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Vehicle production in Turkey declines 15.0% y/y in Q1, exports down 7.1% y/y
Vehicle production in Turkey plunged 17.1% year on year (y/y) during March to 132,189 units, according to data from the Turkish Automotive Manufacturers' Association (Otomotiv Sanayii Derneği: OSD). Of this total, passenger vehicle production was down 17.4% y/y to 87,348 units, while commercial vehicle (CV) production fell 16.6% y/y to 44,841 units during the month. During the first quarter of 2019, total production reached 361,516 units, down 15.0% y/y. This was split between passenger vehicle production of 238,822 units (down 16.3% y/y) and CV production of 122,694 units (down 12.4% y/y). Meanwhile, vehicle exports from the country declined 6.6% y/y to 120,445 units during March. Passenger vehicle exports during the month went down by 5.2% y/y to 81,737 units. During the first quarter of the year, vehicle exports from the country were down 7.1% y/y to 320,213 units, with passenger vehicle exports at 209,884 units (down 10.9% y/y).
Significance: The decline in Turkish new vehicle production during the first quarter of 2019 can be attributed to falling vehicle demand in the domestic market as well as sluggish exports from the country. The Turkish light-vehicle market, including passenger vehicles and light commercial vehicles (LCVs), has been declining for the past 12 months. In the first quarter, light-vehicle sales in the country plunged 44.2% y/y to just 88,469 units (see Turkey: 3 April 2019:Turkish light-vehicle sales decline 44.2% y/y during Q1). As reported earlier, the Turkish lira is once again under strong downward pressure. After depreciating by nearly 5% since the beginning of February until mid-March, the currency dropped by more than 4% on 22 March, falling to TRY5.651:USD1.00. The lira's weakness is linked to factors such as the deterioration of US-Turkish relations, which could potentially result in new sanctions; state interference in banking operations; government threats to engage in forced bank-ownership redistribution (İşbank); data indicating steep economic losses early in 2019; and continued, heavy short-term external debt in the corporate sector and the state. According to IHS Markit's forecast data, sales of light vehicles in Turkey will decline by 18.4% y/y to 506,630 units in 2019 and production of such vehicles will fall by 4.5% y/y to 1.44 million units.
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