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July 21, 2020

Turkish automotive market ‘seeing unprecedented vitality’ – report

July so far is turning out to be a "month to remember for the Turkish automotive market" as the industry, brought to a standstill by the coronavirus pandemic, experiences some unprecedented vitality, local publication dailysabah.com reported.

By Olly Wehring

July so far is turning out to be a “month to remember for the Turkish automotive market” as the industry, brought to a standstill by the coronavirus pandemic, experiences some unprecedented vitality, local publication dailysabah.com reported.

It said high demand in the domestic market was followed by a significant rise in June on the back of the easing of strict coronavirus lockdown measures and cheap loan packages offered by public banks.

Sector spokespeople said the high trend had continued this month and they also pointed an acceleration of exports and an increase in orders, and expect a roughly 10% surge in overseas sales compared to June 2020. Another boom is expected in September.

“Markets slowly began to move in May, following the recession in March and April. We expected this process would accelerate after June and we can say this is starting to happen,” said Mercedes-Benz Turkey’s CEO Suer Sulun.

“We believe that the deferred purchases of the last three month period could be realised in the summer months and offset the losses,” Sulun reportedly told Turkish language daily, Dunya, on Monday.

Passenger car and light commercial vehicle sales in Turkey jumped by 66% year on year in June 2020 to 70,973 units, dailysabah.com said, citing the Automotive Distributors’ Association (ODD).

Passenger car sales were up 58.4% to 57,067 while light commercial vehicle sales soared 108.7% to 13,906.

Overall, sales from January through June 2020 surged 30.2% year on year, the data showed, to 254,068 units.

“We were more focused on export markets in 2019 due to the contraction in the domestic market. We directed most of the vehicles we produced to exports,” Sulun said.

“While we were looking at 2020 as the beginning of the recovery in the domestic market and rise in export markets, the pandemic delayed all of these.”

Turkey is a production base for Ford’s Transit van line sold outside North America, Russia and China and also home to export-focused Toyota (Corolla) and Hyundai plants. A well established local supplier network ensures high local content.Orders on the rise

Ford Otosan officials said there had been an increase in orders from abroad.

“This will reflect on production as of September. We want to go through our current stock first,” the officials were quoted by the Dunya as saying.

They also noted there was a rapid recovery and increase in demand with the decline in interest rates in the Turkish market and the increase in consumer confidence index, which reached 62.6 last month, up 5.2% from May when the figure was 59.5.

“In parallel to this increase, we increased our production tempo above the period before the pandemic. We expect the recovery in overseas markets to be somewhat slower than that of Turkey. We are closely monitoring developments and keeping our production scenarios ready in case of an increase in demand,” the Ford representatives.

Referring to auto sales in June, they said: “Considering that the expectation was around 65,000 units, this market size shows the recovery is happening faster than our estimates with the effect of accumulated demand. We expect this rising trend to continue in July and project a market size of at least as that of June.”

Hyundai Assan general manager Murat Berkel said the mobility in the domestic market had continued, and his company expected a market size of 65,000-70,000 units in July.

If the market reached 70,000 units, it would be one of the best July tallies of the last 10 years. The highest July figures came in 2015 when 83,836 vehicles were sold, followed by 82,297 in 2017 and 71,596 in 2013.

The report said demand for automobiles in the country had risen steadily since early June after three public lenders – Ziraat Bank, VakifBank and Halkbank – introduced low interest loan packages for individual and corporate customers purchasing new and used passenger vehicles.

Supply shortages, however, forced some potential buyers to walk away disappointed. Dealerships across the country have reported car stocks are still limited due to the global supply chain disruption caused by the pandemic.

Every cloud has a silver lining though – the used vehicle market saw skyrocketing prices over the past month after new vehicle dealerships failed to meet the high demand, forcing customers to turn to pre-owned options.

Export recovery

Hyundai Assan’s Berkel and Anadolu Isuzu general manager Tugrul Arikan both pointed to the export recovery saying it was “getting better each month”.

“However, exports still have not reached our pre-COVID-19 expectations. We think we will feel the positive trend better in the September-October period,” Arikan said.

Baran Çelik, chairman of the Uludag Automotive Industry Exporters Association (OIB), said they expected July exports to exceed June’s.

Mercedes-Benz Turkey’s Sülün said exports had been moving upwards following nearly four months of losses.

“The importance of the truck market has been particularly remembered in terms of the continuity of logistics activities. Truck exports, which saw a sudden drop in April, started to gradually increase in May. In this scope, we can say our July exports have increased by 9% compared to June,” he noted.

He underscored the 2020 truck market is expected to exceed the 2019 result.

Overseas sales by the components industry are also seeing upward movement compared to June, Alper Kanca, head of the Automotive Supplier Industry (TAYSAD), said.

“Many of our members saw an average increase of 10% in their exports in the first 15 days of July compared to June. The export increase by some of our members exceeds 20%. In fact, a small number of automotive suppliers are projecting to carry out more exports this month than in July 2019,” Kanca noted, according to the report.

GlobalData (parent of just-auto.com) automotive analyst Calum MacRae said: “Our Automotive Intelligence Centre (AIC) perspective is that our light vehicle forecast for Turkey for 2020 before COVID-19 was was for 690,000 (44% ahead of 2019).

“Now I believe we’re looking at a market of at least 600,000 if flat for the rest of the year, with a chance the 690,000 pre-Covid forecast could be exceeded.

“In that respect Turkey stands, along with South Korea (that’s drawn considerable plaudits for its COVID-19 response) as the only market that stands to perform better anticipated before COVID-19”.

Turkey waits in the wings if supply chains are remapped

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