Contents 4 Corporate Profile 5 Vision-Mision, Strategy 6 Milestones from Do uş Otomotiv s History 8 Do uş Otomotiv Board of Directors 9 Do uş Otomotiv Executive Board 10 Chairman s Message 12 CEO s Message 14 Support Functions in Doğuş Otomotiv 15 Turkish Economy and Automotive Sector by Numbers 16 Do uş Otomotiv in 2008 20 Do uş Group 22 Volkswagen Passenger Cars 24 Volkswagen Commercial Vehicles 26 Audi 28 Porsche 30 Bentley & Lamborghini & Bugatti 32 SEAT 34 Skoda 36 Scania 38 Krone 40 Meiller 42 Volkswagen & Scania Industrial and Marine Engines 44 Do uş Oto 46 DOD 48 vdf Group 50 TÜVTURK 52 LeasePlan 54 Spare Parts & Logistics Services 56 Do uş Insurance Agency 57 Corporate Governance Principles Compliance Report 68 Information on the Capital Structure and Stocks 74 Dividend Distribution Proposal 75 Dividend Distribution Table 76 Audit Report 77 Consolidated Financial Statements At 31 December 2008 Together With Independent Auditor s Report
Corporate Profile Structuring its business plans with the vision of providing innovative service beyond expectations, Doğuş Otomotiv characterizes having a productive and profitable presence in every stage of the automotive value chain as the fundamental basis of its corporate strategy. Being Turkey s leading automotive importer and one of the biggest automotive distributors, Doğuş Otomotiv represents 15 international brands in the segments consisting of: Passenger cars Light commercial vehicles Heavy commercial vehicles Industrial and marine engines Cooling systems Doğuş Otomotiv supplies the Turkish automotives market with nearly 80 models of Volkswagen Passenger Cars, Volkswagen Commercial Vehicles, Audi, Porsche, Bentley, Lamborghini, Bugatti, SEAT, Skoda, Scania, Krone, and Meiller. Besides the company is the representative of VW Marine and Scania Engines in the industrial and marine engine markets and Thermo King in the cooling systems industry in Turkey. Providing sales, after-sales, and spare parts services for all the brands that the Company represents through a service network with a truly national reach, Doğuş Otomotiv is the only company in the world that brings every Volkswagen Group brands together under a single roof. Having one of the widest web of authorized dealers and service stations in Turkey with its more than 500 service stations, Doğuş Otomotiv provides an unconditional customer satisfaction oriented service. Structuring its growth strategy based upon the principle of having a productive and profitable presence in every link of the automotive value chain, Doğuş Otomotiv operates in supplementary services as retailing, automotive financing, spare parts and accessories, logistics and customer services, used car dealership, fleet management and leasing, vehicle inspections, and insurance besides operating in the fields of imports and distributorship. Doğuş Otomotiv has taken its first steps in the field of production, which it regards as an essential activity in the automotive value chain. After the inauguration of Meiller Doğuş Damper Factory in 2008 in collaboration with the world s leading damper brand Meiller, it has carried the groundbreaking ceremony of Krone Doğuş Trailer Factory. Turkey s first foreign-partnered trailer production plant, Krone Doğuş Trailer Factory is projected to be due of 2009 s end. Carrying its collaboration with VW AG in to an international platform, Doğuş Otomotiv is preparing to open an authorized Porsche dealer and service station in Lausanne, Switzerland in the second half of 2009. In line with this aim, a groundbreaking ceremony for this projected service centre named as D-Auto Suisse SA has been actualized. Doğuş Otomotiv, with its solid standing among the highly respected brands in the country, has adopted a service philosophy that is focused on 4
Doğuş Otomotiv Annual Report 2008 high quality service and customer satisfaction, has operationalized a perpetual period of inventive and dynamic service process. Turkey s leading automotive distributor Doğuş Otomotiv, is ranked 29 th in the Capital 500 list, and 2 nd in Fortune 500 list in 2008. Additionally in Turkey s Top Rated Companies survey, carried by Capital, it is ranked among the top three of the automotive sector. Doğuş Otomotiv is also among the largest 25 companies in ISE 100. Doğuş Otomotiv develops and undertakes pioneering and exemplary projects within the context of its philosophy of corporate social responsibility. All of its social responsibility projects that are united under the overall heading of Traffic is Life are expressly aiming at raising awareness, consciousness and feeling of responsibility of the nation but especially the young generation in Turkey. Doğuş Otomotiv is member of the Doğuş Group, who operates in financial services, automotive, construction, media, tourism, real estate, and energy. Doğuş Otomotiv shares were offered to public in 2004 and are traded under ticker symbol DOAS.IS in İstanbul Stock Exchange (ISE). Our vision To provide innovative service beyond expectations. Our mission Doğuş Otomotiv is an automotive company which: Operates on the principle of customer focus Knows its sector very well Is aware of its stakeholders existing expectations and also recognizes new ones that it seeks to satisfy at the highest level possible Possesses a creative workforce and makes good use of technology to that end Is trustworthy Seeks to deliver productive and profitable service in every aspect of the automotive value chain. Our strategy Doğuş Otomotiv s corporate strategy is set on three basic tenets: Be sizable, be close, be innovative. Be sizable : Doğuş Otomotiv pursues growth through systematic, productive, and profitable activities in the Turkish and international markets in which it provides service and it builds up its own human resources in keeping with such growth. Be close : Doğuş Otomotiv strives to understand the expectations of its customers and of all its other stakeholders and to exceed those expectations in the fastest and most effective way possible. Be innovative : Recognizing that the only way to distinguish itself is by being original, Doğuş Otomotiv continuously seeks out competitive advantages through innovations that take an all-embracing approach to product development, customer service, and business concepts and it takes measures to conduct its activities more efficiently, more quickly, and more economically by means of process enhancement and effective teamwork. 5
