Dear Shareholders,

We have been working to make a difference for our shareholders, customers, employees and the society since 1963. In pursuit of our founder the late Mr. Vehbi Koç's motto "As long as my country exists, I exist," we have now left 45 years behind as a company which has been designing, manufacturing the vehicles of its own, attaining a sustainable growth and creating a value for the country, the society and the employees. We have gained countless experiences in 45 years. And we have relied on such experiences to make a difference for our shareholders with our products, service quality, our characteristics and values. At the very beginning of 2008, the 45th anniversary of Otokar, we started with the slogan "Experience making difference". Looking at the business results, I am happy to say that we had differentiated with successes befitting our 2008 slogan and 45th anniversary.

Although 2008 promised a successful year at the beginning, the negative impacts of the global economic crisis were heavily felt during the last quarter, especially in the automotive industry of the country. While the automotive industry significantly shrank, Otokar passed through the crisis-ridden environment more intact and attained the targets owing to its leaps in the defence industry, new products and new market workouts. As a result of our successful activities, we grew by 12% in turnover and 16% in exports during 2008.

Before talking about such successful leaps, I would like to tell something about our characteristic of "operating in niche markets", which is a key characteristic for survival of the company and its shareholders. To be in two niche markets, the defence industry and the commercial vehicles, has been the greatest key of the sustainable success of Otokar so far. The defence industry tenders and the works on commercial vehicles are always balanced and supporting each other, bringing successful results for Otokar. This power is of course backed by experienced staff members, dedicated teams, supreme technology, good engineering and research and development capabilities. These characteristics differentiate Otokar in Turkish and world markets.

The power, historical success and experience of Otokar were appreciated in 2008 as in the past. The most beautiful and important indicator of this appreciation is Turkey’s National Main Battle Tank Project. In 2008, Otokar reaped the success in the main battle tank project on which it has been working with sacrificing efforts: the contract negotiations have been concluded and Otokar has been awarded as the prime contractor in the Altay National Main Battle Tank Project contracted by the Under-secretariat of Defence Industry for the Turkish Armed Forces. We are ready to mobilize our infrastructure, capabilities and faith as a whole in the design of the first national main battle tank of Turkey under such a great and important project. The project, which will make a difference for the country, the army and the industry, will reinforce the position of Otokar in the world defence industry.

In 2008 we did also made a difference in designing new military vehicles and in the level of our after-sale services. Every shipment turned into a good reference for us. We have entered new markets and particularly reinforced our position in the world with our armoured vehicles. In 2008, we were incessantly at service of the Turkish Armed Forces, as always. Finally, we are proud of having been selected for the contract of 861 tactical wheeled-vehicles for Turkish MoD in December.

In commercial vehicles, we were affected from the shrinkage in the market at minimum owing to contracts in large quantities and new products such as CNG busses and Eco semi-trailers. We preserved our share in the semi-trailer market despite the shrinkage of the market, and increased our share in the bus market at highest level among the competitors. Our Doruk (known as Vectio in export markets) brand bus series of 9 meters contributed a lot to this increase for sure. We made a difference in designing owing to win the prize of "Design of Turkey" competition for Doruk LE bus.

We made a difference in the European market with our new models and ever widening distribution network. We have reinforced our position in order to attain our target of selling minimum one of ten busses in the European markets by 2020. We increased our turnover by 58% in the segment of 7-meter small bus in 30 countries, most of which are European countries.

During our 45th anniversary, we made an important investment which will be a touchstone in the history of Otokar. We have purchased the neighbouring factory, facilities and land owned by Otoyol A.Ş. and tripled the area of our facilities.

In 2008 we gave special emphasis to productivity and improvement of quality and cost with a view to make a difference in ever increasing competition. Owing to the Six Sigma methodology and the "Change" project we started in the manufacturing, we achieved significant gains in productivity and quality. Under the SAP system, which is a valuable tool for decreasing the costs and increasing the performance and quality, we have begun to apply the processes in different units as well.

When doing all these things, we had in mind to make a difference for the society as well. We planted 45 thousand trees in the region of our factory in the anniversary of our 45th year. We continued to support the social responsibility campaigns embarked by the Koç Group on the one hand and to cooperate with various charity institutions on the other.

During the last year, we also made a difference in operations for our investors and shareholders as well. We have joined among the leading corporations making up the Corporate Management Index of the Istanbul Stock Exchange and received a high rating: 7,94.

We started 2009 with the successes I summarized above. The next year is supposed to be difficult for our industry and country. Our target for 2009 is to be more competitive, to offer ever the better, and to turn the hard times into promising opportunities for Otokar. During this year, we will be working for realizing the projects we have undertaken for the defence industry successfully. We will maintain our position by developing new products for both of the defence industry and commercial vehicle markets and by entering new markets.

In 2009 we will be working to deserve your trust and faith in us, to continue our sustainable growth and to achieve successful business results that will bring profits for our shareholders.

We wish a successful and prosperous 2009 for the company and the shareholders.

Yours sincerely,

Kudret Önen

Chairman