30 nov 16

Fuel cost and safety are trending issues in Turkish fleet industry

Turkey’s high fuel cost is of particular concern to the fleet industry, which is also turning its attention to safety – a major issue in a country notorious for its high accident rate.

According to lease association TOKKDER, three trends will determine the course of the Turkish lease industry in 2017 and beyond: cost management, safety and environmental issues: “Fleet managers are emphasizing driving safety, by offering driver training courses. These indirectly also have a positive effect on fuel economy. And that in turn plays into the growing sensitivity for environmental issues”.

Tax measures

However, that sensitivity has not yet been translated in tax measures to reduce the carbon footprint – neither by penalizing the biggest pollutors, nor by incentivizing low-carbon alternatives. Tax does play a role in vehicle selection, though, with a punitive levy on engine sizes over 1,600 cc and high taxes on fuel, which is very expensive in Turkey. Both indirectly reward economical cars, making fuel consumption the second factor in the selection of company car models, right after the lease rate.

Defensive driving

Fleet owners are increasingly seizing the opportunity, offered by a number of lease companies and other providers, to educate their drivers in techniques that result in a more defensive driving posture – i.e. less accidents and lower fuel consumption. These driver behaviour courses are also trending in more mature fleet markets, but might actually be more useful in Turkey, relatively speaking, because of the high incidence of accidents, due to both behavioural and infrastructural factors.

Preferred option

But the biggest trend in Turkish fleet industry is the increasing popularity of the leasing solution itself. This is driven by the inherent advantages of leasing itself, but also by external factors, such as the high price of new vehicles, due to high taxation and price increases due to the devaluation of the Turkish lira. Operational leasing is becoming the preferred option for corporate fleets in Turkey, which means the fleet market will continue to grow, albeit at a slower pace than previous years.

Private lease

Lease product awareness is higher among big clients, while among smaller companies it is still very low. This is the very market segment that will generate most of the growth in the forthcoming period. That evolution will have a significant impact on the way itself that business is done, with greater emphasis on car park diversification, and on the marketing of products and the targeting of potential clients – also private clients, as private lease is taking its baby steps on the Turkish market.

Other factors of increasing concern to fleet customers include: image, quality, efficiency and wide network coverage in aftersales services. This indicates a growing concern for – and rise in – Residual Values, as part of the TCO equation.

Authored by: Frank Jacobs