Türkiye's automotive sector has endured a challenging yet transformative year amid a monetary tightening drive since mid-2023, from steady sales growth driven by deferred demand to a major surge in the share of hybrid and electric vehicles.
Looking ahead to 2025, industry executives forecast a bifurcated year.
In November, passenger car and light commercial vehicle sales climbed 5.3% year-over-year, reaching 121,094 units. The uptick, spurred by deferred demand and new model launches, hints that year-end sales may match last year's 1.2 million units.
Year-to-date figures through November, however, reveal a 0.5% contraction, with 1.07 million units sold. While passenger car sales inched up by 0.5%, the light commercial vehicle segment saw a 4.4% decline.
To tackle inflation, the central bank has raised its policy rate by 4,150 basis points since mid-2023, reversing a previous low-rate policy.
It has kept the one-week repo rate unchanged at 50% for the last eight months but is expected to kickstart the easing cycle as soon as this week, as inflation has been declining.
According to industry executives, challenges, including high borrowing costs and limited financing options, shaped consumer behavior in 2024. Additional tariffs on Chinese imports also impacted sales.
DFSK Türkiye General Manager Çınar Noyan described 2024 as a year of stabilization after the previous year's record sales.
Bülent Kılıçer, senior deputy general manager at Honda Türkiye, echoed that view and said the market remained dynamic throughout the year.
"The automotive market of Türkiye has navigated a challenging yet transformative year under the influence of its economic conditions," Kılıçer told Anadolu Agency (AA).
He noted that a market decline was anticipated, but current data shows stable sales figures. He observed that high interest rates and difficulties in accessing loans led to aggressive campaigns to clear stocks.
Deferred demand and aggressive promotional campaigns in the scope of the GSR 2 (General Safety Regulations) regulations helped somewhat offset market constraints, according to Noyan.
"However, difficulties in accessing financing and the decisions to impose additional customs duties on Chinese brands have directly affected vehicle sales figures, especially for China-based brands like ours," Noyan said.
He said they still expect the market to stabilize at around 1.2 million units in 2024, similar to the previous year.
Hybrid and electric vehicles have been building on their momentum since last year, capturing a record 35.2% of the passenger car market in November.
Data from the Automotive Distributors and Mobility Association (ODMD) shows a sharp monthly increase in EV sales, up 45.6% to 12,970 units, and hybrid sales, up 26.9% to 20,321 units.
They now account for 25.7% of the year-to-date market share, up from 18.2% at the start of the year.
Kılıçer attributed the rise in hybrid and electric vehicle sales to new model launches and evolving consumer preferences.
Brands like the national EV manufacturer Togg have further boosted the ecosystem, accelerating investments in charging infrastructure, Kılıçer told Anadolu Agency (AA).
"Many brands are introducing new hybrid and electric models in the Turkish market, considering future competition," he noted.
Kılıçer noted that 2024 has been shaped by the questioning of electric vehicles and the impacts of economic fluctuations in the global automotive sector. He pointed out the growing demand for electric vehicles in China, the U.S. and partially in Europe.
"The increasing influence of Chinese manufacturers in the European market has led national brands to reevaluate their competition strategies. Economic challenges and rising interest rates have suppressed consumer demand, particularly in Western markets. The shift of production from Europe to Eastern Europe, Asia and North Africa aimed to reduce production costs, expanding the impact of changes in logistics and global supply chains that began during the pandemic," he noted.
"Overall, it has been a year of significant transformations, with challenges and new opportunities in hybrid and electric mobility solutions," he added.
Looking ahead to 2025, industry executives see a potential for a positive shift as of the second half of the year, mainly on the back of lower interest rates.
Noyan expects the economic situation to adversely affect the real sectors in the first half of the year, with a rebound anticipated in the second half due to lower interest rates.
"We foresee that the total market may vary up or down by around 10% compared to 2024," he added.
Ali Haydar Bozkurt, CEO of Toyota Türkiye Marketing and Sales Inc., expects the inflation-fighting program to continue in 2025 and says the minimum wage increase as of January will be a key factor for many sectors.
"The size of the increase will significantly impact consumers' spending potential," Bozkurt said on Friday.
"However, considering the current population and mobility needs in Türkiye, we anticipate that the market will remain above 1 million units moving forward," he said.
