A new wind is blowing in the Turkish agricultural machinery market. Global investment company Aral Group has teamed up with the South Korean agricultural machinery specialist Daedong to fully launch the local sales of the South Korean brand "KIOTI" tractors.
Turkey is the fourth largest market in the world and the number one market in Europe based on tractor sales. This market has recently entered a major transformation due to the government's strengthened emissions regulations and expanded subsidies. Among approximately 2.3 million registered tractors, 60% are over 20 years old, leading to a surge in replacement demand.
The background for the KIOTI tractors quickly attracting market attention lies in both the product's technical capabilities and the long-standing trust between South Korea and Turkey.
Since the participation in the Korean War in the 1950s, the two countries have maintained a close cooperative relationship across politics, economy, and industry. Recently, South Korean corporations have participated in large-scale infrastructure projects, such as the Yavuz Sultan Selim Bridge (the third bridge) connecting the Bosphorus Strait in Istanbul, and the 1915 Çanakkale Bridge connecting the Sea of Marmara and the Dardanelles Strait, gaining recognition for both their technology and trust in the local area.
This mutual trust foundation has had a positive impact on the rapid establishment of South Korean agricultural machinery brands in the market.
The Turkish government has also been continuously expanding the scale of tractor purchase subsidies as part of its rural modernization project. The subsidies, which were 240 billion lira (about 1.1 trillion won) in 2021, have more than doubled to 540 billion lira (about 2.4 trillion won) in 2023.
In line with these market changes, Aral Group has signed a supply contract with Daedong for tractors (20 to 140 horsepower) worth approximately 350 billion won by 2028. They are rapidly expanding their brand presence by establishing a strong regional dealer network and focusing on a local-centered strategy to increase contact with Turkish farmers.
ChosunBiz interviewed Kenan Yavu, head of tractor business sales at Aral Group, to hear about the local response to the KIOTI brand and future strategies.
― What kind of company is Aral Group, and why did it enter the agricultural machinery business?
"Aral Group is an international corporation that has invested in the automotive and construction industries for over 30 years. We recognized the high demand for technology in Turkish agriculture and the potential in the tractor market, which led us to enter the agricultural machinery business. We believe that KIOTI is a brand with sufficient competitiveness in terms of technology and quality."
― How do you view the Turkish tractor market?
"Turkey is the largest market in Europe, with approximately 65,000 to 70,000 new tractors sold annually. More than 60% of registered tractors are over 20 years old, creating a very high demand for replacements. Given the environment where various crops are cultivated year-round, a wide range of products, from small to large, is necessary."
― How have changes in market conditions, such as government subsidies and environmental regulations, affected the market?
"Since 2020, the expansion of government subsidies and the strengthening of emissions standards have rapidly reshaped the market to focus on replacements. I see potential for annual sales to exceed 100,000 units if economic conditions stabilize."
― What is the local response to the South Korean brand KIOTI?
"Initially, it was an unfamiliar brand, but through on-site demonstrations, trade fair participation, digital promotion, and expansion of dealerships, we are quickly increasing awareness. In particular, the long-standing ties and trust between South Korea and Turkey positively influence brand acceptance. Local farmers have provided favorable evaluations in terms of technical capabilities and durability."
― What is the biggest challenge in the market entry process?
"Tractors are seasonal machines that are used intensively for about two months each year, so service response is crucial when breakdowns occur. It is essential to quickly operate the supply of parts and the after-sales service system on-site to gain trust. We are currently focusing on strengthening this area."
― What are your future market strategies and goals?
"With the goal of achieving a 3% market share, we are cooperating with highly trusted local dealers. We aim not just to sell products but to establish ourselves as a trusted brand among farmers through educational programs and by expanding our product lineup."