for buses and midibuses, 57% for trucks and just 28% for tractors.
Eroldu said the differing performance across vehicle categories was significant.
"Production declines were concentrated mainly on the passenger car side, while we are seeing a more positive trend in light commercial and heavy commercial vehicles," he said, adding that the sharp decline in tractor production and the more than 50% contraction in the domestic tractor market warranted attention.
New investments expected to lift local production
Despite the production decline, Eroldu said new investments were already beginning to support the share of locally produced vehicles in the domestic market.
The share of domestically produced vehicles in the passenger car market rose to 35% from 29% a year earlier. Locally produced passenger car sales increased 4%, while imported sales fell 19%.
In the light commercial vehicle market, locally produced vehicle sales rose 13%, lifting their share to 23%, while imported sales fell 9%.
Eroldu said the increase in the domestic share was an early indication of the impact of new investments and that the contribution should become more pronounced as production of new models ramps up.
"The positive impact of new models entering production and export programs will become apparent in the final quarter of the year and, more significantly, in 2027," he said.
Export volumes decline, but revenue remains resilient
Automotive exports fell 14% by volume to 542,401 vehicles during the first seven months, according to the OSD data. About 71% of total production was exported.
Passenger car exports dropped 29% to 255,679 units, while commercial vehicle exports increased 8%. Tractor exports rose 20% to 7,792 units.
Despite the decline in unit exports, export revenue continued to increase. According to Türkiye Exporters Assembly (TIM) data, total automotive exports rose by around 2%-2.6% in dollar terms to approximately $24 billion.
Uludağ Automotive Industry Exporters' Association data showed passenger car export revenue fell 9% to $6.3 billion, while exports by main manufacturers increased 0.1% and those by suppliers rose 4.5%.
Automotive remained Türkiye's leading export sector, accounting for 17% of total exports.
Domestic market contracts, but local share increases
The total automotive market shrank 11% year-over-year to 661,249 vehicles in January-July. Passenger-car sales fell 12% to 502,712, while the commercial vehicle market contracted 5%.
Heavy commercial vehicle sales declined 8%, but bus sales rose 23% and midibus sales increased 14%.
Eroldu noted that despite the market contraction, the sector remained significantly above its long-term averages. Compared with the previous 10-year average, the total market was 31% higher, the passenger car market 32% higher, the light commercial market 30% higher and the heavy commercial market 22% higher.
Europe remains key to industry's outlook
Eroldu said the performance of the domestic market, demand and competitive conditions in Europe, and the implementation of new models would be critical for the remainder of the year.
He expects full-year production and exports to remain somewhat below 2025 levels but relatively close to last year's performance.
Looking ahead to 2027, the sector will focus on domestic demand, global vehicle demand, China's competitive pressure, cost pressures, excess capacity and the European Union's proposed Industrial Acceleration Act (IAA).
Europe accounts for around 70% of Türkiye's automotive exports, making the outcome of the IAA negotiations particularly important for Turkish manufacturers and suppliers.
"We expect the negotiation process to extend into 2027," Eroldu said, stressing that Türkiye's automotive industry is deeply integrated with Europe's manufacturing, investment and supply chains.
He said the industry wants Türkiye to be treated within the EU framework as a customs union partner and an integral part of the European automotive value chain, covering both vehicle manufacturers and suppliers.
Eroldu also said that reducing cost pressures caused by the gap between exchange rates and inflation, improving exporters' access to finance and maintaining predictability in the investment environment would be crucial to the industry's competitiveness in 2027.