Gündüz FINDIKÇIOĞLU
[email protected]
Cüneyt DEMİRKAYA
[email protected]
Turkish Automotive Industry
Gaye AKSONGUR
[email protected]
December 2013
Mar 13, 2014
IS THERE A JUMP DISCONTINUITY AHEAD? YES, AND IT BEGAN TO TAKE SHAPE RATHER QUICKLY
Domestic car sales will fall drastically in 2014 and may not easily recover, even in 2015.
A rather dim growth outlook: we expect 2.5% GDP growth in 2014
Fed’s interest rate cycle has not yet turned up, but tapering has already commenced. Historical evidence suggests
that once the cycle reverses course, it follows the new trend for a relatively long time. We expect the US 10 years
Treasuries to reach 3.75-4% by the end of 2014. In an environment of rising interest rates worldwide, domestic rates
may not fall, especially in a risky EM in full flagrance of fragilities, risks of temporary upturns pending. Bad news:
slowdown is very real. Good news: the current account deficit will drop down to 5.5-6% of GDP, thanks to automotive exports in part, or so we hope.
Since car sales are mainly determined by growth –in fact a proxy for disposable income, but also an indirect indicator
of consumer confidence– and interest rates, we expect a clear-cut deceleration in 2014, up to 30%.
We reiterate our view to the effect that demand will forcefully be curtailed in 2014
The automotive sector had a better than expected year on the back of the strong consumer demand in the first half
of 2013. The decline in interest rates and the abundance of credit were the main drivers behind the sector's impressive growth in the past. TRY stability has also helped. Both these factors have pushed the delayed demand to come
in effect in 2013 along with the change in law to the effect that only cars that are produced within the year would be
recorded as new models. This had a bizarre effect: Many brands continued to sell yesteryear’s cars at reduced prices
to deplete stocks, which sustained sales momentum in the first few months of 2013.
Since the automotive demand is cyclical the slowdown has appeared from the second half of the year. Pursuant the
record sales figure of H1 2013 the sector started to lose momentum in the second half, although September and November figures blurred that trend. This effect doubled by the government via an increase in the private consumption
tax. Furthermore, the rise in loan rates and the restrictions imposed on consumer credits affected automotive demand negatively as well. Obviously, part of future demand was brought back by the incoming restrictions.
Finally, the government increased the special consumption tax (OTV) rates on passenger cars by 5-15 points. With
the latest adjustment, the OTV on automobiles with engine volumes up to 1,600cc, and 2,000cc were increased to
45% and 90% from 40% and 80%, respectively. The corresponding rate rose to 145% from 130% for automobiles
with engine volume more than 2,000cc
Momentum loss, both in sales and production, continued in the last couple of months. In fact, it is not only a momentum loss or a temporary setback, but also a drastic sea change in domestic demand. Therefore, to the question
“wherein lies the future?” the answer is the future lies in exports.
Even without the SCT hike cyclicality of demand would become a concern in 2014 anyway. We think the recent rate
hike will fortify this effect.
We expect a contraction of 25 to 30% in automotive sales next year.
December figures confirm momentum loss
The individual consumption index prepared by CNBC-e showed signs of deteoration and decreased by 4.3% in December. We do not expect any surge in automotive demand for rest of the year and same speed and momentum in
2013. We think the December sales figures confirm our expectation.
TSKB ECONOMIC RESEARCH
On the other hand, a likely further TRY depreciation both against the USD and the EUR will have a negative impact on
imported automotive demand.
We temporarily keep our 630,000 unit automotive sales in 2014 on the back of our GDP expectation of 2.5% and year
end CPI estimate at 9.25%.
Now, not everything is priced in fully, in our opinion. The picture is almost complete and economic realities are woefully intriguing. Politically speaking, the favorite question of the incoming two weeks could well have been had misconstruing the AKP become a pastime nearly as popular as guessing the odds of a currency crisis lately?
Could it be true that the organic interdependence of some layers in the AKP and its decision-making body has been
down played? Is it simply an inimical cul-de-sac the AKP has unwisely locked itself in or is there something else lying
behind the facade, a more dramatic kinship with an unacceptably erring deep conservatism. Ideological truisms blur
reason more often than not. Now that everything looks bad once again, this suspicion might well be seen as well
founded. However, even if some fund managers prove correct, and AKP wins a clear electoral victory, the “too much
ado for nothing-ness” of the turmoil should be seen as sufficiently bitter enough to leave us with an undesirable aftertaste.
Furthermore, we do not see that happening. A return to yesteryears is now impossible. Turkey needs a new growth
strategy, and the journey to the (un)known is admittedly long and zigzags are inevitable.
