The surprising thing was not that Norwegian electric car maker Think declared bankruptcy last month -- it's done that four times before -- but that the white knight swooping in to save the company is, of all things, Turkish.
You're forgiven if you didn't even know that Turkey has a sizable auto industry. After all, no other Moslem country does, and there's no internationally known Turkish brand. But in fact, Turkey's auto production was larger than Italy's in 2009, and it's growing fast. One of the contenders (unsuccessful, alas) for building New York City's new taxis was an oddly oblong Turkish van built by Karsan.
The Top Ten producer nobody knows
You'd have to conclude that only traditional biases in favor of the U.S./Asia/Europe axis keep Turkey off many accountings of world auto production, since it's in the international Top 10. Turkey is the world's best-kept secret: A place to build cars with a skilled workforce, close-by export markets and low overhead.
Ford (F) builds its Transit van at its joint venture Otosan plant in Kocaeli, Turkey, which generates $3 billion in export income annually. Last year, Ford announced a $630 million expansion of operations at Otosan, and said it will begin importing Transits to the U.S. in 2014 (replacing domestically made but gas-guzzling E-Series vans). The smaller Transit Connect van, also built in Turkey, has been sold in the U.S. since 2009.
Turkey has been making cars since the 1950s, at first under license from Ford, Renault and Fiat (which, with the addition of Toyota, are still the country's biggest producers). According to a Deloitte study, cars and trucks are now Turkey's leading export, totaling $17.3 billion in 2010. Turkey produced more than a million vehicles last year and exported 754,000 of them.
Turkey's auto sector was up 26 percent last year, in part because the domestic market is growing and has room for more growth -- there are only 104 cars per 1,000 people in Turkey, compared to 500 in France and Germany.
Turkey has applied for membership in the European Union -- it straddles Europe and Asia -- but hasn't been admitted. Becoming part of the EU (not likely before 2013) would help the auto sector by making it easier to export cars around Europe. Adoption of the Euro would help, too, but things are moving along nicely anyway -- most Turkish vehicles go to Europe now.
What Turkey doesn't have is any kind of automotive brand name, though the Turkish government really wants one and is subsidizing development of a home-grown car that could be sold internationally. The biggest Turkish auto company today, TofaÅŸ, produces Fiat-family cars (312,000 of them in 2010). The possible acquisition of Think doesn't create a game-changer car, because although production would move to Turkey, the engineering team would remain Norway-based.
BD Otomotiv, the company in negotiations to buy Think out of bankruptcy, is in the business (small-scale so far) of converting light commercial trucks to electric, for both the Turkish and European markets. According to Otomotiv's chairman, Osman Boyner:
Our intentions are simple -- to bring Think out of bankruptcy and make it the affordable urban EV for Europe it was always designed to be. We have the manufacturing capabilities and sales network to do this, and combined with a core group of retained Think talent in Norway we aim to launch new platforms and the next generation of vehicles if successful in our bid.Priced out of the market
Boyner told me his other core strategy is to bring down the cost of the car, and that is indeed key to making it work. Think (once owned by Ford) declared bankruptcy with 500 cars still in inventory -- a giant number for such a small company. And in its largest market, Norway, Think managed to sell only 85 cars in the first half of 2011. U.S. sales were even less than that. There's a clear reason for the car's failure to launch: The two-seat plastic-bodied battery car is cute, but it's also jaw-droppingly expensive, priced above the Nissan Leaf ($32,780) at $36,495 in the U.S.
A Pike Research report put the Think's lifetime ownership cost at $30,595, some $3,000 more than the Leaf, which has four seats and a lot more utility. The Think is only marginally cheaper to own than a gas-only Ford Fiesta, which means it manages to erase the electric's inherent operating cost advantage.
Producing the Think in Turkey instead of its current Finland would undoubtedly cut costs, but probably not enough to make the car competitive. Instead, Think needs a more radical marketing approach, perhaps selling the car for $15,000 and then leasing the expensive battery pack to consumers for $100 a month.
Think, Boyner told me, "presents a good opportunity for us." He declined to be more specific about his plans, citing competitive pressures in the bankruptcy process. But Boyner knows that the car isn't viable in its current form. It needs a radical re-invention, Turkish style. Business as usual would result in a Turkish bath.