EU's 'Made in EU' regulation brings the UK and Türkiye automotive sectors to the agenda

The repercussions of the new industrial regulation prepared by the European Union (EU) to support domestic production continue.

The draft law, which has been the focus of discussions in Turkey for a long time, is currently at the top of the agenda in the UK automotive industry.

England is discussing the possibility of being excluded from the "Made in EU" regulation prepared by the European Union.

While Iceland, Liechtenstein and Norway, which are within the scope of the single market with EU members, are automatically included in the scope, it is not yet clear under what conditions non-EU countries such as the UK and Turkey will be included.

Therefore, there is a prevailing opinion in the UK automotive industry that being outside the scope of 'Made in EU' may weaken competitiveness.

WARNING FROM THE PRIME MINISTER TO EUROPE

Britain's new Prime Minister Andy Burnham stated that his country should be considered a "reliable partner" by the EU and warned that otherwise the British automotive industry could be negatively affected.

SMMT, the British automotive manufacturers association, also stated that the automotive trade between the EU and the UK is approximately 80 billion euros annually and pointed out that existing production chains should be protected.

Industry representatives emphasize that the UK and European automotive industries are still strongly interconnected after Brexit.

The "Made in Europe" debate is turning into a new bargaining topic between the UK and the EU over Chinese electric vehicles.

Brussels wants Britain to align its trade policy towards China more with the EU so that it can benefit from its “Made in Europe” industrial policy.

While the EU imposes additional duties on electric cars imported from China, ranging from 7 percent to 35 percent, depending on the manufacturer, the UK still has a standard 10 percent customs duty.

The fact that the share of Chinese-made vehicles in the new car market in the UK has reached approximately 16 percent makes London's decision even more critical.

EU AIMS TO PROMOTE DOMESTIC PRODUCTION

The Industrial Accelerator Act announced by the European Commission aims to strengthen production capacity in Europe, reduce foreign dependency in strategic sectors, and especially reduce dependency on China-based supply chains.

Within the scope of the regulation, it is planned to impose local production and low carbon conditions on products purchased through public procurement, tenders and state supports.

Strategic sectors such as electric vehicles, batteries, steel, aluminum, hydrogen technologies, solar and wind energy are covered by the regulation.

As for electric vehicles, it is envisaged that the models to be preferred in public procurement must come from factories within the European Union and 70 percent of the parts except the battery must be European production.

TURKISH AUTOMOTIVE INDUSTRY IS WATCHING THE PROCESS CLOSELY

The EU's new production rules are also on the agenda of the Turkish automotive industry.

The Turkish automotive industry, which exports 60 percent of its production to Europe, is positioned as one of the important parts of the European production ecosystem.

Drawing attention to this issue at every opportunity, Automotive Manufacturers Association (OSD) President Cengiz Eroldu stated that Turkey is an important complement of the European automotive industry thanks to its Customs Union relationship with the EU and the production integration that has been established for years.

Eroldu said, "We are working to ensure that this draft, both in the public and private sectors, continues Türkiye's integration with Europe. Today, Turkey is the largest producer of light commercial vehicles and buses in Europe. We are a complementary country of the automobile market in Europe. This relationship should continue to get stronger. The European Union must definitely fix this issue."

Emphasizing that Turkey is a strong automotive base producing for the European market, OSD President Eroldu stated that it is important to shape the new rules in a way that does not disrupt the supply chains, and called on Europe to act together against Chinese competition.

As can be understood from OSD's statements, the main expectation for the Turkish automotive industry seems to be the preservation of production ties established with Europe and the ability of Turkish manufacturers to maintain their competitiveness in new industrial policies.

BRUSSELS CONTACTS FROM THE AUTOMOTIVE INDUSTRY

On the other hand, due to the uncertainty created by the new regulation in the automotive sector, sector representatives increased their contacts in Brussels.

A high-level delegation representing the Turkish automotive industry held an intensive contact program in Brussels at the end of July.

Within the scope of the program, in which the management of the Automotive Industry Association (OSD), Vehicle Supply Manufacturers Association (TAYSAD) and Uludağ Automotive Industry Exporters Association (OİB) were present, meetings were held with representatives of the European Parliament, umbrella organizations representing the European business world, relevant non-governmental organizations of the automotive ecosystem and OEM representatives.

During the contacts, topics of critical importance for the Turkish automotive industry were evaluated, and the future of production, supply and innovation cooperation between Türkiye and Europe was discussed.

While the main agenda item of the meetings was the draft Industrial Accelerators Act (IAA) prepared by the European Commission and the "Made in EU" approach, views were exchanged on the importance of the long-standing production, supply and innovation cooperation between Turkey and the European automotive industries and the possible effects of these regulations.

An important contradiction emerges here for the European Union. On the one hand, the EU, which wants to maintain its competitiveness against China and strengthen its production capacity in Europe, may, on the other hand, face the risk of weakening the supply chain security it aims for, if it excludes countries such as Turkey, which have been a part of its production ecosystem for years, from the new "Made in EU" approach.

WHY IS TURKEY IMPORTANT FOR EUROPE?

Turkey's relationship with the European automotive industry is not just about vehicle exports.

In addition to the vehicles produced in Turkey, thousands of parts reach production lines in Europe, the integration of the Turkish supply industry into production processes in Europe, and the engineering and R&D cooperation that has formed between the two parties over the years makes this relationship much more comprehensive.

The numbers show that Türkiye's place in the European automotive chain is too big to be ignored in the "Made in EU" debate.

While Türkiye will become the 5th largest automotive manufacturer in Europe in 2025, it will rank 1st in Europe in commercial vehicle production.

While the Turkish automotive industry exported 41.5 billion dollars in 2025, 30.1 billion dollars of this export was made to EU countries.

In other words, approximately three quarters of Türkiye's automotive exports were directed to the European market.

Therefore, the issue should not only be read as how many vehicles Türkiye sells to Europe, but also as to what extent the European automotive industry benefits from the production, supply and engineering capacity in Türkiye.

In summary, if the new regulation is implemented in a way that weakens the existing production chains between Türkiye and Europe, it should not be expected to create costs only for the Turkish automotive industry.

Otherwise, manufacturers in Europe may experience increased supply costs and search for alternative sources.

While putting a stop to the 'Made in EU' issue for now with OSD President Cengiz Eroldu's statement in January that "A European automotive industry without Turkey can hardly survive", we also need to ask the following question: Can Europe achieve the result it really wants by leaving Turkey out while trying to maintain its automotive power against China?