Stylized facts
We could report quite a few regressions to the effect that:
(a) The rate of interest has a huge impact on domestic car sales.
(b) The second factor is GDP; that is economic growth. However, interest rates by far dominate the effect of growth
on sales.
(c) EGARCH coefficients betray an asymmetry: bad news increase conditional variance more than good news do. In
other words, we may expect volatility after negative shocks, rather than after positive shocks.
(d) The coefficient of the intercept (C in the table below) is high and significant. This suggests customers take into
account the long-run weighted average expected volatility when calculating current expected volatility. In other
words, customers have a long consumption-smoothing horizon and they act like buyers of durable goods. Put differently, buyers in the car market look at the future before making a decision.
I do not know if such insights are in fact borne out by events, but as a first approximation, it is possible to claim that
customers are perfectly rational. Hence, an increase in the perceived risk for the years ahead would translate into domestic car sales.
Many regression results suggest that, in a log-log specification –that is in terms of elasticity- the nominal exchange
rate and the rate of interest appear to have very high coefficients. For the entire 2003-2014 period, with monthly data, sensitivity of domestic car sales to fluctuations in economic growth is very high. However, when we restrict the
sample to the 2009-2014 period, sensitivity to growth is lost. On the other hand, using seasonally adjusted series,
sensitivity is again restored, but the role of the exchange rate still matters.
We think growth matters in the long-run. Contrariwise, in the short run perceived future volatilities and expectations
of interest rate and exchange rate matter most. That is, they matter most in terms of sensitivity of sales to variations
in these variables. Should expectations converge to official estimates rather quickly –except the cyclical component,
the path to sustained solid car demand would be underway for 2015 and beyond. In other words, although it is pa-
tently clear that 2014 will fall short of 2013 by 25-30%, 2015 and beyond would look much brighter.
Unfortunately, we expect interest rates to remain high and convergence to growth that is near potential
–i.e. 4% and higher- looks rather elusive.
TSKB ECONOMIC RESEARCH Automotive Monthly
Page 2
Sense and Sensibility: A Quick Comment
Demand for vehicles is notoriously cyclical. We think we caught the peak of the cycle already. GDP growth is slowing
down, and we are not only talking about a cyclical phenomenon here. Rather, the potential growth rate may have
fallen and going forward, we may stick to mere 3% for three consecutive years, on average. Currency realignment is
possible anew, but not sure, in the coming months. Elasticities suggest that such a development would have a large
impact on sales. We think a 10% persistent rise in the exchange rate would curtail domestic sales by 10%-30% within
6 months after the shock hits the exchange rate path.
The EGARCH or Exponential GARCH model was proposed by Charles Nelson in the early 1990s. The specification for
the conditional variance is
log  t2     log t21  
 t 1

  1
 t 1
 t 1
Note that the left-hand side is the logarithm of the conditional variance. This implies that the leverage effect is exponential, rather than quadratic, and that forecasts of the conditional variance are guaranteed to be nonnegative. The
presence of leverage effects can be tested by the hypothesis that   0
The impact is asymmetric if
 0
TSKB ECONOMIC RESEARCH Automotive Monthly
Page 3
Production
Automotive Production excl. F.Trac.
1.400
st
i
n
U1.200
d
n
as 1.000
u
o
h
T 800
1.189
1.095
1.073
1.126
870
600
expect domestic market losses will be offset by
strong exports, thus year-end production figure will
be flat with 2013 output.
400
200
0
2009
2010
2011
2012
2013
Retail Sales
Retail Sales
Thousand Units
1,000
900
911
800
893
818
793
700
600
500
576
400
300
200
100
0
2009
2010
2011
2012
2013
379
350
342
300
250
305
Automotive market showed a similar pattern compared to
2012. Total retail sales mounted by 9.2% to 893,125 units
in 2013. This is mainly due to oversubscribed passenger car
imports. 78% of the passenger cars sold were imported, all
time high. Brand wise, Volkswagen was the leader in imported passenger car (PC) sales with 88,304 units. Renault
skyrocketed imported PC sales by 4.5 times, making the
highest contribution to yearly sales figure. Dacia’s imported
Light Commercial Vehicle (LCV) figure surged to 7,494
units, 5.8 times higher compared to 2012.
Domestic Factory Sales
Domestic Factory Sales excl. F. Trac.
400
Thousand Units
The total automotive production (excluding agricultural
tractors) realized as 1,125,534 units, which points out
4.9% escalation in 2013. The corresponding year’s data
came up with a CUR of 74%, 7 points improvement compared to a year ago. Oyak Renault sustained its leader position in total production league with 331,694 units. We
283
255
200
150
100
50
Domestic factory sales were tapered by %7.4 to 282,842
units in 2013 mostly due to the weak sales performances in
pick-up and minibus segments. Although Tofaş recorded
the highest sales figure with 86,433 units, the y-o-y decline
was read as 14.9%, which translates into 5 points deterioration in the aggregate sales figure. Ford Otosan followed
the leader in a similar manner with 15.4% contraction in
domestic factory sales. Despite the above mentioned falls,
Toyota’s PC sales climbed by 38.3% to 15,790 units.
