Turkey Autos Report Q3 2013 - New Market Study Published

From: Fast Market Research, Inc.
Published: Thu Aug 08 2013

At the mid-point of 2013, BMI is happy to maintain its current forecasts for auto production, sales and trade in Turkey, but warns that there are a number of downside risks to our forecasts, with ongoing economic weakness holding the potential to impact the industry heavily over H213.

Much depends on the political outlook in Turkey. Our current auto forecasts are based on an estimation that the recent outbreak of widespread protests against the government will gradually subside. If we were to see an escalation of violence or a more severe disruption to government stability, this would quickly add momentum to capital outflows. Given Turkey's sizeable external imbalances, this would likely de-stabilise the economy and create a recessionary environment.

To start with auto production, vehicle manufacturing in Turkey fell by 0.4% year-on-year (y-o-y), to 467,370 units in the first five months of 2013. May figures were particularly alarming, down by 3.0% y-o-y. For 2013, we forecast a 3.1% increase in vehicle production, which we maintain for now. Despite a fall in 2012, BMI has long maintained there will be a resurgence in Turkish auto production in 2013 on the back of relatively strong export growth and domestic sales, in addition to good fundamentals. We caution, however, that there are a number of downside risks to our relatively bullish 2013 sales and production outlooks, and ongoing economic weakness could heavily impact the industry.

Full Report Details at
- http://www.fastmr.com/prod/640317_turkey_autos_report_q3_2013.aspx?afid=303

Turning to sales, vehicle sales in Turkey increased by 13.5% y-o-y, 323,187 units, over 5M13. This was predominantly on the back of a 20.7% y-o-y increase in passenger car sales, to 233,816 units. We forecast total vehicle sales to increase by 9.9% and passenger car sales to increase by 14% in 2013, a slowdown from the relatively strong growth witnessed at the beginning of the year.

We believe that current economic conditions may serve to weigh on growth in the sector later in 2013. Much of this sales increase has been met by a 27.6% y-o-y increase in vehicle imports, to 222,245 units. Following a sharp depreciation in the currency in recent weeks, we expect vehicle imports to slow down over the course of the year as they become more expensive in real terms. Furthermore, as the government continues to intervene in the market, we expect credit conditions to worsen, which may serve to dampen vehicle sales over the year. BMI therefore cautions that there are a number of downside risks to our 2013 sales forecasts, as current economic conditions could worsen, and have a greater impact on the autos sector than we currently envisage.

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