Dear Tofaş stakeholders:
We embarked upon 2023 with a devastating earthquake that struck our country on February 6 and caused widespread destruction and provoked the deepest sorrow. We continue to work together in solidarity with others and take part in projects capable of helping our country heal the wounds of what was one of its worst natural disasters in recent memory.
Beset as it was by the still lingering effects of the Covid-19 pandemic, by global supply-demand issues, by war in Ukraine, and by historically high inflation and soaring lending rates, 2022 was a challenging year indeed. Despite worldwide challenges posed by global economic slowdown and by changes in demand, particularly in the European market–the country’s biggest, Turkey’s total automotive exports grew by 5.5% and reached USD 31 billion in value in 2022. A number of factors that included pent-up demand, continued growth in e-commerce, high inflation, and low interest rates nourished domestic demand for automotives in Turkey last year. Domestic sales of passenger cars and light commercial vehicles (LCV) increased by 6.2% and amounted to 783,283 units in 2022. Passenger car sales in Turkey increased by 5.5% and reached 592,660 units while LCV sales were up by 8.6% and reached 190,623 units. The Turkish automotives industry faced a number of tough challenges last year. These included not only soaring raw material and energy prices and high exchange rates but also supply chain disruptions arising especially from the ongoing global chip shortage. Despite such challenges however, the Turkish automotives industry turned out a total of 1,352,000 units in 2022, an increase of 6% over the previous year.
Leadership arising from uninterrupted production
Thanks to an agile organizational structure and to effective management, we have been successfully coping with semiconductor supply difficulties and maintaining overall production continuity. We further strengthened our position as Turkey’s top carmaker in 2022, with 95% of sales coming from our own assembly line. Our total sales were up by 20.3% year-on and supplied a 19.2% share of the total market. In exports, our company registered an 8% rate of year-on growth on a unit-sale basis and captured a 12.3% share of Turkey’s automotives industry exports.
Tofaş’s Fiat Egea sedan once again made us proud as Turkey’s best-selling car, this time for the seventh year in a row. In 2022, Tofaş launched the Fiat Egea in four body variants: Sedan, Hatchback, Cross, and Cross Wagon with a mix of diesel automatic transmission and hybrid engine options.
Tofaş continued to maintain its strong position in the LCV market by capturing a market share of 25.7%. The Fiat Doblò, a popular minivan that commands a significant market share, was once designated “Light Commercial Vehicle of the Year”.
Sustainable quality approaches and product development capabilities
Tofaş is committed to improving its quality indicators every year in line with its sustainable quality approach, which puts customer satisfaction at the center of everything. In an overall evaluation of the Stellantis Production System, Tofaş ranks among Stellantis’s top two manufacturing plants.
With its knowledge and experience in developing completely-new vehicles entirely from scratch, Tofaş’s R&D center continues to create added value for the company in the areas of vehicle design and production. The Tofaş R&D Center also contributes to Turkey’s economy and to its production and R&D knowhow through engineering-service exports as a result of its involvement in the development of various models within the Stellantis system. The company is also expanding its operations in order to address and satisfy the growing needs of the global automotives software market.
Combating climate change
The growing impact of climate change on our planet’s ecosystem is changing the ways in which we all produce and consume and has put climate change and environmental protection among the top priorities on the global automotives industry’s agenda.
As a corporate member of the Directorate of Climate Change’s Climate Platform, Tofaş is committed to taking steps to gradually meet the requirements of a carbon-neutral market. Tofaş regards the protection of natural resources, the conduct of its operations with minimum environmental impact, and the collaborative spread of its sustainability attitudes among all stakeholders with which it interacts as being among its core responsibilities. Tofaş focuses on effectively managing and reducing both its direct and its indirect environmental impact throughout its entire value chain. The company closely monitors European Green Deal developments in order to integrate them into its own climate change mitigation strategies.
Tofaş has committed itself to becoming a carbon-neutral company and is engaged in resolute and meaningful efforts to achieve that goal. It aims to reduce its overall Scope 1 and Scope 2 emissions by 50% by 2030 through such means as using green materials, generating and using solar power, carrying out energy-efficiency projects, and incorporating circular-economy practices into its operations and products. It also further strengthened the roadmap that it laid out to minimize the adverse impact of climate change by joining the Science-Based Targets Initiative (SBTi) in December 2022.