0
2009
2010
2011
2012
2013
Exports
Thousand Units
Exports excl. F. Trac.
900
800
700
600
754
828
791
730
629
500
400
300
200
100
0
2009
2010
2011
2012
2013
TSKB ECONOMIC RESEARCH Automotive Monthly
Exports posted 13.5% growth in 2013 due to mainly
17.3% growth in PC exports. Oyak Renault continued to be
the champion of the exporters with 266,508 units. Toyota
recorded the highest annual change with 36.8% rise in PC
exports. Ford Otosan’s minibus exports swelled by %112.3
from 16,315 units to 34,629 units. In addition to that, according to TIM, the sector including motor vehicles, parts
and accessories completed 2013 with US$ 21.3 billion export revenue and 14% share in Turkey’s overall exports.
Page 4
(Units)
2006
Production
987,580
Retail sales
665,515
Domestic Factory Sales 288,070
Exports
696,688
CUR (%)
2007
2008
2009
2010
2011
2012
2013
%Chg Dec-12 Dec-13
1,099,414 1,147,110 869,605 1,094,557 1,189,131 1,072,978 1,125,534 4.9% 86,944 83,166
634,206 526,544 575,869 793,172 910,867 817,620 893,125
9.2% 121,113 135,596
277,141 229,781 255,176 341,636 379,092 305,402 282,842 -7.4% 36,466 33,747
820,370 910,270 628,970 754,469 790,966 729,923 828,471 13.5% 64,928 64,999
88.8%
79.4% 57.3% 72.2%
75.2%
67.8%
74.4%
66%
66%
%Chg
-4.3%
12.0%
-7.5%
0.1%
Source: Automotive Manufacturers Association (OSD), TSKB Economic Research
Production
OSD announced that the total production in the sector (excluding tractors) demonstrated
4.9% expansion in 2013, amounting to 1,125,534 units. The contribution to growth came from
the production of PC by 5.2%. On the contrary, commercial vehicles (CV) segment contributed
negatively with 0.3 points. PC production was 9.8% higher while CV production was 0.8% weaker
compared to last year. Accordingly, 2013’s CUR emerged as 74%, exceeding the previous year’s CUR
of 68%.
On a monthly basis, automotive manufacturing exhibited 4.3% decrease in December,
compared with the same month of 2012. PC production was up by 13.9% while CV production
contracted by 23.7%.
Compared to November, the production went down by 26.8% to 113,646 units, due to the
commercial vehicles production. In parallel with the decline in production, December’s CUR demerged
to 66% from November’s 90%. (December 2012:66%)
In 12-month production contest, Oyak Renault was again champion with 331,694 units.
The followers were Ford Otosan and Tofaş with 281,287 and 244,614 units respectively in 2013.
Exhibit: 1 Automotive Production in Turkey
(Units)
Passenger Car
Commercial Vehicle
Minibus
Midibus
Bus
Pick-Up
M.Truck
L.Truck
TOTAL
2008
621.567
525.543
21.123
10.660
7.526
449.434
28.904
7.896
1.147.110
2009
2010
2011
510.931
603.394
639.734
358.674
491.163
549.397
11.829
16.978
22.475
2.624
2.658
3.509
5.931
5.268
6.907
330.044
442.408
479.110
7.403
20.429
32.635
843
3.422
4.761
869.605 1.094.557 1.189.131
Dec-12
44.708
42.236
3.060
257
497
37.108
1.156
158
86.944
Dec-13
50.935
32.231
1.862
363
516
26.682
2.360
448
83.166
%Chg 12M2012 12M2013
13,9%
577.296
633.604
-23,7%
495.682
491.930
-39,2%
29.335
37.750
41,2%
4.158
5.197
3,8%
6.427
8.345
-28,1%
426.633
410.556
104,2%
26.271
25.587
183,5%
2.858
4.495
-4,3% 1.072.978 1.125.534
%Chg Nov-13 Dec-Nov%
9,8%
66.155 -23,0%
-0,8% 47.491 -32,1%
28,7%
4.346
-57,2%
25,0%
579
-37,3%
29,8%
574
-10,1%
-3,8%
39.484
-32,4%
-2,6%
2.024
16,6%
57,3%
484
-7,4%
4,9% 113.646 -26,8%
Source: Automotive Manufacturers Association (OSD), TSKB Economic Research
(Units)
January
February
March
April
May
June
July
August
September
October
November
December
12 Months Production (2013)
P.Car Mini Bus Midi Bus Bus Pick Up
40.071
3.278
401
785 37.203
48.821
3.124
427
674 38.023
53.534
3.291
461
