Istanbul: Japan-based air conditioning firm Daikin plans to make a new investment of pound 100 million ($114.8 million) in Trkiye, positioning the country as a regional hub for its Middle East and Africa operations due to its production capacity and engineering infrastructure.
According to Anadolu Agency, Daikin entered the Turkish market after acquiring Airfel and has been enhancing its local production with specialized products. Hasan Onder, CEO of Daikin Trkiye, reported that the air conditioning sector has seen positive performance in 2024 due to global warming and inflation-induced demand, with the firm being 22% ahead of its targets for the first ten months of the year.
Onder explained that despite a slowdown in the European market, the air conditioning ownership rate in Trkiye is around 15-20%, indicating significant potential for growth. He projected that split air conditioner (AC) sales in Trkiye would reach 2.2 million units by year-end, although the market for 'combi' units is experiencing a decline due to the rising popularity of heat pumps and environmentally friendly alternatives.
He also highlighted that the market for central systems, including variable refrigerant volume conditioners (VRV) and applied chiller products, remains robust. Production of these products has already commenced in Trkiye, with some exports directed to the Middle East, the Gulf, and Africa regions.
Onder estimated that a substantial portion of products used in these regions would be exported from Trkiye over the next five years. He noted that Daikin Trkiye has been the leading AC firm in the country for seven consecutive years, closing last year with a turnover of $803.8 million, with $459.4 million attributed to exports.
"This year, we set an aggressive target of $503 million, and I believe we will close this year with a turnover of around $941.7 million, with $516.7 million from exports," he stated. Onder also mentioned the establishment of a split AC plant with a production capacity of 1 million units primarily exporting to Europe, highlighting Trkiye's logistical advantages and strategic geographical location as factors influencing the shift in production.
Daikin Trkiye has launched a new investment to develop an energy-efficient device under the Airfel brand for Africa and certain regions in Trkiye, expected to generate $100 million in exports. Onder emphasized that this production would operate under a different brand name, distinct from Daikin globally, and is an initiative of Daikin Trkiye.
Onder acknowledged the competition posed by countries wanting products manufactured locally but noted Trkiye's advantage in accessing highly skilled workers. He remarked that rising worker wages could affect investments but considered this a temporary challenge.
He revealed that the Airfel Vibe series, a low-cost split AC developed entirely through domestic production in Trkiye, would play a crucial role in both the domestic market and in exports. Additionally, Daikin Trkiye recently conducted a capital transfer of $102.1 million and employs approximately 2,000 workers, with plans to increase this number to 2,500 by 2030. The company aims to raise the percentage of women workers from the current 38% to 50% by the 2030s.
Onder concluded that the AC sector is expected to grow steadily over the next five years despite geopolitical risks, with Daikin's global turnover around $30 billion. He highlighted developments in the Middle East, with countries like Saudi Arabia and the United Arab Emirates focusing on their 2030 strategy plans, positioning Trkiye to meet regional demands through Daikin Trkiye's investments. Trkiye is considered advanced in human resources, systems, and factory technology.
"It appears Trkiye will be Daikin's regional export center, signifying new investments will come to Trkiye in the next five years, with at least $114.8 million to be invested in the country," Onder added.