Despite soaring inflation, maritime specialists in Turkey remain optimistic about the latter half of 2024
In the tumultuous landscape of Turkey's economy, the auto market has emerged as a beacon of resilience. Despite the second-worst inflation crisis in recent history, surpassed only by the 126% inflation in 1994, the sector has proven to be a main driver of the country's economic recovery.
The year 2023 saw significant milestones for the Turkish auto market. For the first time, it surpassed 1 million units in sales, marking a year-on-year growth of 57.4%. This surge was driven by several crucial developments, including the entrance of electric vehicle (EV) brands like BYD, Tesla, and Turkey's first domestic EV brand, TOGG. The dynamics of the consumer market were further triggered by the showdown of EVs. Additionally, an increasing number of Chinese OEMs have been satisfying the Turkish market's demand for affordable cars.
However, the fleet market, which comprises an estimated 250,000 vehicles, is still experiencing stormy conditions due to inflation and restricted access to funding and loans. The steps taken by the Central Bank to cool down the economy point to limited loan opportunities in 2024. This, coupled with the uncertainty in inflation and exchange equations, makes it difficult to access loans, especially for used cars.
Inflationary state is likely to continue in 2024, according to Mehmet Yigit, the founder and CEO of Voltify, the first EV leasing company in Turkey. Yigit also expects a drop in retail sales and higher discounts from suppliers to leasing companies in 2024.
Despite the challenges, the Central Bank's new measures may help control inflation while delaying the lease market's recovery. The fleet market is anticipating a gradual recovery in the second half of 2023, when inflation is predicted to slow down.
Interestingly, 80% of the vehicle lease prices are financing expenses, and high-interest rates push the rental car prices. There are no publicly available, specific details in the search results about any Turkish automobile leasing companies planning to increase their fleet by approximately 35,000 cars in 2024.
The automotive sector's role in Turkey's economic recovery is further underscored by the fact that it was the sector least affected by the Central Bank of Turkey's change of president in February, which increased fears of instability. In January 2023, Turkey's annual inflation rate hit 64.86%, a new high.
Looking at the sales figures, the top five brands in passenger car and LCV sales in 2023 are Fiat, Renault, Ford, Volkswagen, and Peugeot. The catering industry, however, has been hit hardest by inflation, with an annual inflation rate of 92.27%.
Hakan Erdemir, Fleet Manager at Securitas Türkiye, attributes the strong sales in the Turkish auto market to "the delayed customer demand due to the pandemic caused supply and manufacturing issues". As the market navigates through the challenges of 2024, these insights offer a roadmap for understanding and predicting its trajectory.
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