More domestic sales and a younger park required in Turkey
During January-August 2016, Turkey’s total automotive sector decreased by 7%, to 583,771 units; production increased by 7%, to 914,914; export increased by 14% compared to the previous year and reached 705,350. Export value increased by 12, amounting to15.385 billion dollars.
According to the figures of ODD – the association representing the car and automotive dealer industry in Turkey, Turkey’s passenger car and light commercial vehicle total amounted to 568,906 in the first 8 months of 2016, a decrease of5% compared to the same period of the previous year. In the 8-month period of 2015, a total market sales figure of 598,963 had been reached. In the January-August period of 2016, passenger car sales decreased by 3,5%, to 438.025 and the light commercial vehicle market decreased by 9,8%, to 130.881 compared to the same period of the previous year.
Raise the level
What is required, believes Hayri Erce, Executive Coordinator at ODD, are government promotions and practices that can carry the domestic market to the level of the countries that are in the position of global players, as it expresses at every opportunity. Countries that are in the position of global players, such as The United States, Japan, Germany, France, Korea have very high domestic market values. Turkey’s automotive sector takes its power from the country’s large and sustainable domestic market, which means it is possible to strengthen its position further in global setting.
Turkeyis the 18th largest economy in the world and has the second biggest population (approximately 79 million people) in Europe. Forecasts show that Turkey’s economy will be among the first fifteen countries in the world in the medium term. However, it remains some way behind European countries in automobile ownership. In Europe’s most populated country, Germany, whose population is only 2.5 million more than Turkey, more than 3.5 million cars are sold per year. And 2.3 million cars are sold in France, which has a population of 65 million and 1.7 million cars are sold in Italy for a population of 59 million, all of which suggests that Turkish domestic market sales are still short of potential.
While the vehicle park (including passenger cars and commercial vehicles) was approximately 1.5 million in the early 90’s, it stands at more than 15 million as of 2015, although unfortunately 3.5 million of these (23%) are vehicles that are more than 20 years old. The old vehicle park and its negative environmental effects continue to be an important problem for everyone. If evaluated from this angle, it appears that there is a long way to go to rejuvenate the vehicle park.
Turkeyhas to take into account reality in the world and especially in Europe. It has to take a step that supports innovation, digitalisation, Industry 4.0; make reforms that will strengthen the democracy and provide positive implications for the economy. An automotive sector that has a strong, steady and sustainable domestic market will open doors to possible new investments. In this sense, a contribution from the government is also important. Some important regulatory changes have been published recently:
- Within the concept of a law that was published in September 7th, ODD considers the regulation aimed at renewing and rejuvenating human and cargo transportation vehicles as significant. It also hopes that the project based investments and adopting special and flexible government promotions will bring sizable investments to the country.
- The law that was published in August 9th includes important investment and R&D promotions, VAT regulations, stamp taxes and tax regulations.
While the world faces low growth rates, Hayri Erce, Executive Coordinator at ODD, thinks that policies aimed at domestic market dynamics to support the continuity of Turkey’s growth process, and practices for rejuvenating our old vehicle park, will make a significant contribution to the Medium Term Plan, to the country’s growth dynamics and also to environmental protection measures.
With growing Turkey, the automotive sector will have the opportunity to strengthen its position and go forward in global arena.
In the light of all these indicators, Hayri Erce underlines that ODD will do its best for Turkey's automotive market that has so far decreased by 7%, to arrive at last year’s full year figure. | 21/09/2016 | Tim Harrup