The passenger car and light commercial vehicle market in Türkiye achieved a historic milestone as sales surpassed 1.2 million units in 2023, according to industry data published Friday.

The surge was propelled by easing financing conditions in the first half of the year and pent-up demand. Yet, borrowing costs soared as the central bank delivered aggressive monetary tightening after the May elections.

Passenger car and light commercial vehicle sales in December exceeded expectations, rising by 37.7% to 158,653 units, according to the Automotive Distributors and Mobility Association (ODMD).

This took the year-end total to a record 1.23 million units, marking a 57.4% year-over-year increase. The earlier annual all-time high stood at 984,000 units in 2016.

Throughout the year, sales registered records every month except for November.

The rise in sales came despite a sharp rise in the costs of loans for vehicles after seven successive months of interest rate hikes by the central bank aimed at cooling demand and stemming inflation that neared 65% last month.

Since June, the bank hiked its benchmark policy rate by 3,400 basis points to 42.5%, after the new economy administration orchestrated a shift from a yearslong policy of low borrowing costs after the May vote.

According to ODMD data, passenger car sales increased by 63.2% throughout the year, reaching 967,341 units, while the light commercial vehicle market saw a 39.2% increase, reaching 265,924 units.

Boom in EVs

In a breakthrough, electric vehicle (EV) sales constituted 6.8% of the total sales in 2023, according to the ODMD data.

The record share was driven by the first homegrown EV brand Togg, and the entry of new players like Tesla. The course of the year saw electric cars' share in monthly sales surpass 10% in August, compared to just 2% in April.

EV sales in December surged by 643% compared to the previous year, totaling 11,289 units, the data showed. In December alone, they comprised 9% of total car sales.

Sales throughout the year reached a record of 65,562 units.

Togg topped the list and delivered 19,583 of these, while Tesla, entering the market in April, achieved approximately 12,150 sales. Chinese automaker BYD, which started operations in Türkiye in November, delivered 839 units.

Togg is currently producing a fully electric C-segment SUV. The brand launched the production of its T10X in October 2022 before it started deliveries in April 2023.