Tofas Türk Otomobil Fabrikasi Anonim Sirketi : TOFAŞ TÜRK OTOMOBİL FABRİKASI A.Ş. 2023 Annual Report

Tofaş 2023 Annual Report

WE ARE PROUD AND THRILLED TO BE ADVANCING FOR

A CENTURY ON THE PATH LED BY THE GREAT LEADER ATATÜRK, IN THE LIGHT OF THE REPUBLIC.

As Koç Group, we believe that the best way to celebrate our Republic is through work, production and the achievement of excellence.

We continue, with the same determination, to serve with love and devotion for our country, to protect and defend the Republic entrusted to us by Atatürk, along with its principles and values, acting with the responsibility of carrying the values of the Republic to future generations.

TÜRKİYE'S LEADING AUTOMOTIVE COMPANY

THROUGH ITS COMMITMENT TO TECHNOLOGY, DIGITALIZATION, QUALITY, AND EFFICIENCY, TÜRKİYE'S LEADING AUTOMOTIVE COMPANY TOFAŞ CONTINUES TO CREATE VALUE FOR THE COUNTRY'S ECONOMY, INDUSTRIAL BASE, AND R&D KNOW-HOW.

CONTENTS

TOFAŞ AT A GLANCE

• 4 ABOUT TOFAŞ

• 5 VISION AND MISSION

• 5 ABOUT THE KOÇ GROUP AND STELLANTIS

• 6 MILESTONES

• 10 KEY FINANCIAL AND OPERATIONAL HIGHLIGHTS

GENERAL ASSEMBLY

• 14 AGENDA OF THE ORDINARY GENERAL ASSEMBLY MEETING

• 15 INDEPENDENT AUDITOR'S REPORT ON THE ANNUAL REPORT OF THE BOARD OF DIRECTORS

• 16 CHAIRMAN'S ASSESSMENT

• 18 BOARD OF DIRECTORS

• 20 DIVIDEND DISTRIBUTION POLICY

• 21 2023 PROFIT DISTRIBUTION PROPOSAL

• 22 2023 DIVIDEND DISTRIBUTION TABLE

• 23 REMUNERATION POLICY FOR TOP-LEVEL MANAGERS AND MEMBERS OF THE BOARD OF DIRECTORS

• 2023 ACTIVITIES

• 26 CEO'S ASSESSMENT

• 28 SENIOR MANAGEMENT

• 30 TOFAŞ 2023 HIGHLIGHTS

• 36 AWARDS & RECOGNITIONS

• 38 INVESTOR RELATIONS

• 42 THE TÜRKİYE AUTOMOTIVE INDUSTRY AND TOFAŞ

• 44 FINANCIAL RESULTS

• 50 BRANDS & PRODUCTS

• 54 DEALERSHIP NETWORK

• 56 SUBSIDIARIES & AFFILIATES

• 60 R&D OPERATIONS

• 66 INNOVATION & DIGITALIZATION

SUSTAINABILITY

• 72 SUSTAINABILITY

• 78 HUMAN RESOURCES

• 83 OCCUPATIONAL HEALTH & SAFETY

• 84 ENVIRONMENT AND CLIMATE CHANGE

• 92 QUALITY MANAGEMENT

• 92 CUSTOMER FIRST PLATFORM

• 94 SUPPLY CHAIN MANAGEMENT

• 96 ETHICAL BEHAVIOR & ANTICORRUPTION

• 97 CORPORATE SOCIAL RESPONSIBILITY PROJECTS

CORPORATE GOVERNANCE

• 104 INFORMATION ON THE CAPITAL STRUCTURE AND SHAREHOLDING OF THE COMPANY

• 106 BOARD OF DIRECTORS CVS

• 108 CV'S OF SENIOR MANAGEMENT

• 112 DECLARATION OF CORPORATE GOVERNANCE PRINCIPLES AND COMPLIANCE REPORT

• 135 CORPORATE GOVERNANCE INFORMATION FORM

• 143 SUSTAINABILITY PRINCIPLES COMPLIANCE STATEMENT

• 144 SUSTAINABILITY PRINCIPLES COMPLIANCE REPORT

• 154 ACTIVITIES OF THE EARLY DETECTION OF RISK AND RISK MANAGEMENT COMMITTEE

• 156 AFFILIATED COMPANY REPORT

• 157 INDEPENDENT AUDITOR'S REPORT ON THE EARLY IDENTIFICATION OF THE RISK COMMITTEE AND SYSTEM

  FINANCIAL INFORMATION

• 158 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITOR'S REPORT

ABOUT TOFAŞ

Tofaş's production capacity, export performance, R&D competencies, and workforce of nearly six thousand make it one of Türkiye's leading industrial concerns.

