Automotive industry contracts further

The impact of the global economic crisis has not left the automotive industry alone. Although the implemented private consumption tax cut helped for a few months, the initiative has expired and the industry continues down hill.

Turkish automotive industry’s total production in the first 10 months of the year declined to 699,141 by contracting 33.4 percent compared to same period a year earlier.

During the period running from January to October 2009, the industry experienced a significant contraction both in production and in exports, according to the Automotive Manufacturers Association, or OSD.

During the first 10 months of 2009, the auto industry’s exports declined 39.1 percent compared to the same period last year. Meanwhile, in October, the increase in the industry’s exports displayed an increase of 24.4 percent compared to same period last year.

As the private consumption tax, or ÖTV, reductions expired Sept. 30, the industry saw a demand decline of 74 percent in October compared to a month earlier. The automotive sales in October declined 30.1 percent compared to same month last year.

Medium and heavy commercial vehicles and tractor sales experienced some significant loses in production. In the same period, the market for light commercial vehicles contracted 11 percent, while the market for heavy commercial vehicles contracted 47 percent.

The sharp decline in the production of heavy commercial vehicles continued. During the first 10 months of the year, commercial vehicle production figures declined to levels it had seen five years ago. This year, with the production of 57,000 heavy trucks, was below 2002.

The total auto industry market declined 37 percent to 22,111 vehicles, compared to the same month a year earlier. Low demand on light commercial vehicles had already begun to decline as of the last quarter of 2008. This trend continued to follow through. The contraction in the aforementioned market was 45 percent to 7,000 units in October compared to the same month last year. Meanwhile, private consumption tax reduction has not played a major role in the heavy commercial vehicles’ market, as the ÖTV implemented on those vehicles was already low. In October, the market for heavy commercial vehicles contracted 52 percent compared to the same month a year earlier.

Drop in total exports continue

Turkey’s total exports during the 10-month period running from January to October 2009, was worth $13.7 billion. That marked a decline of 38.4 percent compared to same period last year. Automotive industry’s exports during the period covered 17.4 percent of Turkey’s total exports.

Total vehicle exports of the country during the first 10 months of the year stood at 503,660 units, which was a decline of 39.1 percent compared to same period of last year. Total passenger car exports, meanwhile, also contracted 32.5 percent to 319,355 units. Commercial vehicle exports dropped to 184,000 displaying a decline of 48 percent. Tractor exports deteriorated to 6,788, which marked a drop of 23 percent.

In this period, Oyak Renault, a Turkish carmaker co-owned by Oyak and French Renault, exported 181,000 vehicles, while Tofaş, the Turkish manufacturer of cars for Fiat SpA, exported 57,000 passenger cars and 76,000 light commercial vehicles.

Ford Otosan, a carmaker of Koç Holding operating with Ford Motor Co., exported 97,000 light commercial vehicles, while Toyota exported 59,000 passenger cars.

Turkey’s automotive industry began to experience a production decline as of August 2008. Things only worsened with the impact of the global crisis and the tendency of decline followed through October 2009.

In addition to the demand decrease in domestic market, the sharp contraction in exports caused further contraction in the industry. The total vehicle production dropped 33.4 percent, while passenger car production declined 26.2 percent in the first 10 months of this year.

The total automotive production fell to 699,141, while passenger car production stood at 420,379.

Within the first 10 months, production decreased by 93 percent in light trucks, 77 percent in heavy trucks and 51 percent in minibuses. The production contraction in light trucks was 38 percent, while it was 20 percent in buses. Tractor production also dropped 47 percent to 11,776.

Automotive sales during the first 10 months of the year totaled 455,000. The total market growth compared to same period last year was 0.3 percent.