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Karsan

Turkey.
Filed under:  Companies
 
Comment(s): 2
 
 

Karsan was formed in 1966 under the name "Bursa Otomontaj ve Karoseri AS" with 269 investors. In 1979 the Koc Group assumed management control by raising its shares and renamed the company as "Karsan Otomotiv Sanayii ve Ticaret AS".


karsan logo 11

With completely domestic capital and the Peugeot license, Karsan began producing Peugeot J9 minibuses (only one year after Peugeot) enabling them to take a place in the light commercial vehicle market by 1981.

Karsan achieved another first in the LCV sector in 1997 with the production of Turkey's first and only domestically produced minivan, Peugeot Partner. Karsan is the first producer of the Peugeot Partner outside of the parent company Peugeot.

In 1998 Karsan was Turkey's number one exporter of LCV's with exports totaling 44 million USD.

0nan K1raç retired from the Koç Group in March 1998. He saw an opportunity in Karsan to bring his experience and love of the automotive industry together with his interest in the automotive models of the European markets and he went into action in bringing these models to life in Turkey with Karsan.

While the other automotive factories in the Koç Group were being equipped with cutting edge technology, Karsan had been slighted. Other automotive partners of Koç were also pushing to have Koç get out of its smaller businesses. In light of these developments and with the blessing of the Koç family and the other shareholders, 0nan K1raç bought out a majority of the shares in Karsan.

Under the firm belief that industry goes hand in hand with its suppliers, 0nan K1raç and the K1raça Group's mission is to assist these suppliers and properly distribute spare parts in order to serve the Turkish automotive industry

Karsan exported 3,591 J9s in 1998 for a total of 44 million USD.

As a part of the K1raça Group mission , Karsan completed its investment to meet increasing demand and upgrade production technology and raised the capacity of the factory from 10,000 to 25,000 vehicles. This investment took one year and was done mostly from equity share capital.

The new factory in the heart of the Turkish automotive sector in Bursa Akçalar Industrial Park with 60,000 m2 of closed area on a total of 220,000 m2 of land was completed by spending 62 million USD of the 70 million USD budget.

Owing to the fact that the factory harbours the latest technology in its paint shops and production lines and the fact that with minor modifications any type of vehicle can be produced, Karsan is flexible in producing any product mix demanded.

Karsan added another first to its export background by exporting 4,132 J9's in 1999, solely accounting for 49% of Turkey's total exports of light commercial vehicles. The biggest export market for J9s was Algeria with some export also made to Ukraine, Azerbaijan, Kazakhstan, Turkmenistan and Cyprus.

In 1999 exports accounted for about 40% of the total turnover. These exports, totalling 50 million USD, represented a 15% increase over the previous year.

Karsan increased its 300 billion TL capital up to 1.2 trillion TL in 1999.

In 2000 , the company that had formerly been responsible for domestic marketing and distributios of Peugeot vehicles was shut down and Peugeot Otomotiv Pazarlama A (POPA) was formed in its place with the partnership of Peugeot and K1raça A. POPA, owned %40 by K1raça Group, imports passenger cars and purchases LCV's produced by Karsan to sell at its 56 distributors who are found reaching customers throughout Turkey.

Karsan began the production of Peugeot Boxer, leader in its segment in Europe, in March 2000, in order to provide an alternative to the J9 and to answer customer requests for a new model. Production of the same vehicle under the name Ducato went into production in July 2000 for Tofa.

The investments made up until today, were largely covered by the firm's own share capital. In order to be able to raise capital for further investments in the coming years, Karsan sold 10% of its overall shares to the public for a total of 198 million USD.

The company turnover increased by 143% to 122.11 trillion TL and the operating profits rose 67% to 9.85 trillion TL in 2000.

Karsan raised its capital to 2.4 trillion TL in 2000.

On December 21, 2000 the Executive Board made a decision to switch to a recorded capital system. The Capital Markets Board approved the decision and the ceiling for recorded capital was set to 12 trillion TL.

In 2000, in addition to the production of J9 and Partner, Karsan began producing the Boxer under another license with Peugeot. While the overall market for LCVs increased by 64%, Karsan was able to increase domestic sales by 93% over the previous year; selling 3,592 Peugeot J9, 8,214 Partners, 1,975 Boxers for a total of 13,781 vehicles sold. According to these figures Partner and J9 sales were up by 113% and 25% respectively over the previous year.

