27 Sep 23

Turkish leasing market recovers, despite high fuel costs

Following financial issues in 2019 and the pandemic in 2020 and beyond, the Turkish leasing market is now recovering, Q1 2023 figures released by TOKKDER show. However, the recovery is hampered by high fuel costs. 

Turkish leasing and rental association TOKKDER, a member of LeasePlan, represents 80% of companies active in the leasing market in Turkey. Its report on the first quarter of 2023 includes data from 16 leasing companies, including Hedef Filo, Leaseplan and ALD Automotive. 

The report shows that the domestic lease market is still recovering from the negative financial impacts of 2019 and 2020, and electrification has a long way to go to make a dramatic change in the market.

Forecast for 2030

The Turkish fleet market had been growing steadily since 2015, its customer numbers peaking in 2017 at 64,200. Then one of the biggest players went bankrupt, and an economic crisis hit the country. As a result, customer numbers dropped to 40,500 in 2019. 

Since then, the impact of the pandemic and increasing fuel prices have further diminished the figure, which has however started to rise slightly again in the first half of 2023. Here’s an overview of the customer numbers since 2019 (with the first two quarters of 2023):

2019 40,500
2020 35,900
2021 28,500
2022 25,300
2023 (Q1+Q2) 26,700

While car prices hit a low of 6 million TL (around €210,000) in 2019, that cost surged to 37 million TL (around €1.28 million) in 2022. In Q1 2023, the average car purchase cost was down again, to 27 million TL (around €940,000). 

Diesel and petrol dominate

In terms of brands, Renault, Toyota, and Fiat dominate the Turkish market. All three have factories in Turkey. In Q1 2023, Renault had 28.5% of the market, Toyota 14.2% and Fiat 10.4%. Other major brands in Turkey are Volkswagen, Ford, Skoda, and Peugeot

Looking at fuel type, diesel and petrol are still streets ahead of electric vehicles (EVs). A major problem resulting from this situation is that the Turkish market is very sensitive to rises in fuel cost. About 48% of fleet vehicles are diesels, with nearly 43% running on petrol. 

Mild hybrids have 7.3% market share, plug-in hybrids (PHEVs) are at 1.5%, while battery-electrics (BEVs) have just 0.4%.

When we examine vehicle types, we see 48.3% of fleet vehicles are in the C segment, with 28% in the B segment and 12.5% in the C segment. Light commercial vehicles (LCVs) have a 7.2% share.  

Number of vehicles shrinks

With costs well above pre-pandemic levels and the number of customers well below, many Turkish companies prefer longer-term contracts, while the number of leased vehicles continues to shrink. 

The contract terms as of Q1 2023 are:

Less than 18 months: 17,5%
18-30 months: 20,3%
30-42 months: 45,6%
Over 43 months: 16,6%

The number of vehicles leased in Turkey peaked in 2018 at 131,000 and has fluctuated ever since.Following a recovery in 2021 (with 81,000 vehicles leased), the tally for 2022 was just 62,000. According to TOKKDER, the half-year figure for 2023 stood at 31,000 – hardly promising an improvement for the whole year. 

Nevertheless, the Turkish lease market shows signs of strength. For example, the number of cars per customer has increased steadily since 2018, reaching a high of 8.8 in 2022. The first-quarter figure for 2023 is 8.6. Despite that relative stagnation, the average price of purchases is increasing – but this is due to the high inflation rate of the Turkish lira. 

The main image is courtesy of Shutterstock, 2128357160.

Authored by: Mufit Yilmaz Gokmen