Auto industry revises forecasts due to weak demand in Europe

ISTANBUL

The Automotive Manufacturers’ Association (OSD) has revised downward its production and export forecasts for 2024 due to the contraction in the European market, says Cengiz Eroldu, the association's president.

“We are aiming to end 2024 with 1 million units of exports, while our production projection for this year is between 1.3 million and 1.5 million units,” Eroldu said.

Turkish carmakers’ total production declined by 6.9 percent year-on-year in January-September from a year ago to 1 million units, according to data from OSD.

The automotive sector is Türkiye’s largest exporting industry, directly employing 500,000 people. In terms of production, the Turkish automotive industry is one of the largest in the European Union.

In the first nine months of 2024, 657,148 passenger cars were manufactured, down 4.5 percent compared with the same period of 2023. Passenger car production fell 4.5 percent from August.

The auto market shrank 1.5 percent annually in the first nine months, when a total of 881,442 vehicles were sold, with passenger car sales rising 0.9 percent year-on-year to 673,000.

In September alone, vehicle sales were down 12 percent to 89,000, while passenger car sales were down nearly 15 percent annually to 67,434 units.

The share of domestically produced passenger cars in total sales declined below 30 percent in September for the first time in 10 years, said Eroldu.

Pointing out the some 7 percent decline in production, Eroldu said this was mostly due to the fact that local producers “are loosing ground” in the domestic market.

Local carmakers have been going through difficult times in the last couple of months in the face of weak demand.

The combined net income of eight listed automotive companies plunged 40 percent year-on-year in the first half of 2024 to 28.1 billion Turkish Liras ($820 million).

Local carmakers shipped nearly 730,000 vehicles to foreign markets in January-September, marking a 0.6 percent decline annually, showed OSD data.

Their export revenues, however, rose 2 percent to $26.7 billion.

Passenger car deliveries to foreign markets fell 1.4 percent year-on-year to 467,000 units, generating $7.8e billion in export revenues, down 1.3 percent.

In September alone, the industry’s total production dropped 5.4 percent from a year ago to 123,445 units, with passenger car output falling 2.7 percent to 86,000 units.

This followed the 40 percent decline in auto production in August, when passenger car production was down 26.7 percent annually.

Meanwhile, Eroldu suggested establishing a “green fund” to assist consumers in disposing of their old cars, which account for 95 percent of vehicle emissions.

There were more than 30 million registered motor vehicles in Türkiye as of August, and a third of them — around 10 million — are vehicles older than 13 years.

Instead of offering a reduction in the special consumption tax to encourage people to replace scrap cars with new vehicles, a “green fund” may be created by the Environment Ministry to provide financial support, Eroldu said.