Auto Industiy is very important for nations and governments as it plays a key role when determining the competitive power of a country. The industry provides employment and increase GNP as well as provide governments tax income. In this study, the developments in Turkish Auto Industiy, its competition power and productivity figures are summarized. An important problem of the indusli'y which is producing behind economies of scale is discussed and the factors that alTect the domestic demand for autos are presented. The export and import trends in the sector are briefly examined. The effects of the Customs Union Agreement and the probable effects of the New Duty - Free second hand auto import decision of the government are presented. The government decisions play the most important role for the future of Turkish Auto Industry.