With the downturn in the Algerian market, exports decreased to 2,258 vehicles but this was enough to keep Karsan as the market leader in Algeria with 67% market share.

With the reorganization of the government sales department that began in April 2000 Karsan was able to provide 41% of the government sales office's total ambulance purchase for 2000. Karsan also won the minibus tender for the Gendarmerie and demonstrated the importance it placed on government sales by delivering ahead of schedule.

A total of 19,355 vehicles were produced in 2000, a 79% increase over the previous year.

In spite of the fact that the LCV market shrank by 63.3% and the competitions' Tofa Fiat Doblo and Ford New Transit were launched in the market Karsan was able to take its market share from 7.6% to 11.9%.

With the beginning of the export of Partner and Boxer, Karsan's 2001 exports reached to 1,591 vehicles and accounted for 21% of total sales.

As a result of the meetings between Karsan and Peugeot an agreement was reached for Karsan to produce 4,512 Peugeot Partners in 4 different versions for Peugeot to import and distribute to Europe. This agreement represents the first time a company with 100% domestic capital export such a large number of vehicles. The number of vehicles may be raised in the future depending on the economy and the market conditions.

The market, which had done so well up until 2000, suffered in the 2001 economic crisis and shrank by 63.3%. As a result of this crisis Karsan sales were also down by 60% from 2000 to 7,532 vehicles. With fewer vehicles being put on the market, the marketing department started 2001 with 2,700 vehicles in stock but was able to bring this stock down to 804 vehicles by the end of the year.

As a result of the importance placed on exports this year Karsan was able to export a total of 1,591 vehicles consisting of 100 Partners, 225 Boxers and 1,266 J9s to Algeria, France, Ukraine, Romania, Bulgaria, Azerbaijan and Cyprus.

Karsan was able to break Ford's leadership in governmental sales in 2001 by selling 484 Peugeot Partners and Boxers to the Gendarmerie, Office of Government Supplies, Ministry of Health, Postal Service and K1z1lay. Additionally, Karsan won the tender for the Health Department's 243 ambulances in August and delivered them in October.

Karsan took advantage of the need to replace aging Tofa ahin's used as taxis by producing a Partner Taxi which it delivered to the distribution network to be put on the market for sale as of December, 2001.

In another agreement signed at the end of the year, Karsan has agreed to provide cathodic electro- deposition paint bath services to Oyak-Renault's supplier, Opsan A from its factory in the Industrial Park of Bursa. According to this agreement, about half of the 800,000 m2 cathodic electro-deposition bath capacity of the Industrial Park Karsan factory will be used to service Opsan A. A similar agreement is to be finalized soon with Toyota as well.

A project led by Tofa to make use of Turkey's excess capacity in die cast production by renting out to world manufacturers has provided results. Karsan will produce die casts for Fiat in 2002. The first order for this service came in December 2001.

Special prototypes such as the Partner and Boxer Gendarmerie patrol vehicles, the Boxer mobile Gendarmerie office vehicles, Right-hand drive J9s and others were made in 2001.

Karsan revised its politics regarding spare parts in 2001 and made a separate business unit for them since it has put such importance on the spare parts industry as being an all important part of the Turkish economy and the automotive sector. Karsan is aiming for a large increase in turnover in 2002 as a result of this reorganization.

In 2001 Karsan increased operational effectiveness by 35%, decreased controllable costs per vehicle by 15% and decreased quality errors by 60%.

Firm's turnover decreased by 37% to 76 trillion TL in a market that decreased overall by 66%. Gross profits were up 9% in spite of the crisis.

Karsan raised its capital to 4.8 trillion TL in 2001.

Karsan was ranked 170th in the ISO 2001 "Top 500 Turkish Industrial Corporations" list.

Karsan obtained guarantees for yearly minimum vehicle production in December, 2002 and renewed its licenses for the Partner and J9.

In addition this new agreement lifted the ban on production of competitive models stipulated in previous agreements, enabling Karsan to pursue its strategy of becoming a sub-contract producer for various brands including Peugeot.

K1raça sold its 40% share in POPA to Peugeot and used that and the 7.25 USD million sale of the OSB factory to reduce Karsan credit debts to 18 million USD.

With huge efforts in production and sales in 2002 Karsan increased production 61% over the previous year to produce 12,039 vehicles and sell 12,217. Revenue from these sales was approximately 102 million USD.