Milestones from Doğuş Otomotiv s History Pursuing its growth-focused strategy through pioneering and innovative solutions, Do uş Otomotiv advances confidently and resolutely into the future. Total Car Park 650,000 Scania Industrial and Marine Engines distributorship contract signed Scania distributorship agreement Porsche distributorship agreement Joint venture on consumer financing with Volkswagen Financial Services AG Krone distributorship agreement Volkswagen and Audi distributorship agreement Customs duties on vehicles imported from the EU abolished SEAT distributorship agreement and partnership with Yüce Auto Skoda distributorship agreement and partnership with Yüce Auto Used car operations established Assembling Operations Merger of automotive companies under Doğuş Otomotiv Distributorship contract with Volkswagen AG 0.5% Market Share 5.8% Market Share 1994 1995 1996 1997 1999 2000 2001 2003 6
Doğuş Otomotiv Annual Report 2008 Meiller distributorship and coproduction agreement Krone - Doğuş coproduction agreement Thermo King distributorship agreement Doğuş Otomotiv acquired 100% of SEAT TÜVTURK established by the cooperation of AKFEN and TÜV SÜD Krone Doğuş Trailer Plant groundbreaking ceremony Lamborghini letter of intent Porsche dealership contract in Lausanne Groundbreaking ceremony of Porsche deailership in Lausanne Bentley letter of intent Lamborghini distributorship agreement Opening Meiller Doğuş Tipper Plant Volkswagen Marine Engines agreement Opening of OtoMotion Bugatti letter of intent Thermo King letter of intent Second dividend paid Production agreement with Krone Oto-Fix Exspres Service established LeasePlan partnership for fleet services Establishing Porsche Lausanne D-Auto Suisse SA Initial Public Offering of Doğuş Otomotiv First dividend paid 11.4% Market Share 2008 2004 2005 2006 2007 7
Do uş Otomotiv Board of Directors Aclan Acar Chairman Aclan Acar is a graduate of the Ankara Faculty of Economic and Commercial Sciences and holds a master s degree in banking and insurance from the same school, and a master s degree in economics from Vanderbilt University in the United States. Mr. Acar joined the Do uş Group in 1990 and has been chairman of the boards of directors of Do uş Otomotiv and of Do uş Oto Pazarlama since January 2006. Süleyman Kadir Tu tekin Vice Chairman Süleyman Kadir Tuğtekin is a graduate of Boğaziçi University (Department of Mechanical Engineering) in 1973 and holds a master s degree from University of Manchester Institute of Science and Technology in UK. He joined the Doğuş Group in 1986 and has served in a number of positions in the Group including sector leadership. Mr. Tuğtekin is a board member acting as Vice President in Doğuş Otomotiv and also a member of Doğuş Oto and member of Audit Comitee. H. Murat Aka Member of the Board of Directors H. Murat Aka is a graduate of Middle East Technical University (Department of Business Administration) and holds a master s degree in business administration from Bo aziçi University. He joined the Do uş Group in 1987 and currently serves as board member in Do uş Otomotiv and Doğuş Oto and Head of Audit Committee. E. Ali Bilalo lu Member of the Board of Directors E. Ali Bilaloğlu is a graduate of Die Technische Universitat Berlin Engineering Faculty and holds master s degree from the same faculty. He joined Doğuş Group in 2000. Mr. Bilaloğlu chairs the Executive Board of Doğuş Otomotiv and also board member in Doğuş Otomotiv and Doğuş Oto. Özlem Denizmen Kocatepe Member of the Board of Directors Özlem Denizmen is a graduate of Cornell University (Department of Industrial Management) and holds a master s degree in business administration from Massachusetts Institute of Technology. Özlem Denizmen has served in a number of positions in the Group since 2000 and she is a board member in Doğuş Otomotiv and Doğuş Oto. Hasan Hüsnü Güzelöz Member of the Board of Directors Hasan Hüsnü Güzelöz, board member of Doğuş Otomotiv and Doğuş Oto, is a graduate of İstanbul University (Faculty of Law) in 1986. He joined Doğuş Group in 1995. Mr. Güzelöz currently serves as board member and legal advisor in Group Companies. Cem Yurtbay Member of the Board of Directors Cem Yurtbay is a graduate of the Academy of Commercial Sciences (Department of Business Administration). He joined Do uş Otomotiv in 1998. Mr. Yurtbay is a board member in Doğuş Otomotiv and Doğuş Oto. 8
Doğuş Otomotiv Annual Report 2008 Do uş Otomotiv Executive Board E. Ali Bilalo lu Chief Executive Officer E. Ali Bilaloğlu is a graduate of Die Technische Universitat Berlin Engineering Faculty and holds master s degree from the same faculty. He joined Doğuş Group in 2000. Mr. Bilaloğlu chairs the Executive Board of Doğuş Otomotiv and also board member in Doğuş Otomotiv and Doğuş Oto. Anıl Gürsoy Executive Board Member Giovanni Gino Bottaro Executive Board Member İlhami Eksin Executive Board Member Mustafa Karabayır Executive Board Member Tolga Senyücel Executive Board Member Vedat Uygun Executive Board Member Deniz Güven Executive Board Member Dr. Berk Çağdaş Executive Board Member M. Ali Barut Executive Board Member Kerem Galip Güven Executive Board Member 9
