Car fleet market in Turkey expected to rebound
In 2019, Turkey’s fleet leasing sector continued to decline. The report published by the Turkish Auto Leasing and Rental Companies Association TOKKDER and research company Kantar revealed that the number of cars on operational leasing dropped to 284,000 in 2019 Q3, a 17% decrease compared to the same period last year.
The sector has suffered a downturn since 2018. “With the rising interest rates and depreciation of Turkish Lira, the operational leasing sector shrank by nearly 22.5% in the last 21 months,” stated TOKKDER president Inan Ekici.
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
|---|---|---|---|---|---|---|
| Turkey GDP (constant prices, % change) | 6.1% | 3.2% | 7.5% | 2.8% | 0.2% | 3.0% |
Source: WEO database, IMF
He said that the situation prompted mixed reactions from the customers: the postponement of fleet renewals, lease extensions, reductions in fleet size, pre-owned car leases and switching to lower segment cars. Some customers decided in favour of buying.
Rebound
He also added that poor performance of the sector was among the factors attributed to Turkey’s car sales slump, referring to the recent TOKKDER report. According to the figures, 20% of the new passenger car sales in Turkey were purchased under an operational lease in 2018. As of 2019, the share dropped to 11%.
| 2015 | 2016 | 2017 | 2018 | Q3 2019 | |
|---|---|---|---|---|---|
| Vehicle parc (operational leasing), thousands | 277 | 331 | 366 | 324 | 284 |
| growth % | 17.0% | 19.3% | 10.6% | -11.5% | -12.3% |
Source: TOKKDER Operational Leasing Sector Report (Q3 2019), prepared in partnership with KANTAR
Yet the sector is projected to rebound shortly. “We believe that operational leasing sector recovery will start by 2020. The fleet size will reach 305,000 units by the end of 2020, indicating the annual growth of 7-8%,” confirmed the president of TOKKDER.
The upcoming year is also bringing a regulatory change. The new legislation sets a limit on tax deductions associated with auto rentals.
Regulatory policy
Zafer Salman, sales director for Garenta and ikinciyeni.com explained how the new regulatory policy could affect the sector. “The recent tax regulation suggests that companies can deduct up to 5,500 Turkish Lira of the monthly car rental expenses. This regulation might reduce demand for D-and F- segment cars, possibly leading to an increase in B and C segments.”
Consistent with the global trends, advancements in new technologies, electrification and digitalisation will impact the fleet management in Turkey in the long run.
Sustainable development
“Although minimising the costs is the main target for the fleet owners, the concept of sustainable development will eventually prevail. The transition will start with the multinational and large local fleet owners. The shift to low/zero-emission cars will happen gradually,” said Inan Ekici.
Zafer Salman, meanwhile, spoke out about the digitalisation of the fleet management processes in Turkey. “Companies investing in these will enjoy an advantage,” he said.
| Vehicle make (% of total) - Top 5 | |
|---|---|
| Renault | 26.9% |
| Fiat | 13.3% |
| Volkswagen | 13.0% |
| Ford | 10.3% |
| Skoda | 5.0% |
Source: TOKKDER Operational Leasing Sector Report (Q3 2019), prepared in partnership with KANTAR
| Vehicle segments | |
|---|---|
| C | 48.8% |
| B | 28.9% |
| D | 14.1% |
| Others | 8.2% |
Source: TOKKDER Operational Leasing Sector Report (Q3 2019), prepared in partnership with KANTAR
Image: bridge over the Bosphorus, Istanbul
Author: Anna Özdelen