Despite the fact that the Fiat Doblo placed increasing importance on the domestic market and the Ford Connect was introduced into the market , Karsan was able to keep its losses to a minimum and keep a 10.5% market share.

Karsan restyled Peugeot J9 according to customer demand and put the newly restyled J9 up for sale in June.

In 2002 Karsan exported 26 million USD worth of Peugeot Partners to Europe, J9 exports reached to 15 million USD, and 2.5 million USD in spare parts were exported for total export revenues of 43 million USD .
Karsan increased spare parts sales by 120% over the previous year for total revenues of 3.5 million USD.

Karsan provided 1 million USD worth of cathophorese coating services to Renault, Toyota and other automotive producers in 2002.

Karsan used more than half of its capacity in die cast production to export dies via Tofa in 2002 and created over 500,000 USD of added value.

Karsan will raise its capital to 17 trillion TL.

Karsan was ranked 116th in the ISO 2002 "500 Largest Industrial Companies in Turkey" list.

Immediately following the renewal of licensing agreements, technical preparations were completed in the short period of 5 months and production of the new Peugeot Partner's first version, van-type vehicle, started in May, the second version, the combivan, in June and the third version, passenger car, in October.

The fact that Karsan's production quality surpassed worldwide Peugeot Partner producing Peugeot-Citroen factories was certified by the congratulation letter sent by the Directorate of International Partnership and Production.

Efforts to improve J9 minibuses continued with changes in the drive train, increased maneuvering capacity, installation of hydraulic steering and increased comfort. As a result of these efforts, the market share of the improved J9, which was 28.5% in 2002, went up to 52% in 2003.

While sales of total vehicles were 1,097 for the first half of the year, sales in the third quarter alone were 2,611. Subsequently, sales were 1,330 vehicles in October, 1,351 in November and 1,843 in December. Total sales for the 12-month period reached to 8,312. Parallel to this, sales revenue which was 24 trillionTL for the first half of the year, was over 166 trillion TL at the end of the year.

Gross profit margin went up from 8% to 15% compared to previous years and Earnings Before Interest and Tax (EBIT) went from 1% to 10%.

In January the market value opened at 40 million USD and closed at 83 million USD .

New agreements were signed to bring the subcontracting strategy to life. The first contract was in July to convert Peugeot Boxer, Fiat Ducato and Citroen Jumper van-type commercial vehicles to minibuses for the European market. This project is expected to bring about 10 million Euros additional revenue and production is expected to start in the first quarter of 2004.

In September, an agreement was signed with Tofa for stamping Fiat Doblo's body parts and the project came to life at the end of the year. This project will bring 5 million Euros additional revenue to Karsan annually.

An agreement was signed with Autokraz in Ukraine to produce the J9. According to this, 1000 semi-finished J9's and their spare parts will be sold to Ukraine annually. The Ukraine project is expected to bring annual sales revenues of 15 million Euros.

An agreement was signed to provide stamping, rust protection and painting services for Renault military truck cabin production. Additionally, in case of producing Renault military trucks in Turkey, Karsan and Renault have mutually agreed to search for partnership possibilitie.

Also there are various studies on progress for producing new models for different brands within confidentialy agreement.

The ISO 9001 certificate, the 2000 version, was renewed and the ISO 14001 Environmental Management System certificate was also obtained.

The Oracle ERP system was instituted after 10 months of work.

A Performance Management System based on hard targets and competencies was put into effect.

Karsan was ranked 148th in the ISO 2003 "Top 500 Turkish Industrial Companies" list.

Further to the existing 3 Partner versions, new versions were added to the product range which was thus broadened. In this context, production was initiated for the 2.0 HDI Kombi Van version of the new Partner in June; Partner 1.9 D Comfort version in July; Partner Adventure version in November; and the most recent version of Partner 1.4 Kombi Van in December respectively.

While 4.642 units Peugeot Partner were sold in the whole of last year, this figure was realized as 12.358 units as per the end of 2004, with an increase of 266%.

2.8 Di ABS, the new version of J9 was launched in August. Increased engine power, safety support, and decreased fuel consumption feature the new vehicle. Thus the total J9 sales of 3.178 units in 2003 reached 4.644 units in 2004 with an increase of 46%.

Expressed in terms of figures, Karsan has sold a total of 8.231 vehicles in the whole of 2003, while achieving a 107% growth by selling 17.003 units in 2004. In line with this growth, the total turnover of USD 121 million in 2003 has been achieved as USD 281 million in 2004 with a 132 % increase.