Chairman s Message Aclan Acar Chairman of the Board of Directors Doğuş Otomotiv off to a solid start in 2009 through which it is about to celebrate its 15 th anniversary in the make of another operational year where the organizational goals were successfully met. We, as Doğuş Otomotiv endeavour in conformity with our vision to invest in the future and uncompromised the principle on which we provide quality service. We possess a long-term vision and think in comprehensive manner beyond immediate, daily or temporary instances and treat all our activities as such. The year 2008, proving that our approach has been appropriate, was the one, which progressed in parallel with our expectations, and we hence met the targets. We have experienced the benefits of being farsighted, efficient and lean, and have decisively implemented our plans. We have carefully analyzed the implications of the global economic turmoil, taken measures to maintain our processes more efficiently, made plans associated with delicate and detailed thinking and performed investments that are drawn up of prudent optimism. In 2008, we utilized the early signals of the pervasive global financial crisis and rigorously managed the implications. The financial crisis, of which the symptoms have been sensed for a long time in developed economies, transformed the growth into negative rates in 2008 that have been likely to create a pessimistic outlook as a result of adverse economic and social consequences. The earliest signals of the crisis came into existence in 2007 when the loan contracts in the US had been breached. The financial turmoil in the last quarter of 2008 brought the global financial institutions operating in the US to the brink of bankruptcy has turned out to be a global one rapidly crossing borders due to the magnitude of globalization. All the stock markets in the world have tremendously shrunk and administrations have passed a number of aid bills to the extent possible where the damages are considered to be the least. The reflections of the negative panorama thereafter set in just as much as in other parts of the world. The economic growth, which steadily continued in former years significantly, slowed down in 2008. The last quarter s economic contraction has been particularly serious. There is no doubt that these developments have greatly influenced the automotive industry which is closely linked to economic growth and welfare. Auto sales have significantly declined all over the world and even sizeable brands have had to take measures because of contraction in the industry. Doğuş Otomotiv, whose turnover is mostly constituted by distributorship activities, operated in line with the market dynamics and reached the targeted sales and volume figures in 2008. In an attempt to retain its market share, the firm planned sales and operated 10
Doğuş Otomotiv Annual Report 2008 accordingly in 2008. Doğuş Otomotiv is ranked 3 rd in the overall local automotive industry following the two major producers taking the lead with turnover and sales volume. Our greatest organizational success in 2008 was likely to foresee the crisis approaching, take effective measures and rapidly adapt ourselves to harsh economic conditions. Increasing tendencies of excess consumption and disturbance of supply-demand equilibrium triggers an important part of the world s economic problems. In other words, overconsumption has reached a level the world economy and existing resources cannot bear. Today, the world is facing a structural problem resulting from inappropriate and inefficient use of scarce resources. Though consumption is a natural need, in environments where it can turn into wastage Doğuş Otomotiv took many concrete steps throughout 2008 to diligently utilize own resources, operate more efficiently and become innovative. The lean management philosophy, upon which we have placed great emphasis since 2006 and that we wish to integrate into our corporate culture, is an example of those steps. Within the learning organizational structure, such improvement activities that enable us to operate more efficiently, rapidly and at relatively lower costs already started to display positive outcomes. The reflection of cost reductions in more competitive final prices has increased both the profitability and customer satisfaction in recent years. As laid with the same philosophy, moving all our brands and departments in 2008 to the headquarters located in Gebze, Şekerpınar has considerably benefited us to reduce costs and increase motivation and efficiency. Another factor, which will let us proceed over the others within the industry, is the service and product diversity and the strategy to exist in every segment of the automotive value chain. Today, Doğuş Otomotiv serves in a variety of fields ranging from retail and commercial fleet sales to financing and insurance, from maintenance to vehicle inspection stations that encompass a long process within which before & after sales functions are uniquely established. We correspond to needs of automobile fans in Turkey with Doğuş quality. The manufacturing facilities, the investment decisions of which were made in 2006 and have been conducted to increase our activities in variety in a short time tend to strengthen our position. Having started with a zero PPM in 2008, Meiller Doğuş Damper Ltd. has had a striking performance. Our investment in Izmir, so as to establish Turkey s first foreign-partnered trailer production facility with Krone, a pioneering brand in Europe, is on track as planned. Doğuş Otomotiv, from manufacturing to financing, will continue to conform to its strategy that maintains presence in the automotive value chain and will eventually become a value generator in coming years. Our company, just like a teenager challenged since childhood, has grown and become a stronger player in Turkish automotive market over the last 15 years and today represents the most prestigious brands of the world. Openness to improvements and growth potential embedded in the Turkish automotive market provide Doğuş Otomotiv with ample opportunities to grow, improve and raise the bar to the highest standards. Our company will go on in the coming periods rendering continuous, efficient, close and lean services by virtue of completion of its investments and measures taken under whatever circumstances. Right management of predictions to avoid panicky behaviour is the most important way to overcome mistrust led by the current global economic crisis. In this period we will ensure convenient circumvention of barriers by focusing on costs and risk management as well as on precautions taken for increased operational efficiency. Doğuş Otomotiv, in every field it operates, will continue to create distinction by offering innovative services that stretch beyond its customers expectations. The number one element, which lies beneath this selfconfidence, is our employees that we think is the core resource. Doğuş Otomotiv, which is considered to be remarkable through its customer portfolio not only with the product quality but also with the attributes the employees strives to secure its market share permanently by investing human resources. As the creators of all our accomplishments so far and prospective owners of the likelihood of our success in 2009, I personally greet our shareholders and the Doğuş Otomotiv family. I would like to take the opportunity to thank you all for your contributions and dedicated efforts, which already did, and I strongly believe will happen. Respectfully yours, Aclan Acar Chairman of the Board of Directors 11
