TEMSA is a subsidiary of the Sabancı Holding , one of the largest industrial and commercial conglomerates in Turkey. TEMSA was founded in 1968 to operate in the steel construction industry. In 1977 Sabancı Holding acquired full ownership of the company in order to move into automotive and construction equipment sector. Distributorship and Manufacturing License and Technical Assistance Agreements were signed with Komatsu in 1983 and Mitsubishi Motors Corporation of Japan in 1984. The company ventured into three fields, automotive division; production and distribution license with Mitsubishi, construction equipment division; distribution and production license with Komatsu, electronics division; sharp cash registers and Mitsubishi air conditioners. TEMSA started its automotive business in 1984 with the Mitsubishi license to distribute and produce Mitsubishi products for the Turkish market only. Until 1986 TEMSA acted as the distributor of Mitsubishi products in Turkey.
During those years production facility was constructed. In 1987 TEMSA entered to local coach market with Maraton. It was received very favorably in the market, its production continued untill 1996 and a total of 1674 units were sold. Then a new high decker coach “Prenses” was launched in 1992 and sold 2141 units untill 2001. Prenses was also produced under license of Mitsubishi. TEMSA also entered to Midibus market in 1992 as the third brand after Iveco and Isuzu. In year 2000 TEMSA was producing Prestij branded midibuses and Prenses and Safir branded coaches. As TEMSA was producing coaches and midibuses under license of Mitsubishi, inline with Mitsubishi global strategy , Mitsubishi was unwilling to go into the heavy commercial vehicles market in Europe. So the TEMSA was mainly selling in local market and Middle East.
In 1997 they started to sell Euro Prestij to European countries. In the automotive market demand is highly dependant to economical factors. If economic growth and purchasing power due to economic instabilities and crises decreases, it results in sharp demand decreases. During economical instability periods customers generally postpone their spendings and increase their savings. Also during crisis or economic instabilities the financial tools become more expensive as the interest rates get higher, and thus demand again decreases. Even the perceived risk about the future of the economy influences demand negatively. So the volatility of the market in Turkey and Middle East markets result in low and fluctuating demand which was a big problem for TEMSA. In the coach and bus market there are 4 manufacturers in Turkey, Mercedes-Benz Turkey, MAN, TEMSA and BMC while major midibus producers were Anadolu Isuzu, Otoyol (Iveco), TEMSA, Otokar and Karsan. Also some limited amount of coaches and midibuses are imported from EU+EFTA, far Eastern and east European countries.
For coach market Mercedes-Benz was the market leader in 2000 with a share of 46.7%, followed by TEMSA with a share of 32.2%. MAN had a share of 13.5% and BMC had 6.6%. In Turkish midibus market, Iveco had 55.4%, Isuzu had 33.1% and TEMSA had 11.5% market share. Iveco and Isuzu have high brand awareness in the domestic midibus market, and they both have strong local partners. TEMSA also produces light trucks as one of the largest light truck manufacturers in Turkey together with Isuzu and Otoyol. When TEMSA started the production in 1987, company had around 50 production workers. There were two lines one of which was for bodybuilding and the other for trim. There was also a paint shop. TEMSA did not have any significant product design capabilities in 1987. In 1992, TEMSA engineering team made some modifications to Maraton’s body and rear mask in order to launch Prenses. Also 4 new lines were added in 1992, two for midibus and two for Canter manufacturing. In 1999 TEMSA developed Safir’s internal design in cooperation with Ellamp Interiors SPA and Lazzerini Co.
Untill year 2000, product development activities were kept within Mitsubishi license limits except for Prestij and Euro Prestij midibuses. So the design and improvement capabilities stayed limited. Mainly, product development engineers were trying to localize some of the parts and modify some according to local market needs. There was a small R&D workshop with one superintendent and 6 workers and the R&D department had only two dimensional CAD software. In beginning of 2001 TEMSA had 800 workers and 350 suppliers. Being located in Turkey, TEMSA had great advantage of being close to Middle East and European markets. In Turkey, TEMSA had an extensive network of coach and midibus dealers, regional offices and authorized coach service shops. On the other hand they had only one distributor in France for coaches with a suitable showroom and after sales service facilities in France. As mentioned before, because of the volatility in Turkish and Middle East market due to fluctuating and low demand, European market has always been an important target.
But due to global strategy of Mitsubishi and lack of relevant service and dealers in Europe, TEMSA could only sell midibusses to European market. After the crisis in 2001 in Turkey, all vehicle sales, including coach and midibuses were affected severely and the forecast for the overall domestic coach and midibus sales were 300 and 1600 units respectively while the sales were 1541 coaches and 6378 midibuses in year 2000. After a shiny year of 2000, in beginning of 2001 all companies had positive expectations, thus when the crisis struck, TEMSA already had a heavy inventory load for both in finished goods and knock-down kits. So it looked for certain that production would practically stop in 2001.
Also 500 of the 800 workforce would become redundant in 2001. On the other hand there was and opportunity to sell 59-seat high decker coach on a 12 m long platform to France as the distributor in France indicated with a potential of 200 units/year. Of course once such a coach is introduced to European market, there could be some other opportunities in other European countries. So TEMSA had to consider to enter to European market in order not to stop the production in 2001. As Mercedes-Benz and MAN had presence in European market for over hundred years, TEMSA should focus on product attributes such as cost and delivery time in order to be competitive in European market. As TEMSA would be introducing coaches after the strong brands of Man and Mercedes, they should focus on the low cost and differentiated (like 59 seat high decker coach) units. As for 2001 factory would have free capacity, they could offer shorter delivery times.
In order to be competitive in cost, the process should be cost effective where having an assembly line could be giving such and advantage and a model of make to stock can be helpfull for shorter delivery times. The objectives of the process could be to have a low cost, and short lead times. One of the present lines could be redesigned as a PWP in order to produce high decker coach which will meet European requirements. To be able to enter to European market, and to make customers be aware of TEMSA competencies TEMSA should join to the fairs and try to find some distributors with showrooms and after sales services in European countries. They can make use of the current midibus dealers that they have business currently.
To sum up, to be able to run the production in 2001 and to avoid any future issues regarding the low and fluctuating market in Turkey, TEMSA should enter to European market and try to gain some share. In order to do so, first they should increase their R&D resources and focus on developing coaches which meet European standarts, and also the process flow in the factory should be re-organised to manufacture such coaches. At the same time opportunities to make new distributorship agreements should be evaluated. There would be a need for some additional investment in order to achieve those but it will help to the company for sustainable production and sales in near future. The success of the design of the new high decker 59 seat Safari has an important role for the entry to European market, thus requires important focus till the fair in Belgium.
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