Various agreements had been signed in 2003 under the sub-contract manufacturing strategy with the purpose of cooperating with other brands besides Peugeot. Karsan which has put its new strategy into implementation by producing dies for Fiat; and giving technical services through different channels to various manufacturers, e.g. Renault, Toyota, Ford, and Tofa, like e-coating, sheet metal stamping, etc., later focused on its sub-contract manufacturer identity by signing agreements for the transformation of Peugeot Boxer, Fiat Ducato and Citroen Jumper van type vehicles into minibuses for the European market; for the production of SKD J9 in Ukraine under the Karsan .brand; for the stamping of Fiat Doblo body parts at Karsan's press shop; for the production of Renault military truck cabins; and recently for cab painting with Ford Otosan. All these agreements which will bring an annual additional turnover of $ 30 million for Karsan have been realized in 2004.

Assembly of a new press line has been initiated on the basis of an increase in the press printing work performed for existing brands, and the positive course of negotiations made by other brands to which offers were submitted. The new line is planned to be commissioned in May 2005.

Activities with suppliers have been completed for the attainment of homologation norms in Algeria, the major export market for J9 minibuses; and export has been initiated again.

Countries like Egypt and Iran are considered concerning the projects with added value for the SKD/CKD production of the J9 vehicle at different locations. .Karsan continues negotiations with a probable partner in Iran and Egypt.

A significant increase of 11% over the year 2003 has been observed in employee satisfaction in 2004. Work groups have been formed with the participation of employees for continuous and enhanced satisfaction; and improvement action plans prepared by these groups have been put into process.

Work accomplishments targeted under the Performance Management System initiated in 2003 have been shared at all levels in the organizational hierarchy; performance results of employees graded and development plans prepared according to performance levels.

The ERP system was realized on January 5, 2005 after a 10 month work carried out by the Oracle and Innova Company, and the system was integrated to normal work life.

The Environment Management System has been documented with the ISO 14001 certificate received in January 2005.

Regarding Karsan's activities in 2005, the greatest emphasis has been on new projects and strategic issues.

The new J9 Premier, designed by the engineers of Karsan, was launched in June, demonstrating Karsan's competence in the area of vehicle build up. Hydraulic steering wheel, ABS, ASR, EBD, 2.8 Di Isuzu Engine, electric door, redesigned seats, and many other similar modern elements are standard in the new vehicle, with about 80% of its body panels changed. The vehicle's appearance and functionality are also completely renewed.

Activities have been completed during the same period for Partner Long Chassis which is the first vehicle in the history of the Turkish automotive industry designed and put into mass production by an automotive company for its principal licensor. The vehicle was launched at the commercial vehicle fair organized in November as a preparatory step for the mass production initiated at the end of December. Van and kombi versions will be also produced by Karsan and sold initially in the domestic market and later in export markets.

Various prototypes ranging from Pickup to CDV have been designed during the same period as proposed projects; technical and commercial activities concerning these projects are in progress.

A new stamping line was installed at Karsan in 2005, and the capacity was increased by 70%.

Significant progress was made in industrial sales activities and various new projects have been undertaken, e.g.
- Body parts stamping and welded parts production for Renault Trucks, PSA, and Fiat/Tofa_;
- Cataphoresis plating and dyeing of Renault Trucks, Ford Cargo and various tractor/work machine cabins; and
- Cataphoresis plating of parts for various manufacturers in Turkey and Europe.

A bank loan of 50 million Euros with a payback period of 6 years was received from Akbank on very convenient terms in September. This loan will be used for extending the terms of our current liabilities, to reduce our financial costs, and to finance prospective new projects.

Various "strategy" meetings were held in 2005 with the active participation of our Board Members; and strategic partnership activities were accelerated as the result of such meetings. Karsan is at present looking for the possibilities of cooperation with international automotive companies in technical, commercial and strategic matters; and making great efforts for accelerating the realization of the multibrand production strategy.

Karsan has sold 13,143 vehicles in 2005, with a turnover of YTL 250 million; and made a curtailment and adjustment in various balance sheet items, led by inventories.

Karsan has realized a market share of 8.1% with Peugeot Partner in the Minivan class; and of 14.3% with J9 in the minibus class in 2005. With the regulation promulgated in Algeria stipulating vehicles with 25 seats, Karsan began to look for new solutions / possibilities to increase exports.

