After a recovery in March Turkish motor vehicle production declined slightly by 1% year on year in April to 29,179 units, according to figures compiled by the Turkish Industrial Development Bank (TSKB).

Passenger car, bus and tractor production fell whereas truck, pick-up and minibus production increased significantly in April compared to the same period last year.

But total motor vehicle production in the first four months of the year declined by 2.7% year on year to 98,040.

Despite the flat production figures in April, the capacity utilisation rate (CUR) improved from 27% in 1Q02 to 29% YTD-02.

The first two months of the year were the worst in terms of domestic sales. The domestic market bottomed out in the first month of 2002 and a weak recovery started in March.

Although April domestic sales declined by 11% to 6,721 compared to the same period last year, they were twice March#;s volume. Recovery seems to be on the way, but it is not clear how long it will take to reach even the historical averages.

Affordability, disposable income and interest rates remain the critical factors to improve for a prominent recovery.

Due to poor domestic demand and the local manufacturers#; pricing advantage after the massive devaluation of Turkish currency, imports#; share of total sales dropped from 48% in Q1 2001 to 45% in Q1 2002.

But imports#; share of total sales increased to 49% in April once again as the pricing advantage diminished and promotional campaigns took effect.

Total motor vehicle exports increased by 14% year on year in April to 15,182. After Tofa and Renault, Toyota and Ford Otomotive also improved their export performance and became important new export players. After buying Toyotasa shares from Sabancõ Group, Toyota was expected to boost its exports.

Passenger car and LCV exports combined, also rose by 11% year on year in April. Tofa and Renault#;s exports dropped by 18% and 0.3%, respectively. Although Tofa exports dropped slightly in April, lower than-expected-demand in Q1 2002 suggests that it is difficult to attain last year#;s export level.

The main reason for the drop in Tofa#;s exports was fluctuation in European demand.

Although major exporters did not do well in the first four months, Ford and Toyota combined increased their exports significantly.

Both are expected to increase exports in the second half of the year.

TSKB expects the Turkish economy to grow by 1% and 4%, respectively, in 2002 and 2003 and, based on that forecast, expects the domestic automotive sector to contract by 5-10% in 2002 and rebound by 10-15% in 2003 on the back of economic recovery.