Sales of passenger cars and light commercial vehicles in Turkey surged 115.8% year-on-year in September to 90,619 units, hitting an all-time monthly high, according to data by the Automotive Distributors Association (ODD).
In the January-September period, sales rose 75.5% year-on-year to 493,621 units, surpassing the sales of the whole of 2019. Some 479,000 units were sold last year.
The upward trend over the recent months and the performance in the last month have led the association to revise up year-end sales forecast for this year to 700,000-750,000 vehicles.
The increase comes despite a hike in taxes Turkey announced in August on most imported cars. It increased its special consumption tax (ÖTV) on mid-range and expensive cars, but also lifted the lower thresholds at which the duty is imposed, meaning that more vehicles could be taxed at unchanged lower rates. This has led buyers toward cheaper vehicles.
Taxes for cars with engine capacity of 1,600 cubic centimeters (cc), the majority of automobiles Turkey imports, the ÖTV was raised to 80% from 60%. For electric cars with a capacity or the equivalent of more than 2,000 cc, the rate was raised to 130% from 100% and high segment cars will jump to 220% from 160%.
The value-added tax (VAT) on all car purchases remained unchanged at 18%.
Passenger car sales surged by 70% to 388,690 units from January through September, while light commercial vehicle sales were up 99.2% to 104,931 units, the data showed.
In September alone, sales were up 101.9% to 71,296 units and 189.1% to 19,323 units, respectively.
In the 10-year September average, overall sales were up 52%, according to ODD.
The demand for the passenger cars continue to increase with the effect of the coronavirus pandemic, said ODD head, Ali Bilaloğlu, stressing that the vehicle purchases with the aim of investment also accelerated.
"The consumer trend has turned toward vehicles with smaller engines due to the ÖTV and the increase in the exchange rates. We will continue to see transitions here in the coming months," Bilaloğlu said, evaluating the figures.
According to the segment classification, cars in the A, B and C segments constituted 87.2% of the overall sales at the end of September. C-segment vehicles held a 63.2% share with 245,502 units, with B-segment cars holding a 23.5% share with 91,536 units, the data showed.
Sedan cars were the most preferred cars with a share of 43.9%, followed by SUV with 28.9% and hatchback with 24.1%.
Sales of cars with engine capacity of 1,600 cc were up 72.1% and had a share of 94.9%, while sales of the cars between 1,600 cc-2,000 cc increased by 21.9% and had a share of 1.8%. Sales of cars with an engine capacity of over 2,000 cc surged by 1.7% and held a share of 0.2%.
"We had a very good September. We have surpassed the highest September sales in automotive history. The market continues to realize with the figure above expectations. We are in the last quarter. Classically, we are entering the quarter that generally has the highest sales of the year in percentage terms. I think something similar will happen this year if there is no unexpected economic or macro-economic development," said Bilaloğlu.
Murat Şahsuvaroğlu, the head of the Authorized Automotive Dealers Association (OYDER), said even in years when year-end sales hit 1 million units, September sales generally stood at around 85,000-86,000.
"We project we will end at the levels of 750,000 units with the continuation of the tempo seen in June, July, August and September of this year," Şahsuvaroğlu said.
The automotive industry was ravaged by the coronavirus outbreak, with sales plummeting after governments worldwide imposed lockdowns to stem the spread of the virus.
Turkey gradually eased the measures in an effort to revive the economy in May and June as it advanced in its fight against COVID-19.
Demand for automobiles in the country has been increasing steadily since early June after three public lenders – namely Ziraat Bank, VakıfBank and Halkbank – introduced low-interest loan packages for individual and corporate customers who want to purchase new and secondhand passenger vehicles.
Şahsuvaroğlu said the market had contracted in March and April due to the pandemic, however, reentered the upward trend in June with the cheap loan campaign.
He also stressed the ÖTV update to some extent benefited the vehicles produced in Turkey.
Elaborating on the sales, Ford Otosan Deputy General Manager Özgür Yücetürk said there would be inter-segment transitions in the industry with the ÖTV update, adding that they anticipate higher demand for models under 1,600 cc and less equipped vehicles.
"For instance, there may be a flow toward the light commercial vehicle segment due to the effect of ÖTV regulation," he was cited as saying by the Turkish Dünya daily.
Olivier Cornuaille, chairman of the PSA Turkey, which incorporates brands like Citroen, DS, Peugeot and Opel, also stressed the expectation that the ÖTV regulation would further strengthen demand for the light commercial vehicles.