In 2022 Tofaş continued to reduce its CO2 emissions and its energy and water consumption-performance through a variety of efficiency-enhancement projects and environmental and operational investments. The 201 energy-efficiency projects which the company carried out last year conserved a total of 115,055 GJ of energy and reduced overall CO2 emissions by 9,622 tons. Tofaş’s per-vehicle energy consumption fell by 20% in 2022 to 3.19 GJ, thereby outperforming the year’s target. Production-related greenhouse gas emissions amounted to 249 kg/tCO2e per vehicle. Tofaş reduced its per-vehicle water consumption performance by 6% to 2.74 m3 last year. It also recycled about 60 million m3 of usable water thanks to a factory-wide circulation system. In 2022 Tofaş successfully passed environmental audits conducted by statutory authorities and by independent external agencies, all of which reported zero instances of non-compliance.
Tofaş constantly makes not only its production processes but also the vehicles it manufactures more environmental so as to increase the value that it offers its customers. The same approach also informs the company’s R&D, innovation, and digitalization efforts. Tofaş aims to rapidly increase the electrification of all models in production; consistently increases the use of green materials in its vehicle design and production processes; is currently working on pilot studies to improve the greenhouse gas emissions performance of all vehicles. During 2022 the Tofaş R&D Center increased the number of EU-supported projects on its calendar to 31 and worked with more than 260 international project partners. Every year the center aims to add new value-adding innovative projects to the calendar while also increasing the number of Tofaş’s new patent applications. Last year a total of 71 new patents were filed for.
In 2022 Tofaş completed 364 digitalization and innovation projects. The number of the company’s digitalization projects has reached 1,500. These projects focus mainly on giving Tofaş the benefit of such technologies as the Internet of Things (IoT), collaborative robots (cobots), and robotic process automation (RPA).
Our most valuable resource: People
We design all of our human resources processes and policies with inclusion, equality, and diversity in mind. We also prioritize the development of our employees to better prepare them for the future. We treat all of our employees honestly and fairly, refrain from discrimination, and provide a respectful, safe, and healthy workplace environment. We are committed to achieving the sustainable goals of “zero work accidents” and “zero occupational diseases” by taking a world-class, proactive, and lean approach to occupational health and safety, and by continuously improving our occupational health and safety culture. Through a variety of events and projects, we also continue to support the entry-level recruitment of new graduates who will shape Tofaş’s future.
In addition to the UN Women’s Empowerment Principles (WEP) to which we subscribed in 2017, we believe that differences in matters pertaining to gender, age, ethnicity, religious beliefs, ways of living and forms of expression, and mental and physical abilities, are all sources of richness. We are committed to tapping into these differences to create value. We reflect this commitment in all our human resources processes and policies.
As of end-2022, 10% of Tofaş’s workforce of 5,928 people were female. Of all newly-hired personnel last year, 28% were women. Tofaş provides jobs for more differently-enabled people and has also undertaken more projects to recruit them than any other employer in Bursa. As of the same date, the company had 194 people with physical disabilities on its payroll.
We have committed to proactively and steadily increasing the percentage of women and disabled individuals in Tofaş’s workforce at Tofaş through various means and initiatives. Our goal is to increase the percentage of women in office positions from 25% to 35% and the overall percentage of individuals with disabilities in Tofaş’s workforce from 3.3% to 5% by 2026. We have also set targets of raising the percentages of women employed in the areas of technology and innovation and of technology & innovation management from their current 18% and 13% levels to 30% and 20% respectively by the same year.
Alignment with UN Sustainable Development Goals
We believe that a robust social context is essential to our business success. We focus on social responsibility projects that support social development and create social value in a variety of ways while also contributing to the national economy. We align our social responsibility initiatives with United Nations Sustainable Development Goals in view of local needs, expectations, and priorities. We define measurable medium and long-term objectives for our socially-beneficial projects and monitor the projects’ progress accordingly. One such project is the Tofaş Sports Club. In addition to all the sport-related successes that it has achieved since the day it was founded, the club has supported the fostering of healthy generations and improved the quality of social life by giving every young person an equal chance to discover and demonstrate their abilities. Tofaş Sports Club’s social responsibility projects have so far touched the lives of 30 thousand people. In addition to the funding that the company regularly budgets for social responsibility projects, Tofaş paid out a total of TL 24.8 million as charitable donations and assistance in 2022.
As Tofaş, we are committed to being Turkey’s leading automotives manufacturer in the creation of the best value and mobility solutions for customers. We will continue to improve everyone’s quality of life by providing products and services that meet the mobility needs of society as a whole.
In closing, I thank all our shareholders, customers, employees, dealers, suppliers, and other stakeholders for trusting and supporting Tofaş and contributing to its success.
Very truly yours,
Cengiz Eroldu
CEO