CEO s Message E. Ali Bilalo lu Chief Executive Officer Executing its activities within the scope of rendering inventive services beyond expectations, Doğuş Otomotiv is an exemplary model with its customer-oriented approach, successful human resources management, inventive marketing techniques and corporate culture. Within this framework, it has been selected as the second most appreciated brand in a survey carried in order to determine the Most Appreciated of the sector in Turkey, and it has continued its investments in line with its objectives without interruption. 2008 has been a year, which we as Doğuş Otomotiv have concluded in line with the market conditions and also in which we have been focusing on actualization of our investments, cost management and improvement of human resources management. We have prospectively shaped this period, which is dominated by world scale and national economic uncertainties, by virtue of effective financial management and by taking necessary measures when needed. We have continued with our effort to create value in 2008 by means of our international brands reaching to a total of 15 and with over 80 models that are put forward to the appreciation of our customers, and perfect quality network of services that are dominant around the country. Today, at this level where we have reached by growing steadily since our inception, we are a leading automotive importer and the biggest automotive distributor that operates in every activity of automotive value chain that range from retail sales to automotive financing, from used car dealership to after sales services. However all these are not adequate for us; we work with the passionate belief that things can get better. We have targeted the future with the actualized investments in 2008. We have realized the inception of Meiller Doğuş Tipper Factory in June that conferred a manufacturer s and an industrialist s identity on us. Our factory located in Sakarya started its operations with an investment around 10 million. Subsequent to that we have laid the foundations of a 35 million worth investment, Krone Doğuş Trailer Factory in Tire, Izmir that has the biggest trailer production capacity in Turkey. Krone Doğuş Trailer Factory, first foreignpartnered trailer production plant in Turkey, will at the same time hold the title to be the unique trailer producer producing in desired colours. Furthermore, we have laid the foundations of D-Auto Suisse SA in Lausanne, Switzerland, which is due of mid-2009. With its $15 million sized investment, D-Auto Suisse SA, a Porsche sales and services center, will spread around on an area of 5 thousand square meters. In the same year a distributorship agreement, comprising sales and services, has been signed with the world s leading mobile heat control systems brand Thermo King, as a result of which the number of brands represented has reached to 15. And in the last quarter of the year we have opened Doğuş Oto Etimesgut, an investment worth of TRY42 million in retails area, Doğuş Oto s second investment in Ankara. We have started to experience the effects of global financial crisis in our country as well from mid-2008, 12
Doğuş Otomotiv Annual Report 2008 which we have concluded by planning our future and continuous investments. Numerous long-established and strong companies had to put an end to their operations around the world. Prominent representatives of the real sector have started to experience serious financial difficulties. Constriction has left its mark on the automotive sector, the locomotive of economies, in our country, as it was the case around the world. The total automotive market has constricted by 17% compared to the previous year. This constriction has reached to a level of 55% in the last quarter of the year. Exchange rates have adversely affected the sector by fluctuating all along the year. One of the key factors that distinguish strong and successful companies from others is their ability of overcoming difficult times without facing major troubles by virtue of their strong financial structure, managerial skills and values. Ability of accomplishing goals in aggravated conjuncture where the desire of development and progress faces with various hindrances is evidence that the previous performance of a company is not accidental. As Doğuş Otomotiv, we have taken measures against the constriction in the sector; have revised our goals by focusing on effective cost management. While trying to minimize the negative effects of crisis, we have observed the global restructuring opportunities in our sector. We have focused on re-shaping all our business processes to be more productive and effective by integrating Lean Management philosophy throughout the company. As a result, we have acquired a total turnover of TRY 2,144 million in 2008 by a sales number of 55,307 and have sustained our 11% market share. The results procured by our group and the brands it represents are a source of pride. Forwhy we have accomplished our targets during this global financial turmoil; have actualized our investments. Serving a wide range of customer segment, Volkswagen is continuously increasing its reputation and market share