Turkey is seeking stability in an uncertain world. In the summer of 2018, the country was stuck in a financial crisis that seemed insurmountable, scaring investors, according to Barrons.com, with interest rates of 24%, and a 25% drop in the value of the Turkish lira in August. Additionally, fleets in the country are changing their views on certain vehicle funding options.
While Turkey’s president Recep Erdogan publicly spoke out against high interest rates and increased the country’s foreign debt, the country’s central bank has kept interest rates at about 24%. This prudence has mitigated consumer price inflation, and this appears to have opened a path toward stability. That said, the high interest rates and inflation remain a concern, with inflation up 20.35% in January 2019 due to high food and health care prices, according to Intellinews.
Turkey is the largest and most diverse economy in the Middle East, and is typically among the 20 largest GDPs in the world, based on International Monetary Fund data. This includes a strong automotive sector, producing nearly 1.6 million vehicles in 2018, a 9% decrease from the year before, according to Turkey’s Automotive Manufacturers Association (OSD). At the same time, the OSD reports vehicle exports up 11.6%.
The Country’s Fleet
Turkey’s fleet owners have long preferred vehicle purchase to leasing, but this view is evolving.
Tokkder reports that about 20% of all new cars in Turkey are estimated to be operational leasing company cars. This is up from roughly 17% in 2014, and 10% in 2010. Meanwhile, the number of purchased vehicles in 2018 dropped by almost half over 2017 figures.
Managing Fuel Costs
While the country sits amidst one of the most oil rich regions in the world, S&P Global Platts notes that Turkey imports 90% of its liquid fuel, particularly crude oil and diesel. This keeps fuel prices high: in January 2019, a liter of diesel cost 6.23 Turkish lira, or about US$4.47 per gallon. Fuel cards have been a key growth market for both the retail and fleet markets. GlobalData reports that more than 170,000 new fuel cards will be issued between 2016 and 2021, totaling to 864,951 cards in the market. Of those cards 47.6% will be held by fleet vehicles.
About three-quarters of vehicles in Turkey are passenger cars and light trucks, according to the Instanbul Policy Center at Sabanci University, noting that emissions levels are similar to those across the European Union. The report notes that while half of new cars are registered in and around Istanbul, nearly a quarter are often moved or resold into other parts of the country: “Overall, the average age of passenger cars in Turkey is 12 years, with the vehicle fleet in Istanbul being significantly younger than that.”
Turkish Vehicles Run on Diesel
Over 60% of vehicles in Turkey use diesel fuel – among the highest diesel use rates in the world, according to Sabanci University, while the Center for American Programs reports that electric and hybrid vehicles currently are a tiny part of the transportation mix.
The country has signed onto the Euro 6 standards, an EU-wide effort to curb vehicle emissions, and in late 2018 put a new $242 fine in place to ensure that vehicle owners conduct regular emissions testing to keep vehicles in compliance, according to the Daily Sabah.