Chinese suppliers move production to Europe, ushering in new rivalry for Turkish parts makers

Chinese auto parts makers are building factories, buying companies and signing joint ventures in Europe, changing the rules of the game for Turkey's automotive supplier industry. According to a report by AKALIN FINANCE titled "Competition in the Automotive Supplier Industry Is Being Rebuilt," the number of supplier companies in Europe with Chinese capital has passed 130. Spread across countries including France, Germany, the Netherlands and Hungary, these investments are eroding the proximity to Europe and short delivery times that Turkish suppliers have long relied on.

The stakes for Turkey are clear from its export figures. The Turkish automotive sector exported $41.5 billion worth of goods in 2025, with roughly 85 percent of those sales going to Europe. While close ties with European industry make the country attractive to investors, they also force Turkish companies to compete for the same customers as Chinese rivals producing in Europe.

Engineering is now the deciding factor

According to Alper Akalın, founding partner of AKALIN FINANCE, the situation should not be seen merely as a price war. Akalın stresses that the Chinese supplier is no longer a distant competitor, and that as the gap in distance and delivery closes, engineering capability, process know-how, customer relationships and investment strength will come to the fore.

The report also notes that the impact will not be the same for every company. Pressure is expected to be felt most acutely in standard, easily substitutable parts where price is decisive, while competition is projected to remain more limited for manufacturers that develop engineering-intensive products, take part in customers' design processes and hold proprietary technology.

Made in Europe draft could be a trump card

Another issue highlighted in the report is the European Commission's Made in Europe draft. The regulation would require 70 percent of the value of parts, excluding the battery, in electric vehicles covered by certain incentives and public procurement to be of EU origin. The current text allows inputs from countries with a customs union or free trade relationship with the EU to also count as EU origin, which could represent an opportunity for Turkey. However, the scope could change in the final version of the draft, or Turkey could be left out for some product groups.

The report sums up the options facing Turkish companies under three headings: defending their current position through investment in automation, efficiency and R&D; pursuing strategic partnerships or joint ventures to gain access to technology, customers or capital; and, for companies with strong balance sheets, growing through acquisitions in Europe. On the financing side, tools such as initial public offerings, private equity and private debt are also on the agenda. Akalın points out that terms become tougher once the need for capital turns urgent, saying companies should put their plans on the table while business is still going well.