in Turkey with Doğuş Otomotiv, as is the case around the world. Audi brand has performed a world-class accomplishment as of its sales in Turkey by concluding 2008 with the highest number of sales for the first time in luxury segment. Seat brand has continued its progress rapidly by enlarging its range of products and increasing the product quality with the new models it has launched. Bentley, the newcomer of luxury segment in Turkey has continued to increase its customer appreciation. Porsche has continued its progress by riveting its leadership of premium sports car segment with its renewed sports models; Lamborghini has been the only upper-luxury segment member that has enlarged its market share by accomplishing to sell 9 vehicles. Heavy commercial segment members Scania, Krone and Meiller have continued their growth. While Scania becoming the segment leader for the 6 th consecutive time in the16 tons and above imported heavy commercial segment, Krone has preserved its position despite the constricting market. As for Meiller, it has increased its market share by 162% compared to the previous year. Doğuş Otomotiv has successfully concluded 2008 in all vehicle segments where it holds the title of distributorship. We are aiming at continuing to be the pioneers of the after sales services as is with the sales services. Having a vehicle park of over 650,000 in Turkey encumbers us with important responsibility in terms of the continuation of our investments in after sales services and rendering services with uncompromising quality. The biggest support that we have in this scope is our authorized dealers and service providers who have genuinely adopted the philosophy rendering superior service. Doğuş Otomotiv s sales and service stations successfully represent our company in their designated areas; providing solutions to its customers under the same roof from automotive financing to sales and from after sales services to insurance. As a reflection of our customer oriented management philosophy, we successfully carry on our dominating and leading role in After Sales Services field with our more than 500 service stations. Turkish Quality Association, who has chosen Doğuş Otomotiv Volkswagen as the best in 2008 in Turkey for the 3 rd consecutive time, has again approved the dexterity we have accomplished in this field. Likewise, our authorized dealer Şenyıldız Otomotiv s ranking 3 rd in overall classification and 1 st in technical classification in the world finals of the 4 th Twin Cup organized by Audi AG to select the most successful authorized services, deservedly did great credit to us. Crisis is cyclical. Whereas transforming customer satisfaction in to a substantial occurrence rather from a verbal target is possible with a long-term and perseverant effort that helps incorporating certain values with corporate values. Today, as a reward of a 15-year effort, Doğuş Otomotiv has accomplished to become one of the leading and exemplary establishments of Turkish automotive sector in every respect. The vertex it has reached is an indication of how Doğuş Otomotiv locks on its target regardless of the conjuncture it faces. VW AG, the leading automotive company of the European market; our producer-partner, motivator and competent shareholder that incorporates numerous brands, each of which is more valuable than the other; provides us with major contribution to continue with our activities at best. We provide our customers with service beyond their expectations by the help of our proficient, target oriented and resolute human resources; and with our widespread web of authorized dealers, who are comprised of the most distinguished businessmen of their regions around the country. I wholeheartedly believe that we will continue to operate in accordance with our targets and be cited as an example under all circumstances by virtue of the strength we acquire from our shareholders and the vision we derive from our longestablished corporate culture. Respectfully yours, E. Ali Bilaloğlu Chief Executive Officer 13
Support Functions in Doğuş Otomotiv Deniz Güven Chief Communications Officer We as Doğuş Otomotiv believe that our structure that incorporates all links of the automotive value chain has given us distinctiveness in our sector. By virtue of this, our customers receive service at the highest standards of quality available in the sector and we stand by our customers every step of the way. This characteristic of Doğuş Otomotiv brings along important responsibilities: continuous improvement, sustainability, efficiency and closeness All of which are directing our minds, operations and communications activities as indispensible concepts. As a company that maintains a presence in all of the sector s activity and service areas, we also have an extensive network of stakeholders. We believe that the value-added relationships with our stakeholders further reinforce our company s strength and we operate with the comprehension of corporate citizenship and with our awareness of being a part of the society. We regard each and every one of our stakeholders as our customers. We enter into long-term, sincere relationships that are continuously being built upon. In compliance with this approach, during 2008 we focused on perfecting our customer relations through proactive CRM, getting closer to our internal customers, and developing synergies throughout the automotive group with our brands. Dr. Berk Çağdaş Chief Financial Officer 2008 was busy year from the standpoint of financial fluctuations in international markets and their impacts. In spite of all these fluctuations, we have successfully completed the year of 2008 in terms of our operations. In keeping with our strategy we continued to add still more strength to our automotive market activities in 2008. Especially in the second half of 2008, with the effects of the downturn in the automotive industry, we have focused on lean operational management and have therefore increased our efficiency. Internal key performance indicators have been restructured according to macro economic indicators and market conditions. Our risk management policy has been tightened and henceforth strengthened our structure against financial and market risks. Liquidity management, cash flow management were our main focus within this year. In 2008, TÜVTURK vehicle inspection stations have been started servicing. Also, we start the production of Meiller tippers and have gained our manufacturer identity through our affiliate Meiller Doğuş Damper San.Tic.A.