ECONOMY

Easing inflation and cheap loans seen to be sustaining car sales in Turkey

ISTANBUL (Reuters) – Turkey’s automotive market may grow by 4 percent in 2005 thanks to sound economic indicators, easing inflation and cheap bank loans, commercial vehicle maker Ford Otosan said on Friday. Carmakers’ group OSD has said the car market may shrink by 15 to 20 percent this year under the impact of tax hikes introduced by the government to curb consumer appetite for vehicles and with demand returning to normal levels. But August data show a decline in sales seen so far this year is losing momentum, said Michael Flewitt, Ford Otosan’s first deputy general manager, in an interview with Reuters. «Indicators have turned positive,» he said. Ford Otosan is a joint venture between Turkish conglomerate Koc Holding and US car giant Ford Motor Co. Ford and Koc each hold a 41.04 percent share in the automaker, while the rest is traded on the stock market. «We predict that sales of the light commercial vehicles – other than tractors, work machines and buses – will exceed 770,000 at the end of 2005,» said Flewitt. «This nearly corresponds to a 4 percent growth.» Release of pent-up demand after an economic crisis in 2001, cheaper bank loans and tax incentives for sales of new vehicles helped overall sales surge 88.2 percent to 753,731 vehicles in 2004. OSD data released in August show that total vehicle sales dropped 8.1 percent year on year in the first eight months to 457,025. Flewitt predicted Turkish automotive exports would total 560,000 vehicles, worth $12.5 billion, in 2005. They jumped 25 percent year on year in the first eight months to $7.6 billion.