July auto sales in Turkey impressive but sustainability remains a question

The surge in sales is impressive but not unbelievable in light of Turkey’s effective response to the COVID-19 crisis. While economic impact was inevitable, the Turkish Government and the Central Bank of the Republic of Turkey (CBRT)’s timely and effective actions such as the 21-point stimulus package, reduced interest rates and the deferral of social security premiums helped the country overcome challenges.

“The low interest rates and attractive packages helped automotive customers overcome the concerns regarding economic uncertainty. Attractive, low-interest vehicle loans for two-wheelers, as well as new and used passenger vehicles has significantly driven customer’s interest towards personal mobility.

“Another key factor that contributed to the surge in automotive sales since June is easing of country-wide movement restrictions. June and July witnessed significant pent-up demand from March, April and May, when the country was majorly under lockdown to contain the virus.

“It is questionable as to whether the spike in sales is sustainable. It depends on, firstly, whether there is a significant demand of vehicles left in the domestic market. In order to leverage the attractive packages, customers may have pulled forward their purchases and the demand for vehicles for 2020 may have been largely exhausted. The second point is whether the local manufacturers that were more focused on exports can respond to the domestic demand to maintain adequate supply.