Ş. By including the sales and after sales of the world leader cooling control system Thermo King, we have included the 15 th brand under our umbrella. Our first European service point Lozan Porsche dealership will feature its sales and after sales service in the last quarter of 2009. Doğuş Oto Etimesgut is the latest project in our value chain and we will strengthen this chain with a new investment project with Bursa Doğuş Oto. Despite all these developments and also considering the effects of the global financial crisis, the central financing units successfully achieved all their targets, remained closely aligned with our strategies and added further strength to our group vision. M. Ali Barut Chief Operations Officer Human Resources - As Human Resources Department our main objective in 2008 was, to establish basic Human Resources processes infrastructure in our company. According to this goal, we analyzed all business processes of our company in terms of responsible persons, durations, and frequencies for each unit. Due to this purpose we have determined the norm staff according to the results of this analysis and comparison outputs of local/international companies. We have conducted job evaluation studies for each position and created the Job Family and Job Grades accordingly, as a result of these efforts, we have revised our compensation and rewarding systems. We revised and finished all workshops for our Performance Management System, which evaluate performance levels according to ratio of employee s realized targets and competencies that has defined as numerical. We effectuate this system in 2008. By improving current human resources portal, enabled employees directly retrieving information and reports about themselves and their teams in different levels from the system. We have developed Talent-Knowledge and Skill exams, specific to our company, in order to recruit new candidates accurately and we have implemented e-orientation program in order to ensure that our newly recruited employees have sufficient information about the company and business processes. IT - As IT Department, we have accomplished an online integration based on the Mernis Turkish Citizens Identity Number (TCKN) system. We have managed to build a system that updates, corrects our customer records from the government s database on a continuous basis and locks them up against arbitrary modifications from users. We have put serious effort in data cleaning. We have taken innovative actions on improving the overall user experience in Turkuaz by creating a more responsive, good-looking, modern working environment with much better usability in mind. Business Project Management - As Business Process Management Unit, documenting all the work definitions of the company have been guided which was followed by procedure studies completed for prioritized processes to support institutionalization. 14
Doğuş Otomotiv Annual Report 2008 Turkish Economy and Automotive Sector in Numbers Turkish economy, performing a steady growth rate during the last seven years, has underperformed in 2008 and was able to grow only 1.1% in fixed prices compared to the previous year as a result of its decreased trade volume in goods and services and slowed inflow of capital. A decreasing sales trend was observed along the year in the automotive sales in coherence with the general economic indicators. The total of passenger cars and light commercial vehicles market was recorded as 469,168 for the January-December 2008 period. GNP Growth Rate (Fixed Prices) % CPI Inflation % Exports (USD billion) Imports (USD billion) 2006 2007 2008 2006 2007 2008 2006 2007 2008 2006 2007 2008 1.1 6.1 4.6 9.7 8.4 10.1 86 107 132 140 170 202 Source: Turkish Statistical Institute Total Wholesales (Unit) 2006 2007 2008 Passenger Cars 371.325 359.416 307.214 Light Commercial Vehicles 248.159 232.971 188.954 Heavy Commercial Vehicles 33.393 26.383 20.227 Trailer 5.450 5.622 4.161 Source: ADA (Automotive Distributors Association) and TAID (Commercial Vehicles Importers Association) 15
Doğuş Otomotiv in 2008 Doğuş Otomotiv has successfully concluded 2008 by accomplishing the majority of its objectives despite the tough market conditions shaped by the economic turmoil on a global scale. Doğuş Otomotiv s products and services that are reflected to its customers on a wide range of spectrum have helped it to gain a competitive edge among its rivals. Doğuş Otomotiv continues to hold its leading position in the market firmly with its wide range of products and services ranging from financing loans to sales and from after sales services to used car dealership. The leader of imported car market with a sales figure of 55,307 Representative of the world s strongest 15 automotive brands 80 different models Selling 13,124 used cars Nearly 2,000 employees More than 500 customer contact points Approximately 800,000 customers A total car park of 650,000 435,000 m² of closed sales and service area Receipt of nearly 800,000 cars in service stations Value Chain 2008 Production Import and Distribution Retail Replacement Parts and After Sales Services (TR) Used Vehicle Sales Finance Other Investments Krone* Quick Fix to all Brands Used Car Sales Automotive Financing* TÜVTURK* Meiller* ** Do uş Otomotiv Independent Authorized Dealers Insurance* (Switzerland) LeasePlan* Insurance* Yüce Oto* Centre of Logistics * Subsidiaries **Represantative Offices 16
