Long streak of auto price hikes may come to an end

ISTANBUL

This year’s streak of price hikes on brand new car prices appears to have come to an end while some carmakers even plan on offering discounts to consumers, according to an executive from the industry.

Sales in Türkiye’s auto industry broke records, but prices also kept climbing in the past eight months. From January to August, passenger car sales grew 66 percent from a year ago to 588,000. Including light commercial vehicles, total sales amounted to 761,000, pointing to a robust 66 percent year-on-year increase.

Prices, however, have stabilized and now some companies with a large stock of cars started offering discounted prices and affordable loan plans to consumers in October.

After the Trade Ministry introduced measures for the automotive industry, those who used to buy cars as an investment have left the market, “what we have now is real consumers,” said Murat Berkel, the general manager of Hyundai Assan.

“In the first 8 months, prices increased due to exchange rates, inflation, higher costs and adjustments in the Special Consumption Tax,” Berkel added.

After the Central Bank opted for a series of hikes in the policy rates, exchange rates have stabilized, he said. “If this continues, I don’t expect significant price increases. Many brands, including us, started offering campaigns. Companies have more vehicles available…we are slowly returning to our ‘old normal.’”

Those who in the past bought cars as they saw vehicles as an investment are not in the auto market anymore, according to Berkel.

“What drives car sales now is those who have postponed their purchases for years. I think this trend in sales will continue until the end of the year as consumers are unleashing the pent-up demand.”

Berkel predicts that with monthly sales at around 85,000 in the rest of the year, total sales will be somewhere between 1 million to 1.1 million in 2023.

Sales may slow down starting from 2024 as demand from those consumers will be met, according to Berkel as this demand is met. “Interest rates on vehicle loans are on course to reach 4 percent, so it is very difficult to access a loan.”

He added that the problems in production in the automotive industry, caused by the chip and supply chain issues, is about to come to an end.