Borusan

Distributorship

Automotive

The combined global retail sales of the BMW Group, including all the makes under the BMW, MINI and Rolls-Royce automotive brands, totaled 1,435,876 units. According to these figures the Company experienced a limited 4% contraction in relation to 2007 and maintained its title as the world's leading premium class automobile manufacturer. After breaking a global sales record by selling 186,590 units in 2007, Land Rover experienced an 18% drop in turnover last year.

When compared to 2007, the Turkish passenger vehicle market decreased by 14% during 2008 and the luxury segment also shrunk by 18%. With retail sales totaling 4,849 units BMW maintained a 2% share in the Turkish passenger vehicle market. Additionally, by the end of last year 5,009 units of BMW were sold as wholesale.

Despite the global financial and economic crisis the MINI brand managed to break a new record in 2008. With 232,425 units sold globally the carmaker increased its sales by 4% over 2007 figures.

The Turkish SUV segment increased sales to 21,661 units during 2008. Even though the SUV market contracted by 10% over 2007 numbers its share in the passenger vehicle market amounted to 7%, or a slight increase of 0.3%. During the same time period Borusan Otomotiv sold a total of 1,804 units of Land Rover vehicles and was the leader of the premium 4X4 segment with a 39% market share. In addition, Land Rover's combined market share in the SUV segment was 8%.

The global financial crisis, the contraction dominating all markets and their detrimental effects on the Turkish market became quite apparent during the last quarter of the year. Because of the fact that the decreasing trend in demand occurred at such a crucial period retail and wholesale units were limited to 601 and 599, respectively. Despite the fall in sales volume MINI was still able to maintain the leadership in its segment. Although new and powerful competitors made an entry into the segment MINI still manages to maintain a 47% share of the market.

The Turkish motorcycle sector closed 2008 with a sales volume of 190,000 units, which was quite close to the previous year's figure. BMW Motorcycle increased its 20% market share in among its 650 cc and above models to 21% during 2008 and its retail sales amounted to 355 units.

Borusan Oto Cyprus, which is Borusan Otomotiv's first investment outside of Turkey, opened for operation in November of 2008. As the only authorized distributor of Land Rover in the Northern Cyprus Turkish Republic (KKTC), Borusan Oto Cyprus will be offeringsales and after sales services for all Land Rover vehicles under Borusan Otomotiv's quality and assurance program. Borusan Oto Cyprus' facilities, which were built on a 7,100 m2 plot of land, include 2,250 m2 of covered area with a 790 m2 showroom.

In 2008, 799 units of BMW, 100 units of MINI and 225 units of Land Rover were sold through Fleet and Special Sales.

Despite unfavorable market conditions secondhand auto sales during 2008 also increased to 971 units.

As of January 2009 the necessary preparations have been made in our Istinye facilities to begin marketing secondhand automobiles.

Manheim Turkey, the country's first “multi-branded second hand automobile platform,” is a part of the Borusan Group's developing automotive distributorship network. Launched in January of 2008, Manheim Turkey joined forces with one of the world's leading auto auction companies, Manheim USA. The headquarters of Manheim Turkey is located in Tuzla and in September of 2008 a new automobile auction center was opened at the Istoç Auto and Trade Center.

During 2008 member dealers for Manheim Turkey reached 580. The auction system, which is designed to sell vehicles from fleet owners to intermediary groups and individuals, began operations in 2004. By the end of 2008 the Company had facilitated the sale of close to 10,000 vehicles while those sold through the auction system increased to 4,068 units. On average 130 dealers per week participate in the sales.

Supsan

The year 2008 was a record one in terms of sales and production for our automotive parts company Supsan. Under the production license of the global leader Eaton Inc., Supsan produced 7.4 million units of engine valves while sales were as high as 7.3 million units. The Company's combined turnover reached $ 26.4 million. Moreover, exports to Italy and the USA came to 4.3 million units for the year. With 1.2 million units sold, domestic spare parts sales were also among the highest in recent years.

The Earth Moving Equipment (EME) and Power Systems Group

Along with the rest of the world the financial crisis triggered a significant contraction for the EME sector in Turkey, as sales shrunk by 46% to 5,280 units last year. Regardless of the decrease in the new machinery sector the Company's rental, secondhand and service activities continued to grow as compared to that of the previous year.

Despite the presence of a global crisis during 2008, Borusan's Caterpillar distributorship managed to maintain sales in both the domestic and foreign markets.

Regardless of the downturn in the domestic market and a 40% contraction in the volume of earth moving equipment sales, Borusan Makina successfully managed to maintain its leadership position and increased its market share by 2%. With its rental fleet consisting of 190 units of EME the Company surpassed its 2008 sales target by 42% and maintained its substantial leadership in this segment. In addition, the sales revenue generated from used machines was up 13% compared to 2007 as a total of 410 units were sold.

Service activities also maintained their growing trend during 2008 as yearend results came to 18% above the targets set. Moreover, a Customer Support Agreement (CSA) was signed on 69% of the machines sold throughout the year. As a result of the quality of its CSA operation, Borusan Makina was awarded second place in the “CSA Champions League,” an award scheme implemented by Caterpillar in the EAME region.

The Company's share in the spare parts market (POPS-C) was 46% in 2008. Also, with CAT Motor Oil sales of more than two million liters, the Company currently ranks quite high in the list for the EAME region. The CAT Spare Parts market share was also increased through campaigns targeting the track systems, which has been marked in recent years by high competition.

In Kazakhstan in 2008, Borusan Makina sustained its leadership position among western made equipment as the volume of EME sales increased by 30%. The growth in the market share and the restructuring that took place in the mining segment doubled the revenue generated from the sector. In keeping with developments taking place in Kazakhstan's agricultural sector of during 2008 Borusan Makina managed to increase its market share and achieved a 300% increase in income over 2007 figures.

In compliance with Caterpillar's worldwide “Contamination Control Program” the Varvarinskoe Project facility in Kazakhstan was brought to the five-star level and is currently the only one among the CIS countries to achieve such a high ranking.

The year 2008 was another period of high performance for Borusan Power Systems. Regardless of unfavorable conditions in the energy sector and the financial markets, success was achieved in all sectors. The increase in annual sales was above 50%, aided especially by the support from the marine and diesel segments. There was substantial growth in the marine sector, especially in the areas involving tug boats, mega yachts and cargo and chemical ships. In the diesel segment there was also growth reported among units of 1000 KWH and higher.

The Competitive Customer Financing Program was implemented across all sectors during 2008. Roughly 34% of all sales last year were initiated with the help of customer financing instruments.