Doğuş Otomotiv Annual Report 2008 Total Vehicle Wholesales (Unit) 2006 2007 2008 Passenger Cars 42.741 40.966 33.742 Volkswagen 27.619 26.110 21.485 Audi 4.956 5.898 5.647 Porsche 220 218 157 Bentley 0 19 12 Lamborghini 0 3 9 SEAT 4.572 3.426 2.874 Skoda 5.374 5.292 3.558 Light Commercial Vehicles 32.062 27.669 18.969 Volkswagen 31.947 27.669 18.969 Skoda 115 0 Heavy Commercial Vehicles 2.908 3.055 2.596 Scania 2.099 2.174 1.894 Krone 809 811 518 Meiller 0 70 184 TOTAL 77.711 71.690 55.307 A successful year against all odds Despite the circumstances that have primarily affected the automotive sector adversely in Turkey as it has been in the world, notably since the last quarter of 2008, Doğuş Otomotiv has accomplished the majority of its 2008 objectives with a sales of 55,307 vehicles by preserving its market share at 11%. Doğuş Otomotiv has recorded a business profit of TRY 23 million in 2008 through generating a turnover of TRY 2,144 million. During the same year the total assets has reached to TRY 1,444 million and the investments has reached to a total of TRY 60 million. Production investments are being finalized Doğuş Otomotiv is one step closer to its goal of existing in every link of automotive value chain by virtue of spreading its products and services to a wider spectrum with its investments in production in 2008. The opening of Meiller-Doğuş Damper Factory has been accomplished in Sakarya in 20 June 2008 with the partnership of the world s leading damper producer Meiller, whose distributor in Turkey is already Doğuş Otomotiv. The production plant, which was accomplished with an investment of 10 million is Doğuş Otomotiv s first, has made our company with proud by achieving its first production with a zero PPM. The foundations of Krone Trailer Factory, which was planned to be Doğuş Otomotiv s second production plant, has been laid in Tire, İzmir in 17 July 2008. The Krone Doğuş Trailer Factory whose foundations have been laid with the collaboration of Europe s second biggest trailer producer Krone, whose distributor in Turkey is already Doğuş Otomotiv since 2003, with an investment of 35 million is projected to be due in 2009. Turkey s first foreign-partnered trailer production plant, Krone- Doğuş Trailer Factory will at the same time be the first trailer production center in Europe, which will produce in requested colours. Our new service points Despite the economic conjuncture of 2008, aside it s continuing production investments; Doğuş Otomotiv has carried its strong position a step further in the Turkish automotive sector by keeping up with the opening of new sales and service points. Opening of Doğuş Oto Etimesgut service point, established in Ankara with an investment of TRY 42 million, has been a morale booster for our company despite the 17
economic crisis and the constriction in the automotive sector. Doğuş Oto s total servicing area has reached to a total of 175,000 m² with the participation of 22,000 m² premises comprising VW passenger cars and VW commercial vehicles sales and services, Audi services and DOD s used car dealership premises. Concurrently, Başaran with its VW and SEAT showrooms and service facilities in Fethiye, Opat with its VW showroom in Tarsus, Gencay and Koluman with its VW services in Batman and Gaziantep respectively, Aydoğanlar with its VW and Audi services in Ankara are newly joined locations of the Doğuş Otomotiv family. Scania, the leader brand of the heavy commercial vehicle import market together with Krone trailer performed the inagurations of two new sales and service dealers in Bolu with Çarıkçı and in Hadımköy with Flash Otomotiv. Scania has also enlarged the service points in Turkey with Sağ Otomotiv Scania workshop in Hatay. Additionally, KCR Otomotiv s Meiller showroom and service station in Denizli are rendering services in compliance with the world standards on behalf of Doğuş Otomotiv. Another investment that has marked its seal on 2008 is the Authorized Porsche Dealer and Service centre in Lausanne whose foundations have been laid. The service point D-Auto Suisse SA, which will be established on an area of 5,000 m² with an investment of $12 million, and whose 99 % shares are owned by Doğuş Otomotiv forms another link of our company s collaboration with Porsche AG that exceeds over a decade. Porsche s Lausanne dealership is projected to be in operation by mid-2009. We have widened our range of products Keeping more than 80 models in its stocks that appeal to every type of budget and taste, Doğuş Otomotiv holds its unique position of being the only automotive company that incorporates the widest range of products under one same roof and hereby rivets its practice of existing in every line of automotive value chain and responding to the needs and wants of its customers to the full. Doğuş Otomotiv, who accommodates world s most prestigious automobile brands, has realized numerous launches in 2008. Besides the newly launched Golf VI, Tiguan, Scirocco and Passat CC by VW in Turkish market, Audi A4 (B8), which is denominated as The Car of the Future and The New Seat Ibiza are a few of the models that are presented to the appreciation of the customers in 2008. Doğuş Otomotiv, who has concluded the year successfully by growing its sales and enlarging its market share in the higher-end luxury segment, has made an indelible impression by virtue of the accomplished activities. Lamborghini s new Gallardo LP 560 has been launched in September and its showroom was put in to service with an exclusive party in October. Bugatti s test-drive vehicle, which was brought in the last quarter of the year, has been welcomed avidly. Thermo King, the world s leading temperature control systems producer brand that has started its operations in sales and services areas in Turkey with the Doğuş Otomotiv s distributorship in August 2008, has also completed its corporate and organizational structuring in the same year. Rendering services with its 9 authorized dealership and service points settled in potential promising regions like İzmir, Ankara, Samsun, Antalya, Antakya, Adana and Mersin in addition to the ones located in İstanbul s Asian and European sides, the brand s sales target in 2009 is 300 vehicles with an aimed market share of 30 %. Thermo King branded products are in compliance with the CE and ATP standards and are expected to enlarge their sales volume by 20 % with the compliance to the EU standards becoming a current issue. It has been a vintage year for our brands Despite the economic conjuncture and the constriction in the market, our brands have accomplished the majority of their sales objectives. One of the most prominent successes accomplished in the year was Audi becoming the market leader with a sales figure of 5,484 vehicles, outclassing its competitors in the luxury segment for the first time since its launch in 1994. Company s other brands have kept the ball rolling by increasing their market share following Audi s success. 18
