Dear Shareholders,

We are experiencing the happiness and pride of delivering the added values we have created so far to the customers, the shareholders, the stakeholders and the country in 2006 as well.

Our aim is to deliver a sustainable growth to Otokar, to minimize the impacts of fluctuations in the market, to preserve our existence and success in the long run, to deliver added value to our shareholders and to the country, and while attaining these aims, to preserve the environmental resources being indispensable for the future by using the existing resources most efficiently.

Competition in a globalizing world surpasses the geographical boundaries, urging you to think more strategically, to be more planned and to work harder in order to maintain the success. As regards to the automotive industry in particular, it becomes ever harder for Turkiye, which is regarded as the "manufacturing base of Europe", to preserve her competitive power against emerging economies like China, India, Russia as a natural consequence of globalization.

It seems that the ultimate requirements for preserving the competitive advantages and attaining a sustainable growth are to own and control technology and to create your own brand for niche markets. I am proud of saying that Otokar meets this requirement in line with the basic strategies of Koc Group and maintains the competitive power by designing its own vehicles.

Otokar is growing with vehicles of its own design. In the armored and commercial vehicles segments, Otokar responds to the requirements of domestic and international markets in a shortest time and goes to the potential markets with own brands independently.

The greatest power of Otokar comes from the fact that it operates in niche markets, analyzes the market and the customers very well, and offers the best solutions to expectations and requirements owing to its designing and flexible manufacturing capabilities. Offering products to different niche markets minimizes the impact of economic, social and political developments on the growth of Otokar. Otokar is sustaining the growth by maintaining the balance between the defense industry and the commercial vehicles.

By taking the advantage of this power, having foreseen the shrinkage of domestic demand during the second half of 2006, Otokar had established the strategiesfor 2006 asgrowng in the defense industry, increasing the share of exports in the turnover, and growing with new models. In 2006, Otokar has attained all of the targets and achieved a growth of turnover by 1 9 percent.

When we look at the industry and the developments in Otokar in 2006, we must talk about the success of Otokar in the defense industry segment. Otokar did record high deliveries in the armored vehicles segment during the previous year. Having won one of the largest defense industry contracts in recent years, Otokar completed the deliveries in 2006 successfully. Thanks to the investments in technology in this segment, Otokar broke a record of its own production by manufacturing 529 armored vehicles. In 2006, the automotive industry ranked first in exports among the all manufacturing industries with an increase in exports by 26 percent. With the effect of defense industry deliveries, the increase achieved by Otokar has been 52 percent. Almost half of the turnover of Otokar amounting to TRY 338 million came from exports. With USD 100 million earned from the defense industry representing the greater part of the exports, Otokar preserved its leadership in the Turkish defense products exports this year as in 2006.Otokar made the highest defense industry exportation of Turkiye on turnover basis in 2006.

In 2006, during which records were broken in the automotive industry where the manufacturing reached approximately 1 million vehicles, Otokar broke its own record. In the armored vehicle manufacturing, Otokar attained the highest level ever attained by itself and the Turkish automotive industry. In the trailer segment, Otokar broke its own record with 1 340 trailer sales owing to the new product developments and the growing market trends. Otokar continued its efforts to expand the product family with new models in the commercial vehicle and military vehicle segments and the distribution channel in Europe in medium size bus segment during 2006.

In the following pages you can find a summary of our works on products and markets we conducted with the aim of sustaining the growth in 2006 and afterward, of our investments, of the works aimed at increasing the productivity to raise the economic profitability, and of the new systems we have introduced.

We will continue our works at the same speed and decisiveness in 2007 in order to sustain the success we achieved in 2006 and to achieve new successes. Our primary target for 2007 is to be pioneer and a favored supplier in commercial vehicles developed in accordance with the customer trends in the domestic market, to become prominent with our design and manufacturing capabilities in the projects pursued in line with the growing demand across the world in the defense industry segment, and to achieve a sound position in European market in the medium size bus segment with existing and new products.

As a manufacturing company which not only manufactures but also develops technology and offers it to the service of the customers, we are persistently monitoring through our experienced and capable human resources the market trends and the developments in designs and manufacturing in the world in order to attain these targets correctly and on a timely manner and working toward preserving the confidence you have for Otokar and reflecting the results of our works to you positively.

I wish a prosperous and successful 2007 for Otokar and the shareholders.

Sincerely,

Kudret Önen

Chairman