Public lenders exclude automakers from loan package over price hikes

Public lenders exclude automakers from loan package over price hikes

Public lenders exclude automakers from loan package over price hikes

Three state-owned lenders have excluded six major international automakers from a cheap loan package campaign, accusing them of raising prices disproportionately.

Ziraat, VakıfBank and Halkbank said in a joint statement on July 25 that they would no longer issue loans for purchases from the six automotive companies, which produce vehicles in Turkey mainly for export but also for the domestic market.

“Honda, Hyundai, Fiat, Ford, Renault and Toyota have been excluded for violating the aim of the loan package, which is to provide low-cost financing to our individual and corporate customers and promote domestic production in the country,” read the statement.

The public lenders offered loans with interest rates as low as 0.49 percent and a grace period of up to 12 months in early June, when the government eased three-month anti-pandemic restrictions to ramp up economic recovery.

Last month, the automotive market jumped 66 percent on an annual basis, reaching 70,973 thanks to cheap loan packages. Passenger car sales surged 58.4 percent to 57,067, while light commercial vehicle sales soared 108.7 percent year on year to 13,906 in June.

As deferred demand was unleashed, prices skyrocketed, partially due to limited vehicle stocks caused by the global supply chain in recent months. But for many customers, the price hikes were so high that they had to leave stores empty-handed.

In the meantime, the public lenders said that companies had been handed price-gauging warnings before they were excluded from the loan campaign.

Automakers in Turkey produced 415,454 vehicles, including automobiles, light commercial vehicles and tractors, between January and May, according to a sector report released on June 8.

In the first five months of 2020, Turkey’s auto production dropped 35 percent on a yearly basis due to the COVID-19 pandemic, said the Automotive Manufacturers Association. Although the total volume of automotive exports witnessed an 8 percent decline annually, it increased to $2 billion in June from $1.2 billion in May, according to the Uludağ Automotive Industry Exporters Association.