Turkey 2018. Market breaked the negative trend

Turkey Motorcycles

Turkish Motorcycles Market in the 2018 has gained 1% despite all around in the country is collapsing. The heavy lira depreciation has penalized importers and Japanese brands have lost steam. Indeed, the local brand Kuba overtook Honda taking the market leadership.

Economic Environment

Turkish economy likely recorded a dismal fourth quarter, as the impact of the August 2018 currency crisis continued to reverberate. The manufacturing PMI was firmly in contraction territory throughout the period on shrinking output and new orders, while business sentiment was decidedly pessimistic. Moreover, consumer spending was hit by higher interest rates, still-elevated inflation and depressed household sentiment, with retail sales declining sharply in October and vehicle sales plummeting throughout Q4.

This comes after comprehensive data showed that GDP growth slowed sharply in Q3 on soft private consumption and fixed investment. More positively, the lira has recovered substantial ground since September, while external rebalancing continues apace, with a third consecutive monthly current account surplus in October.

In the 2019 the economy is set to perform poorly, depressed by restrictive financial conditions constraining private consumption and fixed investment. However, the external sector should provide some support. Currency volatility and the possibility of renewed geopolitical tensions pose significant downside risks.

Motorcycles Industry Heritage

This century started up with 53. 000 sales in the 2000, well below the level of the record of 94.000 units touched in the 1997 and in the following years was in a sharp crisis with sales fallen down at a record-low of only 16.000 units in the 2002. Then the crisis was over and the market took a rushing path, with sales  near the record in the 2004 (92.000) and then above, with 2005 at 174.000 and in the 2006, in the sky, at the actual record of 390.000 units.

Too fast too soon, and in the 2007 and 2008 sales fell at 192.000 units (the current third best ever level), with a rapid fall at 134.000 in the 2010, a rapid recovery in the 2011, at the current second best record, 199.000.

Since then a progressive slow declining pathway is in place, with 2016 at the lower level in this decade (143.677) followed a recovery in the 2017 due to the reduction of compulsory traffic insurance tariff and ownership tax cut, ending the year at 157.755 units.

Market Trend

According to data released by the Turkish Association of Motorcycles Manufacturers, in the 2018 the market has been surprisingly resilient, ending with an increase of 1%, at 159.339 units, while the economic environment deteriorated rapidly, severely hitting the automotive industry, fallen down by a huge 35%.

Despite the positive score, the Turkish Motorcycles market has lost one spots in the preliminary global ranking falling out in 27th place, overtaken by Guatemala

In the last decade the domestic brands have progressively lost the market control to Japanese brands. However, the strong lira depreciation in 2018 has penalized all importers with local brands and local producer gaining consistently in volumes and market share.

Indeed, Honda has been the market leader between the 2013 and the 2017, but in the 2018 it was overtaken by Kuba, which increased sales by a spectacular +49% ending the year not far from 30.000 units. Kuba is a local company established in the 2004 and operating in Gaziantep with an annual production capacity of 120.000 among scooters, motorcycles, tricycles and ATV. In 2018 was back on top of the market after 5 years.

In second place ranked Honda with 24.729, losing 17.0%, and actually under the attack of the third, Mondial, very close with 24.626 units (+11.1%).

In fourth place Yamaha with 9.860 units (-31.8%).

All Premium brands had been penalized by the sharp increase in price with BMW down 24.3%, Ducati down 31.8%, Harley Davidson down 34.8%.

The outlook for the 2019 is quite negative, considering the country is in recession and the high depreciation of the lira created increase in the new motor vehicles and spare parts price. We project the market down 15-20 percent.

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