Doğuş Otomotiv Annual Report 2008 Scania Industrial and Marine Engines has ranked third in the Top 10 list of Scania s global listings for the top selling distributors. The success in the after sales services is continuing Our customer oriented approach, which is based upon the concept of keeping our customers content not only during the sales process but also with the after sales process, comprises rendering friendly and quality services throughout the years as if it is the first day. Volkswagen Passenger Cars becoming the most appreciated brand of the year for three consecutive years in a customer appreciation survey carried by Turkish Quality Association (KALDER) is a solid justification of this approach being not of words but of deeds. Şenyıldız Otomotiv s ranking as the third in overall classification and the first in technical classification in the 4 th Twin Cup organized globally by Audi AG to determine the world s finest technical service stations is a proof of dexterity to which our service stations have reached. The DOD difference in used car sales Winning a prominent position in the used car sales where trustworthiness has gained an essentiality, DOD unquestionably became the most preferred partner for its customers who wish to be served by a trusted institution. DOD has continued to diversify its range of products and services in 2008 by adding new inventive solutions to the already existing ones for different segments and needs. Utilising the Internet competently, DOD has lifted its effectiveness by restructuring its website www.dod.com.tr and has reached to its vertex by attracting over a million and a half visitors in 2008. DOD has accomplished three new product launches based upon the concepts of unconditional customer satisfaction and high brand value in 2008. ParkDOD that is developed for the customers who are not able leave their vehicles full time to the sales points; PrimeDOD that has its own infrastructure and website for the used car trade in luxury segment; and KeyDOD, the first of its kind in the world, a user friendly value assessment website have attracted attention as the standard setting products in the sector. TÜVTURK expands rapidly Established by the Doğuş Otomotiv-Akfen-TÜV SÜD consortium and entitled to undertake the task of opening and operating vehicle inspection stations in Turkey for a period of 20 years, TÜVTURK has structured itself rapidly and has pressed 183 stations in 77 cities in to operation by the end of 2008 after having been active in 2007. We have been rewarded in the communications area A new commercial has been added to our series of successful commercials in 2008 and VW Passat Variant s Baba commercial has received both Kristal Elma award and the Gold Medal in IAAA. The Practical Conversation Booklet project, 10 Dilde Seyr ü Sefer, prepared by Scania Marketing Team has put its signature under an international success by winning the honour prize of the Communication Award, which is regarded as the best marketing project award. The booklet, which was prepared to provide solutions for the communication problems of the long distance drivers, contains practical conversation tips in the languages of the 10 mostly visited countries by Turkish drivers. Proceeding on our way with superordinate goals Doğuş Otomotiv describes its entrepreneurship and its strategy with its profoundly progressive potential as: Deepening in the national market and uninterrupted leadership in the imports market, Becoming a regional power in the international arena Doğuş Otomotiv will carry on its efforts to increase the investor satisfaction in mid and long terms; generating soaring value for its stakeholders and will proceed on its way with its ascending targets. 19
Doğuş Group Founded in 1951, the Doğuş Group has today become one of Turkey s largest conglomerates of impeccable track record. The Doğuş Group is active in seven core businesses: financial services, automotive, construction, media, tourism, real estate and energy. The Doğuş Group has more than 70 companies and a workforce of around 20 thousand which enables it to offer high technology, quality brand and dynamic human resources to its customers. The Group seeks to maximize the value of its brands, not only in Turkey but also in the regional and global context. The Group carries the vision of becoming a regional leader especially in the services sector. The Doğuş Group always provides its services based upon the principles of customer satisfaction and trust. As a result of this approach, the Group has created reputable brands with global standards and has been representing our country worldwide. Its name is a source of attraction for the international investors interested in Turkey. The synergy it has created with global giants including General Electric in finance and real estate, Volkswagen AG and TÜV SÜD in automotive, Alstom and Marubeni in construction, CNBC in media and Starwood Hotels & Resorts, Worldwide Inc., HMS International Hotel GmbH (Maritim) and Aldania GmbH in tourism has also been contributing to this process. Doğuş Group has a customer-focused and productivity-centered management style. This style is not only formed through material gains, but it also embodies a strong corporate citizenship approach from which the whole society can benefit. The Doğuş Group implements social responsibility projects, especially in the area of education, with a particular focus on children and our future. 20