877 39.136
51.211
2.851
415
688 35.671
54.157
2.864
453
793 36.020
55.989
3.718
442
879 38.104
65.411
3.757
414
787 39.002
30.137
1.336
244
500 13.026
65.199
4.122
550
734 38.111
51.984
3.201
448
538 30.094
66.155
4.346
579
574 39.484
50.935
1.862
363
516 26.682
Truck
2.070
2.450
2.520
2.472
2.631
2.843
2.621
2.045
2.800
2.314
2.508
2.808
Total
83.808
93.519
99.819
93.308
96.918
101.975
111.992
47.288
111.516
88.579
113.646
83.166
Brand-wise Production (2013)
(Units)
P.Car Mini Bus Midi Bus Bus Pick Up
Oyak Renault
331.694
Ford Otosan
36.874
238.120
Tofaş
82.817
161.797
Toyota
102.260
Hyundai Assan 102.020
M. Benz Turk
4.001
Honda Türkiye 14.813
Karsan
836
576 10.084
A. Isuzu
1.981
58
Otokar
40
2.659 1.224
555
Temsa Global
557
1.186
MAN Türkiye
1.300
Truck
Total
331.694
6.293 281.287
244.614
102.260
102.020
18.394 22.395
14.813
990
12.486
2.868
4.907
362
4.840
1.175
2.918
1.300
Source: Automotive Manufacturers Association (OSD), TSKB Economic Research
TSKB ECONOMIC RESEARCH Automotive Monthly
Page 5
Domestic Retail Sales
Domestic retail sales posted 9.2% expansion, increasing to 893,125 units in 2013. In details, PC sales
posted 19.5% growth, where CV exhibited 12.6% contraction. In December, the number of HCV sold was 0.1% higher
compared to the same month of 2012 and 80.1% higher compared to previous month.
Domestic retail sales attained 135,596 units, posting 12.0% hike in December on the same month of previous year. CV
retail sales decreased by 14.4% while the PC retail sales grew by 25.1%.
On the other hand, local automotive retail sales posted %9.3 decline beginning from 2011 as shown on the chart below.
SCT hike in LCV curb demand in 2012 and 2013.
The share of import-based vehicles in the domestic market decreased to 68.2% in December, from November’s 69.2%.
In terms of monthly import numbers, Ford captured the “Pole Position” in passenger cars imported with 11,297 units
whereas Volkswagen was the leader in LCV imports with 2,462 units. Looking at the 12 months period, Volkswagen was
at the top of the ladder in both PC and LCV markets with 88,304 units and 23,752 units respectively.
Exhibit: 3 Automotive Sales in Turkey (Retail)
(Units)
Local
Import
Domestic Sales
Imports as % of Total
2009
261,948
313,921
575,869
54.5%
2010
327,764
465,408
793,172
58.7%
2011
372,335
538,532
910,867
59.1%
%Chg
-9.3%
20.3%
9.2%
Dec-12
45,071
76,042
121,113
62.8%
Dec-13
43,166
92,430
135,596
68.2%
%Chg 12M2012 12M2013 %Chg
-4.2%
305,926
277,515
-9.3%
21.6% 511,694
615,610 20.3%
12.0% 817,620
893,125
9.2%
62.6%
68.9%
Nov-13
25,610
57,407
83,017
69.2%
Nov-Dec %
68.6%
61.0%
63.3%
%Chg
Dec-12
Dec-13 %Chg 12M2012 12M2013 %Chg
19.5% 80,926
101,199 25.1% 556,280
664,656 19.5%
-12.6% 40,187
34,397 -14.4% 261,340
228,469 -12.6%
-14.8% 34,474
28,519 -17.3% 221,481
188,723 -14.8%
-0.3%
5,713
5,878
2.9%
39,859
39,746
-0.3%
28.4%
398
697
75.1%
3,084
3,959
28.4%
67.1%
315
156
-50.5%
2,410
4,027
67.1%
-7.6%
5,000
5,025
0.5%
34,365
31,760
-7.6%
9.2% 121,113 135,596 12.0% 817,620 893,125
9.2%
Nov-13
64,117
18,900
15,184
3,716
415
128
3,173
83,017
Nov-Dec %
57.8%
82.0%
87.8%
58.2%
68.0%
21.9%
58.4%
63.3%
Source: Automotive Manufacturers Association (OSD), TSKB Economic Research
(Units)
Passeger Car
Commercial Vehicle
LCV
HCV
Midibus
Bus
Truck
TOTAL
2009
369,819
206,050
187,307
18,743
2,205
1,623
14,915
575,869
2010
509,784
283,388
251,129
32,259
2,372
1,525
28,362
793,172
2011
593,519
317,348
270,920
46,428
3,104
2,532
40,792
910,867
Source: Automotive Manufacturers Association (OSD), TSKB Economic Research
Local Automotive Retail Sales 2011-2013
60,000
50,000
Units
40,000
30,000
20,000
10,000
0
Jan. Feb. Mar. Apr. May Jun.
