EU slump bodes ill for local carmakers

ISTANBUL - Hürriyet Daily News

A decline in the car market speeds up in Europe, which is bad news for Turkish carmakers that export to the continent. AFP Photo

The decline in Europe’s car market accelerated in December, according to figures released yesterday. The data bodes ill for the Turkish economy, as European Union member countries continue to rank at the top regarding Turkish auto exports.

European consumers, wary of the future of eurozone economies, held back from major purchases, Reuters reported yesterday. Car registrations tumbled 5.8 percent last month following declines of 1.4 percent in September and 3 percent in November, according to data from the Brussels-based Association of European Carmakers. Registrations ended the year 1.4 percent lower at 13.6 million.
“Consumers loath to engage in big-ticket expenditure as purchasing power comes under pressure,” said Alexander Law, head of economics consulting firm Xerfi Global, according to a Reuters report.
The downgrade of nine European nations’ debt by Standard & Poor’s last week will lead to higher interest rates on consumer credit including car loans, Xerfi Global predicted. “That will weigh heavily on the auto market,” Law said. “This year is going to be very tough for Europe’s auto market.”

The bleak outlook will reverberate in Turkey, whose export engine relies heavily on foreign sales of motor vehicles. Last year, Turkish auto firms posted $18.3 billion worth of exports, according to data from the Automotive Industry Exporters Union (OİB). The figure represented an annual increase of 16 percent over 2010’s performance.

According to OİB data, Western Europe accounted for a huge portion of foreign sales in the automotive sector. The top three auto importers from Turkey last year ranked as Germany, France and Italy. Data from November showed EU members account for 72 percent of Turkey’s automotive exports.

The market slide in the EU could seriously hurt Turkey’s overall exports in 2012. Last year, Turkish automotive exports accounted for 14 percent of all exports, which totaled $134.5 billion.