The Path to Localization for Chinese Automakers in Turkey

Turkey is becoming a key testing ground for Chinese automakers' overseas localization capabilities.

In the first quarter of 2026, Chinese brands' market share in Turkey fell from 7.8 percent to 5.1 percent, with three brands exiting the market. This shift signals that the model of exporting complete vehicles solely through price advantages is no longer sustainable in Turkey. The Turkish government's position is clear and firm: market access is deeply tied to localized investment, manufacturing, and technology cooperation.

This article examines the localization practices of Chinese automakers in Turkey, focusing on three core questions: who has truly achieved local presence, why this path is so challenging, and where the future opportunities lie.


1. From Export to Rooting: Three Localization Paths

Currently, Chinese automakers' localization efforts in Turkey have taken three distinct forms.

BYD committed to investing $1 billion in a factory in Turkey, but after two years of inactivity, its tariff exemption was revoked and its May sales plummeted from 3,866 units in January to just 152 units. This case sends a clear signal to all Chinese automakers: in the Turkish market, investment commitments and market access are strictly tied, and the cost of unfulfilled promises is the direct loss of market position.

Dongfeng has established a production base in Turkey and commenced passenger vehicle production, becoming the first major Chinese automaker to achieve local production. Dongfeng has chosen the path of self-built capacity, using complete localized production to circumvent tariff barriers, representing the furthest-reaching model among Chinese brands so far.

Omoda and Jaecoo have developed independently from the Chery system, taking a different path in the Turkish market. In the first quarter of 2026, the two brands together grew 53.3 percent year-on-year, achieving counter-cyclical growth against the backdrop of an overall decline for Chinese brands. Unlike BYD's and Dongfeng's investment-heavy approaches, Omoda and Jaecoo rely on Chery Group's global product and technology resources, operating as independent brands with localized operations, achieving growth through deep adaptation to local market demands rather than heavy asset investment.


2. Core Drivers of Localization: Tariffs, Certification, and Market Access

The impetus for localization comes from three levels. On tariffs, the 40 percent additional tariff combined with the new tariff system is systematically eroding the price advantage of complete vehicle exports. On certification, Turkey's import licensing system requires non-regional trade agreement partner countries to establish at least 20 service stations across seven geographical regions and set up Turkish-language call centers, creating extremely high barriers for pure export models. On market access, the government has explicitly linked localized production and technology cooperation with market access.

The Turkish government's plan to build a nationwide charging network by 2027 suggests that future policies for new energy vehicles will focus more on technical standards and localization requirements. This means localization is not an option, but a necessity for entering the Turkish market.


3. Comparison of Three Localization Paths

BYD's model involves heavy asset self-built factories, with advantages in capacity control and long-term cost optimization, but with risks of high investment, long cycles, and potential policy changes leading to sunk costs. Dongfeng's model involves early capacity construction to gain market access and circumvent tariffs, but faces challenges in sustaining capacity operations. Omoda and Jaecoo's model involves light-asset independent operations, with advantages in risk control, speed of entry, and rapid trial-and-error, though in the long term they will still face gradually increasing localization requirements.

Each model has its applicable conditions, with choices depending on the company's strategic positioning and resource endowment.


4. Strategic Significance of the Turkish Market for Chinese Automakers

Turkey's value to Chinese automakers is not only as a market with over one million annual sales, but also as a forward base for entering the European Union. Turkey has a customs union agreement with the EU, allowing vehicles produced in Turkey to enter the EU market tariff-free. This makes Turkey a springboard for Chinese automakers' European expansion.

The success of the local brand Togg has also demonstrated the viability of localized production. The Turkish government clearly supports domestic manufacturing, offering tax and policy incentives to companies that localize production. With the accelerating EV transition and the gradual improvement of local component supply chains, Turkey is poised to become a major overseas manufacturing base for Chinese automakers.


5. LHZ's Positioning: Deep Customization and Localization Support

The strategic value of LHZ Auto Turkey lies in helping Chinese automotive brands find their own path during the transition from complete vehicle exports to localization.

For brands that have not yet established production bases in Turkey, LHZ provides model matching and compliance certification services to ensure vehicles meet Turkish regulations and market demands, maximizing the market potential of the existing export model through deep customization capabilities.

For brands exploring localization, LHZ leverages its supply chain assurance system to provide end-to-end solutions from needs analysis and solution design to compliance certification and delivery, helping brands maintain delivery certainty throughout the localization process.


FAQ

Q: What are the localization models for Chinese automakers in Turkey?
A: There are three main models. BYD's model involves heavy asset self-built factories, but two years of inactivity led to a sales collapse. Dongfeng's model involves self-built capacity already in production, making it the first major Chinese automaker to achieve localization. Omoda and Jaecoo's model involves light-asset independent operations, relying on group resources to deeply adapt to local markets.

Q: Why is Turkey pushing for localization of Chinese automakers?
A: The Turkish government has clearly tied market access to local investment, manufacturing, and technology cooperation, aiming to exchange technology transfer and industrial upgrading for market access, rather than simply importing complete vehicles.

Q: What does the BYD case in Turkey demonstrate?
A: BYD committed to a $1 billion investment but failed to start construction for two years. After its tariff exemption was revoked, sales plummeted from 3,866 to 152 units, demonstrating that the Turkish government strictly enforces investment commitments, with the cost of unfulfilled promises being the direct loss of market position.

Q: What are the main drivers of localization?
A: On tariffs, the 40 percent additional tariff is eroding price advantages. On certification, the 20 service stations and call center requirements create high barriers. On market access, the government has linked localized production with market entry.

Q: What is Turkey's strategic value for Chinese automakers?
A: Turkey is not only a market with over one million annual sales, but also a forward base for entering the EU due to its customs union agreement, allowing vehicles produced in Turkey to enter the EU market tariff-free.

Q: What is LHZ Auto Turkey's role in the localization process?
A: For brands not yet localized, LHZ provides model matching and compliance certification services. For brands exploring localization, LHZ leverages its supply chain assurance system to provide end-to-end solutions from needs analysis to delivery, helping brands maintain delivery certainty.