2011
2012
Jul.
Aug. Sept. Oct. Nov. Dec.
2013
Source: Automotive Manufacturers Association (OSD), TSKB Economic Research
TSKB ECONOMIC RESEARCH Automotive Monthly
Page 6
Domestic Factory Sales
In 2013, domestic factory sales weakened by 7.4% to 282,842 units proving the
mounting demand for imports. The wholesale figure of CV posted a 18.1% decline, while the
passenger car sales posted a 4.7% upsurge in that period. The decline in the sales of commercial
vehicles pulled the figure down by 9.6 points while passenger car sales brought the figure up by 2.2
points. CV sales drop was mainly triggered by deteriorating pick-up sales figure.
In December domestic factory sales indicated a 7.5% y-o-y fall, and sales decelerated to
33,747 units. In yearly terms, PC sales remained flat with 0.3% up, while commercial vehicles
plunged by 13.2%.
On the other hand, comparing December to November, domestic factory sales grew by
20.1%. Commercial vehicles, especially pick up sales was the major contributor to growth, while the
passenger cars exhibited 4.7% decrease, compared to November.
Tofaş reinforced its dominant position in domestic factory sales by selling 86,433 units in
2013, while Oyak Renault and Ford Otosan followed the leader with 64,468 and 55,230 units,
respectively.
Exhibit: 4 Domestic Automotive Sales (Wholesales Figures)
(Units)
Passenger Car
Commercial Vehicle
LCV
Pick-Up
Minibus
HCV
Midibus
Bus
Truck
TOTAL
2010
2011
2012
2013 Cum.Change Dec-12 Dec-13
161,445 180,276 143,594 150,365
4.7%
15,549 15,596
180,191 198,816 161,808 132,477
-18.1%
20,917 18,151
153,714 160,298 130,069 97,875
-24.8%
17,736 13,802
146,220 150,596 120,077
89,968
-25.1%
15,858 13,195
7,494
9,702
9,992
7,907
-20.9%
1,878
607
26,477 38,518 31,739 34,602
9.0%
3,181 4,349
2,060
3,040
3,017
4,152
37.6%
353
569
1,990
2,495
2,367
3,834
62.0%
296
109
22,427
32,983
26,355
26,616
1.0%
2,532
3,671
341,636 379,092 305,402 282,842
-7.4%
36,466 33,747
YoY% Nov-13 MoM%
0.3%
16,361 -4.7%
-13.2% 11,740 54.6%
-22.2% 8,877 55.5%
-16.8%
7,997 65.0%
-67.7%
880 -31.0%
36.7% 2,863 51.9%
61.2%
453 25.6%
-63.2%
124 -12.1%
45.0%
2,286 60.6%
-7.5% 28,101 20.1%
Source: OSD, TSKB Economic Research
Exports
In 2013, the automotive sector exports grew by 13.5% y-o-y to 828,471 units. Demand
for PC was the main trigger of exports in the January-December period. PC exports depicted 17.3%
growth, while CV exports increased by 8.5% in 2013.
In terms of monthly performance, motor vehicles exports in December decreased by
18.5%, on m-o-m basis. Passenger cars displayed 9.4% m-o-m decline, while CV exports shrunk by
31.8%.
Oyak-Renault remained the leader of exporters’ league during the 12 months of 2013, by
shipping 266,508 units. Ford Otosan and Tofaş were ranked in the second and third place with
208,272 and 160,309 units respectively.
Turkish Exporters Association (TIM) announced Turkish automotive sector – including
motor vehicles, parts and accessories – generated US$21.3bn export revenue, which signaled
11.8% growth, and holds 14.0% share in Turkey’s overall exports in 2013. In addition to fortifying
European Union countries, exports to South Africa soared by 4 times. Top 3 countries that caused
exports to increase by 12.3% are UK, Belgium and Russia.
