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Turkey Automobile Market Faces 30 Percent Contraction In 2007
May 07, 2007

Turkey automobile sector is experiencing a downturn due to hiked up interest rate and economic slump. Automobile producers have started exporting their products to survive in market.

Automotive Manufacturers Association (OSD) of Turkey declared on April 10, 2007 that Turkey’s automotive market reduced by 27 percent, whereas automobile sector tapered upto almost 30 percent during first quarter of 2007, according to news published on Today’s Zaman.

As per OSD statistics, consolidated vehicle fabrication increased by 9.5 percent in first quarter of 2007, to reach 246,785 units. On same lines automobiles also displayed a16.9 percent growth in terms of production, and reached 139,857 units. Decrease in demand and superfluous demand led to oversupply of automobiles, and hence many automobiles have to be exported. This resulted in increased number of exported vehicles for first quarter of 2007, which reached 185,452, representing a growth of 22.3 percent.

Turkey's automotive market has been adversely affected by the current decline in value of lira and mounting interest rates. Following April end, lira has gone down almost 15% from its original value, resulting in hiked car prices by automobile dealers. Additionally, inflation has elevated interest rates, making car loans costly in country. Only benefit foreseen is that industry would be benefited by reduced export prices, although adverse effect is on country’s own domestic automobile market.

Sharp decline in automobile industry is consequent to macroeconomic condition of turkey, as Gross National Product (GNP) registered a slump of 3 percent year on year basis in Q406, down from 8.8 percent in Q206. Central bank’s total 450 basis point (bps) led to increase in interest rate mainly responsible for downturn of automobile industry.

As per industry experts, automobile sector of turkey is experiencing dramatic change from onset of 1990’s. Despite reduction in domestic market, the companies integrated well in time with licensing companies and made continuous exports to survive and started developing new markets like E.U. countries.

As per a research analyst at
RNCOS, “Automobile demand in Turkey is experiencing negative growth due to increased sales tax, low per capita income resultant of economic slowdown and uneven distribution of income. If impending demand is apprehended, automotive market size of turkey is anticipated to reach $10 billion annually, by end of next 5-6 year period”.

Related Market Research Reports:
Turkey Automobile Sector Forecast (2008-2012)
China Automobile Sector to 2010
Slovakia Automobile Sector Analysis