Türkiye's trailblazing automotive manufacturer, Tofaş was founded in 1968. 24.3% of Tofaş's shares are traded on Borsa İstanbul and are included in both the BIST 30 and the BIST 100 indexes; control of the remaining shares is divided equally between Koç Holding Stellantis. Tofaş's publicly-traded shares are also included in Borsa İstanbul's Corporate Governance and Sustainability indexes. Headquartered in İstanbul, Tofaş's production operations are carried out in Bursa at a plant with 350 thousand m2 of enclosed space situated on nearly 1 million m2 of grounds.

Tofaş's plant produces the Fiat Egea family's sedan, hatchback, station wagon. cross and cross wagon models. Tofaş exports more than half of the vehicles it produces to different countries in the world. Committed to being a leading player in all segments of its home market in line with customer expectations, Tofaş offers a broad portfolio of brands and products that include five brands (Fiat, Alfa Romeo, Jeep®, Maserati, Ferrari) for which it is the Turkish representative.

In its capacity as a key production and R&D center for the Stellantis Group, Tofaş contributes directly to the growth and development of Türkiye's engineering ecosystem by

TOFAŞ FILM

strengthening its own product-development capabilities globally. With its expertise and knowledge in developing vehicles from scratch, the Tofaş R&D Center not only oversees the production of models manufactured at the Tofaş plant but also participates in the product-development processes of different models within the Stellantis Group. The center is likewise a major exporter of engineering services for global product-development projects. Continuing to broaden the scope of its operations by addressing the global demand for automotive software, Tofaş R&D develops connectivity-based mobility solutions. Productivity-driven digital optimization is key to Tofaş's smart-factory transformation and a strategic priority for the company. To maintain its competitive edge, Tofaş constantly tailors its production practices in response to technological advances and to shifting market needs.

As a corporate member of the National Climate Platform, Tofaş supports the transition to a low-carbon economy. As part of the ongoing carbon-transformation program, Tofaş plans to make its plant net-zero company by 2050. Committed to this goal, Tofaş joined the Science Based Targets Initiative in 2022 and developed a comprehensive roadmap. The company's path toward being net zero by 2050 includes increasing the use of green materials, expanding electrification in products, implementing energy efficiency projects, and embracing circular economy principles.

Tofaş aims to build upon its sustainable success by leveraging over half a century of experience, robust R&D, technological innovation, and skilled human resources to create value for customers. The company strives to be a global leader that employees and business partners are proud to be associated with.

TofaşataGlance

VISION

To be a leading automotive company that creates the best value and mobility solutions for customers.

MISSION

To improve people's quality of life by providing them with the products and services that best suit society's need for mobility.

ABOUT THE KOÇ GROUP AND STELLANTIS

Founded in 1926, the Koç Group today is Türkiye's biggest industrial concern and services-provider on such measures as total revenues and exports, Borsa İstanbul market capitalization, and jobs created. It is an engine of the Turkish economy with combined revenues corresponding to about 9 of national income while also accounting for about a 7 share of Türkiye's export trade. Koç Holding is the only Turkish company included in the Fortune Global 500. The company adheres to international standards of corporate governance, customer satisfaction, sustainability, and social responsibility in the conduct of its operations. This commitment, combined with strong competitive advantages, positions Koç Holding as a leader in the high-growth sectors of energy, automotive, consumer durables, and finance.

Formed in 2021 from the merger of Fiat Chrysler Automobiles and PSA Group, Stellantis is a sustainability-focused mobility-technology company with a global reach. The Stellantis Group has operations in 30 countries, boasts 14 automotive and 2 mobility brands, and employs a diverse workforce in which more than 160 nationalities are represented. Stellantis's brand portfolio is structured so as to offer unique and sustainable solutions which embrace electrification, connectivity, autonomous driving, and shared mobility and which also address customers evolving needs. As a leader in vehicle electrification and automotive software development, Stellantis advances confidently towards realization of the "Dare Forward 2030" commitments that underpin the group's "Net 0 Carbon" by 2038 transformation and goal of being an unrivaled global force in value creation. The total asset size of Stellantis, whose net sales reached EUR 190 billion, surpassed EUR 202 billion as of the end of 2023.

GeneralAssembly

2023ActivitiesSustainabilityCorporateGovernanceFinancialInformation

MILESTONES

1968

• • Tofaş Türk Otomobil Fabrikası A.Ş. is incorporated as a joint venture of Koç Holding and Fiat of Italy.