In terms of financial results Karsan could not achieve its expectations in 2005 and has sustained a loss of YTL 46.9 million due to cancellation of the deferred taxes and adjustments made in some balance sheet items, on top of the decline of activities. Through the radical measures being taken in sales, costs and new projects, we hope and aim to avoid the repetition of such occurance in 2006 and the coming years.

As per the year end 2005, Karsan has restructured its organization to increase its efficiency, to adjust to the requirements of the current business volume, and to attain a less complicated organization in line with its strategic objectives, with a decrease from 707 to 631 in the number of blue-collar workers, and from 106 to 84 in the number of white-collar workers as of 02.01.2006.

The number of vehicles produced by Karsan under the Peugeot license has exceeded 150.000 units as of December 2005.

Karsan, quoted at Istanbul Stock Exchange (ISE) since 2000, was accepted into "ISE - 100 List" due to the increasing transaction volume.

Karsan was ranked Turkey's 82nd industrial organization in 2005 according to Istanbul Chamber Of Commerce rankings and has moved up 66 steps in one year.

As a conclusion, 2005 is a year which was rich in terms of new projects and operational satisfaction, but quite poor in terms of financial results, while we have contemplated, studied and almost concluded on major strategic issues for sure success in the coming years.

In 2006 Karsan focused on new projects and strategic issues as in 2005.

In 2006, 12.317 vehicles were sold, 3.357 of which is J9 and 8.960 of which is Partner.

By April 10th 2006, 0sotlar Grup undertook the distribution of J9 Premier Model. J9 Premier Model was re-released to the market along with this change and new face of the Karsan brand.

Taking of the distributorship of J9 Premier and locating 38 dealer points all over Turkey, 0sotlar increased the market share of J9 by 20% in monthly basis which was 14,3% in 2005.

Karsan sold 12.317 vehicles in 2006 along with the other industrial services and made 189.5 million $ turnover.

Karsan achieved a market share of 7.2% with Partner in the minivan class, and 17.7% with J9 Premier in minibus class.

The total production of vehicles surpassed 160.000 units by the end of 2006.

Karsan was ranked 137th in the ISO 2005 "Top 500 Turkish Industrial Companies" list.

Partner 1.6 HDI Kombi and Partner Platinum models were launched on June and November, respectfully.

Tractor cabin Production Agreement is signed with Türk Traktör and Uzel.

2007 will be a year in which Karsan will be realizing the projects they have been working on for a long time, laying the foundation of future projects, and position Karsan as an organization making profit on its own by achieving strategic cooperations .

While they are aiming at actualizing some of our new projects in process turn into real production figures in 2007, Karsan's forecast is that results of some projects will probably be reflected on the figures of 2008. Our basic operational target is to make maximum effort in cost reduction and active stock management, to increase the VAT per vehicle, and sell minimum 7.000 Partners, 5.000 J9s, and create a business volume of 45 trillions in order to take the best results in operational and financial tables. Besides, Karsan wants to realize at least two new projects in terms of their multi-branded production strategy, achieve an export connection for minimum 3.000 vehicles and fulfill Karsan's mission in the vehicle production field along with the industrial services they have been offering.

Therefore as well as the parameters such as market share and turnover, Karsan's primary objective is to actualize the projects they have been working on for some time, to conclude the practices on strategic matters, to develop their skills in design and engineering fields which they proved to be worthy in 2005 and 2006, to offer complete solutions on design, engineering and production as Karsan and K1raça to the customers and close the year with profit.

(source: Karsan)


LINKS
Karsan   Official site.
 
 
COMMENTS
Ali Mehrizy2534 days ago

Dear Sir,
I am Mehrizy and I have a Karsan J9 2007 in Iarn.
About there are 3000 this car in Iran But all of them are unused.
There is only one problem in this car IT IS POOR ENGINE.
Now we are going to develop it but we dont know abut engine technical specification. Please If you can sent me about it and gear too.

Yours faith fully,
mehrizi

omid sharifi1447 days ago

Dear Sir,
I am sharifi and I have a Karsan J9 2007 in Iarn.
About there are 3000 this car in Iran But all of them are unused.
There is only one problem in this car IT IS POOR ENGINE.
Now we are going to develop it but we dont know abut engine technical specification. Please If you can sent me about it and gear too.

Yours faith fully,
sharifi

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