Turkish-Made Auto Boom Has Ford, Karsan Vie for Manhattan Cabs

Carmakers in Turkey drove economic growth that rivaled China’s last year, exporting in record numbers across Europe and the Middle East. Now they want to drive New Yorkers, with two of the three finalists for the “Taxi of Tomorrow” competition being Turkish-made cabs.

Ford Motor Co. (F)’s unit near Istanbul and Karsan Otomotiv Sanayii AS (KARSN), which is offering a moon roof to watch the Manhattan skyline, are vying with Nissan Motor Co. (7201) of Japan for the 10-year contract to roll out a fleet of next-generation cabs. It’s the first time New York is introducing a uniform fleet.

The entry of Turkish firms caps a decade in which the country’s once little-known car industry has emerged as a regional powerhouse, more than quadrupling production to overtake Poland and the Czech Republic as a manufacturing base for global brands. Output also surged as Turkish banks not only survived the financial crisis without a government bailout, they approved record amounts of loans to businesses and consumers.

Turkey has become a hub for light-commercial vehicle production for many global car companies as this segment has grown in popularity,” said Berna Kurbay, an automotive analyst in New York-based BGC Partners’s Istanbul office. “The visibility created with the New York taxi cab could help create a quality image for cars made in Turkey.”

Crown Vic

Ford has long been the automaker of choice for livery drivers. Its Lincoln Town Car is the standard airport shuttle for corporate executives while most police cars in the U.S. start out as Ford Crown Victorias. With Ford planning to close the St. Thomas, Ontario, assembly plant that makes those large, rear-wheel-drive cars, New York is looking at other options.

Ford offers customers a version of the Transit Connect minivan built with Turkey’s Koc Holding AS (KCHOL) at a seaside plant 100 kilometers (62 miles) from Istanbul. The Dearborn, Michigan-based based company began exporting the model from Turkey to the U.S. last year, selling the taxi version in 10 U.S. cities.

Turkey, which has no automotive brands of its own, has also become a production hub for Hyundai Motor Co. (005380), Toyota Motor Corp. (7203) and Renault SA. (RNO) Fiat SpA (F)’s Turkish unit, Tofas Turk Otomobil Fabrikasi AS (TOASO), began making the Doblo minivan after investing 386 million euros ($533 million) from 2007 to 2009.

Gasoline prices in Turkey are 3.9 liras ($2.50) a liter, or about $9.50 a gallon, and government taxes more than double the price of some cars. The industry is therefore heavily export-reliant with three of every four vehicles shipped abroad, according to data from Turkey’s Automotive Distributors’ Association. Production rose 26 percent last year to 1.1 million vehicles, making the country the top producer in Eastern Europe outside Russia.

Photographer: Jin Lee/Bloomberg

A New York City taxi drives through Times Square in New York. Close

A New York City taxi drives through Times Square in New York.

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Photographer: Jin Lee/Bloomberg

A New York City taxi drives through Times Square in New York.

Lending Boom

Turkey’s economy outpaced every member of the Group of 20 nations except China in 2010 with annual growth of 8.9 percent in the first three quarters. It probably expanded 8 percent in all of 2010, the International Monetary Fund estimates. Lending by Turkish banks climbed 34 percent last year to 532.4 billion liras, the country’s banking association reported.

At Karsan’s factory in Bursa on the Sea of Marmara, Chief Executive Officer Murat Selek leans over to unlatch a giant metal box in his office. The company’s focus on the New York cab competition -- Karsan’s offer is the only one among finalists that was designed from scratch as a New York cab -- gives it an advantage, Selek said.

The Karsan V1 is a boxy, van-like taxi with an ample backseat, an engine that can be gas, hybrid or electric, an advanced “infotainment” setup and the only design of the three to offer full handicapped access, a feature that has already won the company plaudits from advocates for the disabled, including Assemblyman Micah Kellner of Manhattan.

Peugeot, Renault

“We understood that the mayor of New York wanted a specially designed vehicle,” Selek said in a Jan. 18 interview as he reached inside the box to pull out a model taxi parked atop 1,500 pages of technical specifications.

New York Mayor Michael Bloomberg is founder and majority owner of Bloomberg News parent Bloomberg LP.

Karsan, which also builds vans and trucks for Peugeot, Citroen and Renault, plans to increase sales 10 percent to 20 percent from last year’s 550 million liras to 600 million liras and will invest $150 million in production should it win the tender, the CEO said.

For Ford Otomotiv Sanayi AS (FROTO) CEO Nuri Otay, a contract to produce some 26,500 taxis for New York over a decade may have less impact on the company’s profit. The venture may report about 447 million liras in 2010 net income, according to the average estimate of eight analysts surveyed by Bloomberg.

Global Hub

Otay said the taxi contract is important as it helps him achieve a larger goal: making Turkey a global hub for automotive research and development. Ford Otosan, as the Turkish unit is known, will have more than 1,000 research and development engineers by the end of this year, he said in an interview. “It will be one of Ford’s three global R&D centers.”

A large pool of talented engineers is one of the main reasons international carmakers choose Turkey, according to Pinar Sahin Fersoy, a London-based Turkish industrials analyst at Nomura International Plc.

Nissan’s design is based on the NV200 van, which was introduced in 2009, according to the company’s Web site. The NV200 was named International Van of the Year 2010 by a jury of 23 European motor journalists, who said it “sets new standards in terms of internal space,” according to Yokohama-based Nissan.

New York’s taxi commission is evaluating “best and final offers” from the three finalists, said David Yassky, who chairs a committee of the New York mayor’s office tasked with selecting the winning bid. “The country of manufacture is not now, and has never been a criteria for taxi cabs. The now predominant Crown Vic is not American-made and none of the responses propose an American-made vehicle.”

To contact the reporters on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net; Benjamin Harvey in Ankara bharvey11@bloomberg.net.

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net; Andrew J. Barden at barden@bloomberg.net

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