1971

• • Tofaş's Bursa plant opens and begins production of the Murat 124.

1974

• • Tofaş's exports begin with shipments of the Murat 124 to Egypt.

1976

• • The Murat 131 goes into production.

1977

• • The Şahin goes into production.

1981

• • Kartal and Doğan models go into production.

1990

• • The Tempra goes into production.

1991

• • Tofaş commences domestic production of engines for the Tempra series.

1993

• • Tofaş's one-millionth vehicle rolls off the Tempra assembly line.

1994

• • With the production of the Fiat Uno, a vehicle for the B segment is introduced to the market for the first time in Türkiye.

• • Tofaş R&D is established.

1995

• • With the Tempra model, Türkiye's first large-scale export to European markets takes place.

1998

• • Participating in its first global automobile project with its contributions to the Fiat Palio, Tofaş begins managing a world-spanning supply chain.

1999

• • Marea and Brava models go into production.

TofaşataGlance

2000

• • The Fiat Doblò goes into production

2001

2006

• • Tofaş becomes the Turkish representative for Fiat Auto's Alfa Romeo brand.

2002

• • The Palio series is given a makeover and the Albea goes into production.

• • Tofaş Museum of Cars and Anatolian Carriages opens in Bursa.

2003

• • Koç Fiat Kredi Finansman A.Ş., a captive financing company set up jointly by the Koç and Fiat groups, becomes a wholly-owned subsidiary of Tofaş as a result of its acquisition of all of that company's shares.

2005

• • Work begins at Tofaş on the company's "Minicargo Project", whose aim is to develop a new light commercial vehicle for Fiat, Peugeot, and Citroën.

• • With the incorporation of Fer Mas Oto Ticaret A.Ş., a wholly-owned Tofaş subsidiary, Tofaş becomes the official representative for Ferrari and Maserati in Türkiye.

• • The Fiat Linea goes into production.

• • Tofaş introduces a World Class Manufacturing (WCM) program at its Bursa plant in order to bring its operations into compliance with lean-manufacturing standards and practices.

• • Tofaş's Fiat Linea is voted an AutoBest award.

• • The new Fiat Doblò receives the "Commercial Vehicle of the Year" award.

2007

• • Tofaş begins producing Fiorino Minicargo models for Fiat and the PSA Group.

2008

• • The Bursa plant's production capacity is upped to 400,000 vehicles a year.

2009

• • Tofaş becomes the first among 175 FCA plants around the world to achieve World Class Manufacturing Silver status.

• • The Fiat Doblò receives the "Commercial Vehicle of the Year" award.

GeneralAssembly

2023ActivitiesSustainabilityCorporateGovernanceFinancialInformation

MILESTONES

2011

2015

• • The "Commercial Vehicle of the Year" award is bestowed on the Fiat Fiorino by the International Van of the Year jury.

• • The Cargo version of the New Fiat Doblò is voted "Light Van of the Year" in the UK's Van Fleet World series of awards and also receives the year's environment award.

2012

• • Tofaş becomes the representative for Jeep in Türkiye after Fiat acquires a majority stake in Chrysler.

• • The Opel Combo, a multi-brand model developed by Tofaş based on the New Fiat Doblò platform, goes on sale in many European and other markets.

2013

• • Tofaş achieves World Class Manufacturing Gold status.

2014

• • Tofaş begins exporting the Fiat Doblò to North American markets as the "Ram ProMaster City".

• • The Fiat Egea Sedan goes on sale in Türkiye and around the world.

• • At the Private Sector R&D Centers Summit organized by the Ministry of Science, Industry and Technology, the Tofaş R&D Center is cited as the best R&D center in the Turkish automotive industry and also places third among the country's best R&D centers in all categories.

2016

• • The Fiat Egea Project's Hatchback and Station Wagon models go into production.

• • The Fiat Egea is voted "Best-Buy Car Of The Year In Europe" at AutoBest 2016.

• • Record-breaking performance makes Tofaş the Turkish automotive industry's leading manufacturer and exporter.

• • Tofaş brings home first-place honors for the second time at this year's Private Sector R&D Centers Summit conducted by the Ministry of Science, Industry and Technology.

  The company also ranks first among Turkish entrants in the European Commission Joint Research Center's R&D Investment Score List.

2017

• • Tofaş once again ranks first among Turkish entrants in the European Commission Joint Research Center's R&D Investment Score List. This is the third year in a row that the company's success has been so honored.