Cengiz Eroldu - Board Member & CEO

Dear Stakeholders;

Covid-19 pandemic, which began in 2020, has led to unprecedented impacts on both humanity and business world. Billions of people faced physical, emotional, and financial challenges. And unfortunately, Turkey was intensely affected by this pandemic. As Tofaş, our priority was to protect the health of all of our stakeholders, especially our employees, safeguard their jobs, and to protect them from revenue losses, and in this process we also continued to create economic value by ensuring continuity of work. Our long-term R&D, digitalization, and innovation works, as well as the knowledge we have, and our ability to act fast provided us with great power during these hard times.

Like all other sectors, global automotive sector faced challenges in trade and supply chain; however, Tofaş maintained its place as a significant industrial organization in Turkey, and showcased its value added for the sector and economy thanks to 250,000 vehicles produced, 118,000 vehicles exported, and 93% domestic production rate in domestic market sales.

With the brands it represents in Turkey’s automobile and light commercial vehicle markets, including Fiat, Fiat Professional, Alfa Romeo, Jeep®, Ferrari, and Maserati; Tofaş was able to increase its market share up to 18.4% in 2020 by selling 142,000 vehicles, which was 80,4% greater than the previous year. In 2020, our brand, Fiat, maintained its top position in automobile and light commercial vehicle sales. Egea family was renewed with an investment of 225 million USD, and a new model, Cross, was added to the product range.

Thanks to an export share of 13%, Tofaş ranked 7 out of top 10 exporters, and was named among 10 largest industrial organizations in “Top 500 Industrial Enterprises” survey.

Tofaş R&D, on the other hand, operates as one of the two major R&D centers of the FCA Group in Europe. Investment of 10 million Euros was made to purchase new testing equipment for our R&D Center with the aim of increasing our ability to develop products. As Tofaş, we were among the top 3 companies with the highest R&D spending in the general ranking, within the scope of the “R&D 250, Companies with the Highest R&D Expenditure in Turkey” research prepared by Turkishtime. In 2020, Tofaş R&D Center renovated Egea family and supported FCA in their R&D  projects by exporting engineering services. The number of EU research projects we took part in raised up to 26, and with 23 patents we ranked 7 in “Top 250 R&D Companies of Turkey” survey conducted by Turkishtime magazine. As a result of our innovative work, we applied for 36 new patents in 2020. We owe the success we achieved under such compelling conditions brought about by the pandemic to the practices we developed in years with an understanding of sustainability. Even though our definitions for risks and actions, which cover environmental and social matters and affect our value chain, were created based on such topics as climate crisis and gender mainstreaming, it was our agile administrative performance, digital transformation, ability to take rapid actions, and innovative perspective that helped us take administrative decisions during the pandemic.

Within the scope of digital transformation, i.e. an integral part of the future of production, we have managed to increase our production capacity while also improving our assembly lines thanks to the algorithms we developed with smart factory procedures.

Customer services, on the other hand, were provided through digital channels and e-trade practices during the pandemic. Furthermore, we began selling vehicles on Fiat Online, our new digital platform. Thanks to “Fiat Yol Arkadaşım Connect (Fiat Seatmate Connect)” technology, “Connect Kasko (Connect Insurance)” became the first example of smart insurance pricing in Turkey. Using the real-time data we collected from our machines and equipment, we put into use more than 100 projects with regards to “Internet of Things”, which provided efficiency in energy and production; and we improved our processes thanks to more than 50 advanced analytic studies, image processing procedures, robotic process automatization works, as well as advanced robotic and collaborative robot (cobot) practices.

Our units also showcased their corporate sensitivity by rapidly responding to social needs alongside their main activities. Accordingly, the protective healthcare equipment designed and produced at our R&D Center were delivered to healthcare organizations in 70 cities and Tofaş produced 50,000 pieces of face shield, and 1,300 biologic sampling and intubation cabinets. Furthermore, we created an online platform to collect requests and track production and shipment functions; and we shared our equipment designs as an open source so that other companies were able to produce healthcare equipment as well. With the aim of protecting public health during Covid-19 pandemic, Fiat and BiTaksi launched the first “Cabinet Taxi” project in Turkey. Accordingly, a special isolation system that divides the taxi into two compartments was developed in Tofaş R&D Center to protect both the drivers and the passengers from the virus. Furthermore, vehicle disinfection service was provided free of charge for Fiat, Alfa Romeo and Jeep brands.

In any case, our main responsibility in Tofaş culture is to create a safe work environment for all of our employees. With this responsibility in mind, we updated our occupational health and safety rules in line with the requirements brought about by the pandemic, and we strived to safeguard our employees’ lives by rapidly implementing protective measures and transitioning to remote work. What’s more, since we began our World-Class Occupational Safety activities, we have managed to reduce Lost Time Accident (LTA) frequency by 96% in our factory, which sets an example with the scores it gets and the importance it attaches to occupational health and safety within the scope of WCM.

In 2020, we were awarded by Stevie Awards and Brandon Hall Group for nine human resources practices in miscellaneous areas, and innovative learning and technology solutions developed by our training and development organization, Tofaş Akademi.

Today, we also focus on climate crisis a topic that draws more and more attention from the public. Based on our understanding of responsible production and consumption, we reduce natural resource consumption and waste, while increasing our recovery rates. Accordingly, our target for 2024 is to reduce our emission by 33% compared to our base year, 2011, and to become a carbon neutral company in the long term.

The present report analyzes the results pertaining to the year 2020, and evaluates our sustainability performance. It also notes that the meetings organized to discuss a possible merger between FCA and PSA groups ended, and “Stellantis” Group, in which both companies have an equal share of 50%, was established as of January 2021. It is thought that the force created with the merger of the companies will increase their operational and capital efficiency, while also boosting their growth and technology development capacity. We, as Tofaş, will focus on increasing our power and performance with the synergy and additional value created by this new entity.

I would like to thank all of our stakeholders, especially our shareholders, customers, employees, dealers, and suppliers, who help us maintain our basic values in our journey, for trusting, supporting, and contributing to our company while we continue to grow with our products, activities, and services without compromising on our respect for people and environment.

Cengiz Eroldu
Board Member & CEO