Auto sales likely to lose momentum next year

ISTANBUL

Auto sales are expected to decline between 35 percent to 40 percent next year after hitting a record level in 2023, according to representatives of the car industry.

In the first 11 months of 2023, the combined sales of passenger cars and light commercial vehicles already exceeded 1 million with the passenger car market expanding 66 percent from a year ago.

Total vehicle sales leaped nearly 61 percent year-on-year in the January-November period, while some 841,000 passenger cars were sold in Türkiye during the period.

There were several reasons for the surge in vehicle sales in 2023. Consumers unleashed pent-up demand. In addition to this, consumers bought cars as they viewed them as an investment in an environment where vehicle prices kept rising almost every month.

Vehicle sales are expected to hit 1.2 million this year, people from the industry said, warning the market is likely to contract between 35 percent to 40 percent.

Vehicle sales will be around 750,000 units next year where they were in 2020, they predicted.

Difficulties with accessing loans, and prohibitively high prices of brand-new cars will be the main factors hindering sales, according to Bülent Kılıçer, senior assistant general manager at Honda Türkiye.

Auto sales may change course significantly after the March local elections, Kılıçer said.

The economic management team has been consistently sending out signals that the monetary tightening will continue, he said.

“Demand is likely to decline not only in the auto but in other industries… The elections, I believe, will be a milestone. The post-election outlook may be significantly different.”

The share of car sales financed with loans, which normally hovered at 70 to 75 percent, plunged to around 15 percent, according to Kılıçer.

“We forecast vehicle sales to be around 650,000 units, which means a 35 percent contraction.”

Honda’s sales in the Turkish market are expected to hit 23,500 this year, Kılıçer said, adding that if they did not have supply problems, their sales could reach 35,000.

Honda’s share in the local market will be around 3.5 percent to 4 percent next year, according to Kılıçer.

The year-on-year increase in vehicle sales slowed to 39.8 percent in November to 115,000 from 55.4 percent in the previous month. In July, sales soared more than 118 percent annually.

In the passenger car market, the pace of annual growth also declined from 74 percent in October to 54.4 percent to 91,424 last month.