Page 74 - TURKRptJul19

9.1.2 Automotive sector news
Turkish auto market contracts 16% y/y in June. Auto sales (passenger cars plus light commercial vehicles) declined by 16.36% to 42,688 units in June, the Automotive Distributors’ Association (ODD) said on July 2. Vehicle sales have been declining since April last year, however, the latest figures for June showed that the pace of contraction in the market slowed. In May, auto sales plunged as much as 54% y/y that followed the 57% y/y drop in sales in April. But it is too early to conclude that the worst is over for the auto market and it is bottoming out. Because the Turkish economy is not out of the woods yet: unemployment is rampant, inflation hovers around at 20%, and the GDP is expected to contract this year. ODD said passenger car sales fell by 12.6% y/y to 36,000 units while light commercial vehicles sales -which is an indicator for domestic trade activity- dropped 32.1% on an annual basis to 6,664 units. According to ODD data, passenger car sales dived 43.31% to 156,378 units and light commercial vehicle sales plunged 49.97% to 38,766 units on an annual basis in January-June. In 2018, Turkey’s automotive industry contracted 35% as a total of 620,937 units of passenger cars and light commercial vehicles were sold versus 956,194 units in 2017. The ODD in June said it expected vehicle sales to be between 350,000 and 400,000 this year.
Auto sales in Turkey plunged 55% on an annual basis in May to 33,016 units with the passenger car market shrinking 53%, data from the Automotive Distributors’ Association (ODD) showed on June 11. In the month, little more than 27,000 passenger cars were sold while light commercial vehicle (LCV) sales declined 62% y/y to 5,900 units. The local auto market has experienced sharp declines in sales since the start of the year despite tax cuts the government granted in order to stimulate domestic demand. In January, auto sales (passenger cars plus LCVs) dropped 59% on an annual basis while the market contracted 47% y/y in February and 35.5% y/y in March. According to data from the ODD, vehicle sales were down 56.5% in April. In the first five months of the year, total vehicle sales stood at 152,456 units, marking a 49.57% decline from a year earlier. Last year was also a very bad 12 months for Turkey’s auto industry. A total of 620,937 units of passenger cars and LCVs were sold in 2018 versus 956,194 units in 2017. Clearly, people are not willing to spend money or take out loans to spend on big items such as cars in an environment of economic uncertainty. Data from the central bank show that car loans in Turkey have been declining on an annual basis each month since September 2018. The pace of decline in car loans volume accelerated after April this year. Car loans dropped 11% y/y in January, down 12% and 13% in February and March. According to the data, the decline in this loan segment accelerated to 15% y/y in the final three months of May. Separate data from statistics office TUIK suggest that the rest of the year is not looking promising for Turkey’s auto industry. The index measuring the probability of a person buying a car in the next 12 months plunged 29% m/m in May, according to TUIK’s consumer confidence data series. The ODD predicted that 350,000-
74 TURKEY Country Report July 2019 www.intellinews.com