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400,000 vehicles will be sold in Turkey this year. Its previous forecast was 450,000 vehicles.
Storm ahead for Turkish auto dealers warns leading retailer Otokoc.
Turkish auto dealers will face very serious problems if the current market situation continues, Gorgun Ozdemir, general manager of Otokoc, the country’s leading automotive retailer and car rental company, has said.
According to Ozdemir, the local automotive market will shrink by as much as 30% to some 400,000 units this year. “The weaker currency and interest rates [on loans] are taking their toll on sales. Financially unsound dealers will go out of business,” Ozdemir said. He noted that large players on the market have organisational structures based on annual vehicle sales of one million units. “However, those companies cannot even meet their operating costs. Measures such as cutting special consumption tax are not enough, some other steps must be taken,” Ozdemir added.
He also said that the contraction in the car rental market continued. “We closely watch daily air passenger traffic. The number of domestic travellers declined over a successive four months this year. This is unprecedented. Dealers survive only with the support they receive from distributors,” Ozdemir said.
Turkey’s vehicle production declined by 12% on an annual basis to 625,946 units in the first five months of the year, data from the Automotive Manufacturers’ Association (OSD) showed on June 15. Local carmakers manufactured a total of 418,626 passenger cars, marking an 11% y/y drop in January-May, the association said. It would appear that the sharp depreciation of the Turkish lira (TRY) did not help local producers increase exports. Carmakers’ export revenues in fact dropped 6% y/y to $13.4bn in the first five months. This decline could be attributed to poor demand and weak economic performances across main export markets such as Europe. The auto industry managed to increase its export revenues by 10.8% to $32.2bn, with passenger car exports up 5.3% to $12.4bn, in 2018. High inflation, weak economic growth and high unemployment depressed local demand and forced consumers to delay purchases as they waited for a more favourable environment to emerge.
The combined net income of eight publicly traded automotive companies—Ford Otosan, Tofas, Tumosan, Karsan, Anadolu Isuzu, Otokar, Dogus Otomotiv and Turk Traktor—sank 19% y/y to TRY678mn (€102mn) in the first quarter of 2019. Their combined revenues rose only 4% to TRY17bn in the first quarter of this year. However, their share prices increased 6% on average in the first quarter.
Turkish business group calls for extension of tax reduction for cars. Turkey’s Automotive Manufacturers’ Association (OSD) has warned that the country’s key automotive industry may soon hit the wall unless the government
75 TURKEY Country Report July 2019 www.intellinews.com