Exhibit: 5 Motor Vehicle Export Figures
(Units)
Passenger Car
Commercial Vehicle
LCV
Pick-Up
Minibus
HCV
Midibus
Bus
Truck
TOTAL
2010
2011
2012
2013 Cum.Change Dec-12 Dec-13
439,999 442,674 412,991 484,504
17.3%
35,925 42,834
314,470 348,292 316,932 343,967
8.5%
29,003 22,165
307,702 339,529 309,030 335,429
8.5%
28,338 21,073
306,902 319,366 292,601 300,765
2.8%
25,722 18,610
800
20,163
16,429
34,664
111.0%
2,616
2,463
6,768
8,763
7,902
8,538
8.0%
665 1,092
807
647
1,173
985
-16.0%
213
178
3,550
4,204
4,047
4,498
11.1%
299
552
2,411
3,912
2,682
3,055
13.9%
153
362
754,469 790,966 729,923 828,471
13.5%
64,928 64,999
YoY% Nov-13 MoM%
19.2%
47,271 -9.4%
-23.6% 32,522 -31.8%
-25.6% 31,515 -33.1%
-27.6% 27,339 -31.9%
-5.8%
4,176 -41.0%
64.2% 1,007 8.4%
-16.4%
47 278.7%
84.6%
497 11.1%
136.6%
463 -21.8%
0.1% 79,793 -18.5%
Source: OSD, TSKB Economic Research
TSKB ECONOMIC RESEARCH Automotive Monthly
Page 7
Conclusion
2013 commenced with relatively low levels of production. Thanks to recovering Europe, production picked up
sharply at the half of the year with the contribution of strengthening exports. Production tracked down-trend
path for the last four months of the year parallel to diminishing exports. (See Production vs Exports Chart). The
pie chart below shows Turkey’s automotive export markets: The EU territory dominates %75.3 of the market.
Retail sales were import oriented. Share of imported PC sales hovered around 75% throughout the year.
Imported pc sales ended the year with 78% share. (See Retail Sales vs Imports and Share of Imports Charts).
To curb the demand for imported vehicles, Government introduced precautions: SCT hikes are implemented,
auto loan installments altered and the rates had gone up. Share of imported vehicles is expected to drastically
decline together with contracting domestic sales in 2014 due to price hikes in 2014 model PCs and CVs and SCT
boost in PCs.
Retail Sales vs Imports
Production vs Exports
260.0%
210.0%
160.0%
110.0%
60.0%
10.0%
Production yoy change
3
1
i.k
E
-40.0%
Exports yoy change
Retail Sales yoy change
Source: OSD, TSKB Economic Research
Jul-13
3
1
.
m
e
T
Oct-13
3
1
s.i
N
Jan-13
3
1
.
ac
O
Apr-13
2
1
i.k
E
Jul-12
2
1
.
m
e
T
Oct-12
2
1
s.i
N
Jan-12
2
1
.
ac
O
Apr-12
1
1
i.k
E
Jul-11
1
1
.
m
e
T
Oct-11
1
1
s.i
N
Apr-11
1
1
.
ac
O
Jan-11
0
1
i.k
E
Oct-10
0
1
.
m
e
T
Jul-10
0
1
s.i
N
Apr-10
0
1
.
ac
O
Jan-10
120,0%
100,0%
80,0%
60,0%
40,0%
20,0%
0,0%
-20,0%
-40,0%
Imports yoy change
Source: OSD, ODD, TSKB Economic Research
Export Markets-2013
Share of PC and LCV Imports in Total
EU 21
France
85%
80%
75%
70%
65%
60%
55%
50%
45%
40%
35%
30%
3%3%
4%
4%
5%
England
15%
Germany
Italy
Other Countries
5%
12%
Near and Middle East
Russia
PC
LCV
Source: OSD, ODD, TSKB Economic Research
TSKB ECONOMIC RESEARCH Automotive Monthly
Oct-13
Jul-13
Apr-13
Jan-13
Oct-12
Jul-12
Jan-12
Apr-12
Jul-11
Oct-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
6%
North Africa
6%
11%
Belgium
USA
8%
Spain
9%
10%
Slovenia
Europe (Exc. EU and Russia)
Source: TUIK, TSKB Economic Research
Page 8
Outlook
Turkey is still journeying through the vicissitudes of a single concept, one entwined with many of its selfgenerated economic conundrums: stability –or lack of it thereof. Nevertheless not only politics do cloud the
economic horizon. First, the growth story has ended: Turkey does not have a growth model, not even a growth
engine. Second, emerging markets are fragile and so is Turkey. Private sector FX-denominated debt and its short
position loom large at the horizon. The most recent data show that central bank reserves have been used up to
USD 5.9 billion to finance both the current account deficit and capital outflows. Third, political risks will not
dissolve after the municipal elections: They may last at least until the August 2014 Presidential voting. It may
also prove to be correct that the ideological-cum-political cul-de-sac this country has found her in is here to stay
for a very long time. Next year, that is 2015, would then be the year of “recovered stabilization” but, on the
other hand, the Presidential elections could lead the stabilization to go astray anew and become a source for
further instability. Overall, March 30 elections may not solve anything at all. We expect loan rates to remain high
throughout the year, with increased exchange rate volatility, higher than consensus inflation, and lower than
expected growth. It is not yet a recession, not even a near-recession. Outlook, however, is not bright at all, and
is fundamentally dim.
