Turkish lease market continues 15% growth
Tough for Turkey, great for the Turkish fleet industry: that’s a good summary of 2016, a year in which fleet industry growth not only bucked the declining trend in automotive sales but also outpaced overall economic growth.
Turkey remains an immature fleet market, with plenty of room for growth. This promising picture is confirmed by both the big-frame figures and the latest, detailed market data.
By mid-2016, there were 20.8 million vehicles on Turkey’s roads, of which 11.8 million were passenger cars. Of these, about 2.5 million are part of corporate fleets, with 11.2% of that total supplied by lease companies. In the mature markets of North America and Western Europe, that share is anywhere between 30% and 45%.
That leaves a lot of potential for growth. And the market is living up to that potential, with annual growth figures averaging 15% and upwards, both for the past few years and for the next ones. According to the Q3 report by Turkey’s lease and rental association TOKKDER, the country’s total operational leasing park had increased by 98,910 new vehicles for the year to date, to a total of 306,380 vehicles. At current growth rates, that total is expected to increase to 320,000 units by year’s end.
Translated into monetary value: with additional investments of 6.9 billion Turkish lira (€1.9 billion) in the first three quarters of 2016, the Turkish operational lease industry has reached a total worth of 20 billion TL (€5.5 billion) and paid a total of 3.2 billion TL (close to €900 million) in taxes in that same period – making an important contribution to Turkey’s tax base.
These figures are all the more impressive when viewed in the difficult economic and geopolitical context that Turkey experienced in 2016. Perhaps the most shocking event was the failed military coup in July, but the country was also rocked by a string of terror attacks and continued unrest in the southeast, partially an overflow of the civil war raging in neighbouring Syria.
All of these factors had a negative impact on the Turkish economy, which showed some signs of slowing down over the year, but nevertheless maintained a remarkable resilience, in view of the many shocks the country endured.
Paradoxically, these tough times are a contributing factor to the continued growth of the Turkish fleet industry. By choosing leasing over purchasing, and outsourcing the management of their fleet to professional players, Turkish companies are not only concentrating on their core business, but also reducing cost and risk – an especially prudent strategy in a volatile environment.
Those advantages of the leasing option are increasingly realized by Turkish SMEs, which are expected to represent a large part of the industry’s future growth, especially over purchasing, which remains a popular method of vehicle acquisition. The recent devaluation of the Turkish lira, and the resulting increase in vehicle prices (75% of which are imported) will only stimulate the trend away from purchasing and towards leasing.
Perhaps the most striking indication of the Turkish lease industry’s growing strength is the fact that it grew by 10.5% in the first three quarters of 2016 already (compared to the end of 2015), despite an overall drop of automotive sales by 2.3% - the result of both the aforementioned devaluation and of an increase in the special consumption tax.
This means that just over 1 in 5 new cars sold in Turkey (20.2%) is now a lease vehicle – an impressive figure, and an indication of an even brighter future for the Turkish lease market.
Image: Aviad2001, CC BY 2.5