Turkey: Auto sales take a dive
Source: Middle East Insurance Review | Oct 2019
Turkish auto sales plummeted after tax incentives expired on 30 June, in a stark display of how dependent the market has become on government life support, according to a Bloomberg report.
Sales of cars and light commercial vehicles, or LCVs, fell by 66% in July from a year earlier to about 18,000 units, according to data published by the Automotive Distributors’ Association (ODD). The drop was the biggest since October, taking losses in the first seven months to 48%. Overall automotive sales reached 213,071 in the January-July period this year.
“The industry has been contracting for the past two years,” said ODD Chairman Ali Bilaloglu. To kickstart sales, a special tax on cars with engines smaller than 1,600 cubic centimetres should be repealed for this year, he said.
Total domestic sales could fall to about 350,000 units this year, Mr Bilaloglu said, which would be far short of 2016’s record of 983,720 units. A total of 620,937 automobiles and LCVs were sold last year, down from 956,194 in 2017.
The contraction in motor vehicle sales is seen as the most important factor that will limit insurers’ revenues in the coming period. In the Turkish insurance market, motor insurance is a large business branch (especially MTPL insurance), accounting for more than a third of the market share.
Lower vehicle sales and discounts allowed by the insurance regulator on minimum motor tariffs mean that the motor insurance segment will see mounting challenges this year. M