Relegating the much-abused practice of “inflation tax” to oblivion was a success in the early 2000s, and the key
was budget discipline. However, this only rendered Turkey comparable to other emerging markets because both
inflation and interest rates have been falling throughout the EM universe since 2001. What has changed? A lot
has changed. Nevertheless, from a simple trade-off viewpoint public & domestic debt has been swapped with
private & external debt. Private savings have been falling already when the 2001 crisis hit, but this trend has
been exacerbated since then.
TSKB ECONOMIC RESEARCH Automotive Monthly
Page 9
Demand cannot be triggered any further. Household debt/disposable income: 50.6 and better than some Ems.
However, that ratio was 4.7% in 2002. As levels go, it is acceptable, but growth is excessive. Interest on
household debt/disposable income is also reasonably low, but at the margin, the cost of borrowing has been
raising fast in the last few months.
This ratio is “gross”. It includes “only assets” as blended with “only liabilities” etc. Wealth distribution is even
more unequal than income distribution. Excluding “only asset” types, it may be as high as 60%. Furthermore,
debt is not long-term.
Going forward, even 4% GDP growth looks elusive. The potential growth rate has been roughly 4.5% in the past,
but the IMF thinks it has fallen to c. 4%, a conjecture we concur with. Even so, future GDP growth is likely to
remain below potential. As trends go, a 3-7-7 pattern emerges for the next: 3%GDP, 7% CPI, and 7
%
Current Account Deficit. We also look at sequential growth, not only head-on. There are huge base effects in the
Turkish data. Hence, GDP has to be analysed as seasonally & working day adjusted, sequential, and/or compared
to the previous quarter. The years of success, i.e. expansionary fiscal contraction of 2003-05 are gone. Growth
slides down by all metrics and so does its potential. A sea-change is warranted more than ever.
TSKB ECONOMIC RESEARCH Automotive Monthly
Page 10
Exhibit: 6 Passenger Car Market In Turkey
Passenger Car Sales
(Units)
Local
Import
Domestic Sales
Imports as % of Total
2009
126,277
243,542
369,819
65.9%
2010
155,634
354,150
509,784
69.5%
2011
179,488
414,031
593,519
69.8%
%Chg
0.4%
26.3%
19.5%
Dec-12
19,069
61,857
80,926
76.4%
Dec-13
22,222
78,977
101,199
78.0%
%Chg 12M2012 12M2013 %Chg
16.5% 146,604
147,128
0.4%
27.7% 409,676
517,528 26.3%
25.1% 556,280
664,656 19.5%
73.6%
77.9%
Nov-13
14,643
49,474
64,117
77.2%
Nov-Dec %
51.8%
59.6%
57.8%
Passenger Car Imports
(Units)
Volkswagen
Ford
Opel
Renault
Hyundai
Dacia
Peugeot
Toyota
B.M.W
Mercedes
Citroen
Nissan
Audi
Others
Total
2009
26,752
33,462
22,689
5,908
25,091
5,873
13,783
18,637
6,729
9,700
6,627
5,949
6,251
56,091
243,542
2010
39,822
55,212
39,768
5,291
16,418
13,230
18,851
29,341
12,034
12,300
11,462
11,299
9,656
79,466
354,150
2011 %Chg
Dec-12
55,550
32%
8,316
58,807
24%
5,828
52,624
13%
8,536
7,534 452%
777
17,157
19%
3,900
17,937
4%
4,731
15,480
59%
3,047
26,450
12%
4,148
15,018
36%
1,957
12,630
57%
2,578
14,469
34%
2,175
18,573
-2%
2,998
12,064
9%
1,756
89,738
8%
11,110
414,031
26% 61,857
Dec-13 %Chg 12M2012 12M2013 %Chg Nov-13 Nov-Dec %
9,636
16%
66,792
88,304
32%
8,579
4%
11,297
94%
47,030
58,405
24%
6,044
35%
10,176
19%
49,143
55,719
