MARKET SNAPSHOT: Turkey's car market enjoys a boom
After the collapse to exports last year, added car demand at home will be very welcome in Turkey
Turkey's car market is enjoying a boom this year on the back of a strong economy and low interest rates.
New car sales in the cumulative period to the end of August are up 18% on the same period of last year. The economy is growing at close to a 6% annual rate, real wages are up and consumers are in the mood to spend. The car market this year could exceed 450,000 units, around a fifth up on last year.
Analysts say that reduced taxes on cars last year helped to kick-start the market and that low interest rates have given an additional shot in the arm to car demand which is continuing this year, stronger than many had anticipated.
“Interest rates are now just 6.5% in Turkey, which compares very favourably with around 20% a few years ago,” says JD Power analyst Carol Thomas.
She says Turkey is a market where consumer finance is important to purchases.
“This, you have to remember, is a market that has seen volatility in the past. People tend to spend when conditions look right.
“Right now the economy looks good and interest rates are staying low. In fact, any risk to our forecast for car sales this year is on the upside.”
“It may be a year of consolidation after the fast pace of market growth over last year and this, but the economic forecasts remain favourable, with perhaps an edging up of interest rates and GDP growth still close to 6%. It may well be that we have underestimated the impact of low interest rates in a country with some degree of pent-up car demand. Also, don't forget that car ownership levels are still low in Turkey – there's very good potential for car demand growth when the economy comes right.”
Turkey car sales %ch
2008 305,998 -14.4
2009 369,818 20.9
2010F 452,000 22.2
2011F 459,000 1.5
2012F 486,000 5.9
Source: JD Power Automotive Forecasting