Weak domestic demand curbs automotive output

ISTANBUL

Turkish automotive production dropped by 10 percent to 75,042 units, while exports fell 11 percent to 51,000, according to data released by the Automotive Manufacturers’ Association (OSD). CİHAN photo

Turkey’s vehicle production, a major source of exports, fell 10 percent in January to 75,042 vehicles, according to new data from a sector association, which emphasized the challenges that lie ahead of the sector.

Despite a 30 percent rise in automobile output, a steep production fall in heavier vehicles reaching upward of 50 percent sent the overall production to remarkable lows in the first month of the year, the Automotive Manufacturers’ Association (OSD) said.

According to data released yesterday, production of minibuses plummeted 53 percent, light trucks by 51 percent, small trucks by 45 percent and buses by 38 percent.

As automotive exports also fell 11 percent to 51,000 during the month, the overall Turkish automotive market contracted by 8 percent compared to the same month last year, coming in at around 34,000 units, the OSD data revealed.

Automotive production rose 5 percent in 2013 to 1.13 million units, but is expected to decline this year as domestic demand falls.

Weaker domestic demand, stronger exports

The weakening Turkish Lira is already gradually raising prices, but sector representatives say the special consumption tax (ÖTV) hike introduced on vehicles at the beginning of the new year will sharpen that price rise in 2014.

The government hiked the consumption tax on passenger cars by between 5 and 15 percent, depending on the size of the engine.

A regulation introduced to raise the down payment on car loans by the country’s banking watchdog, the BDDK, is also expected to add to sector players’ headaches.

OSD Chair Kudret Önen had said domestic market losses would be compensated with efforts to boost export.

 “The production is expected to be at around 1.1 to 1.2 million units. The goal for exports, meanwhile, is be between 810,000 and 850,000 units, with an expected value of $21 billion to $22 billion,” he had said.

The Automotive Distributors’ Association’s (ODD) 2014 sales forecast currently stands at 800,000-860,000 vehicles this year, although it had also warned the macro-pruedntial measures taken by the government account deficit could dent sales.