13%
4,815
9%
5,466 603%
5,965
32,904 452%
2,894
678%
4,004
3%
25,141
29,824
19%
2,665
-5%
4,802
2%
27,666
28,901
4%
2,331
-1%
4,800
58%
14,519
23,068
59%
2,147
26%
2,595
-37%
20,099
22,421
12%
2,175
21%
3,291
68%
15,247
20,705
36%
2,401
46%
3,006
17%
12,730
20,023
57%
1,687
20%
3,015
39%
14,711
19,690
34%
1,563
-13%
2,641
-12%
18,873
18,417
-2%
1,783
13%
2,603
48%
13,720
14,987
9%
1,577
14%
11,645
5%
78,040
84,160
8%
8,813
32%
78,977
28% 409,676 517,528
26% 49,474
22%
Source: ODD, TSKB Economic Research
Exhibit: 7 LCV Market In Turkey
LCV Sales
(Units)
Local
Import
Domestic Sales
Imports as % of Total
2009
121,417
65,890
187,307
35.2%
2010
149,720
101,409
251,129
40.4%
2011
158,586
112,334
270,920
41.5%
%Chg
-23.7%
-2.3%
-14.8%
Dec-12
21,290
13,184
34,474
38.2%
2010
24,018
19,109
5,262
11,252
5,938
8,780
4,141
3,647
2,622
1,539
1,130
2,153
1,965
9,853
101,409
2011 %Chg
Dec-12
26,361
-9%
2,893
25,128
-29%
1,996
8,395
13%
1,245
9,968
-9%
1,809
3,402 477%
241
9,258
-13%
1,283
5,380
26%
633
4,640
34%
519
2,296
13%
573
1,351
-8%
578
1,833
32%
296
2,557
-40%
341
1,746
-30%
127
10,019
-48%
650
112,334
-2% 13,184
Dec-13
15,486
13,033
28,519
45.7%
%Chg 12M2012 12M2013 %Chg
-27.3% 129,399
98,778
-23.7%
-1.1%
92,082
89,945
-2.3%
-17.3% 221,481
188,723 -14.8%
41.6%
47.7%
Nov-13
8,127
7,057
15,184
46.5%
Nov-Dec %
90.6%
84.7%
87.8%
LCV - Imports
(Units)
Volkswagen
Renault
Mercedes
Peugeot
Dacia
Citroen
Fiat
Mitsubishi
Isuzu
Toyota
Iveco
Hyundai
Nissan
Others
Total
2009
10,601
13,449
3,025
8,007
3,918
3,627
2,157
2,838
2,046
1,156
794
3,281
1,376
9,615
65,890
Dec-13 %Chg 12M2012 12M2013 %Chg
2,462
-15%
26,048
23,752
-9%
1,827
-8%
16,331
11,550
-29%
1,309
5%
9,234
10,421
13%
1,883
4%
9,112
8,323
-9%
1,260 423%
1,298
7,494 477%
982
-23%
7,672
6,679
-13%
979
55%
4,962
6,245
26%
709
37%
2,684
3,592
34%
474
-17%
2,296
2,587
13%
321
-44%
2,615
2,413
-8%
380
28%
1,673
2,204
32%
214
-37%
2,454
1,480
-40%
36
-72%
1,247
878
-30%
197
-70%
4,456
2,327
-48%
13,033
-1%
92,082
89,945
-2%
Nov-13 Nov-Dec %
1,643
-13%
1,018
-20%
785
32%
774
44%
559
636%
422
-25%
600
8%
177
-40%
228
-3%
311
14%
219
164%
142
-49%
45
-32%
134
-56%
7,057
0%
Source: ODD, TSKB Economic Research
TSKB ECONOMIC RESEARCH Automotive Monthly
Page 11
Exhibit: 7 Automotive Loans and Rates
17.5
400
15.0
300
12.5
TL Millions
TL Billions
Automotive Loans
200
10.0
100
7.5
0
5.0
Total (LHS)
Jan-14
Oct-13
Jul-13
Apr-13
Jan-13
Oct-12
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
-200
Jul-10
0.0
Apr-10
-100
Jan-10
2.5
Weekly Change (RHS)
Source: CBRT, TSKB Economic Research
Automotive Loan Rates (Weekly)
%
16.5
15.5
14.5
13.5
12.5
11.5
10.5
9.5
Jan-14
Oct-13
Jul-13
Apr-13
Jan-13
Oct-12
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
8.5
Source: CBRT, TSKB Economic Research
TSKB ECONOMIC RESEARCH Automotive Monthly
Page 12
TSKB
Economic Research
[email protected]
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FINDIKLI ISTANBUL 34427, TÜRKİYE
(90) 212 334 50 50 fax: (90) 212 334 52 34
This document was produced by Turkiye Sinai Kalkinma Bankasi A.S. (“Industrial Development Bank of Turkey”) (“TSKB”) solely for
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TSKB ECONOMIC RESEARCH
Page 13
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Turkish Automotive Industry December 2013 Gündüz