Turkey’s government fueled credit boom and the Central Bank’s endless rate cuts are triggering speculative frenzies at strange places in the economy. Most domestic commentators attribute the surge in BIST, Turkey’s stock exchange, to deposit holders fleeing banks on account of deposit rates far below the going rate of CPI inflation (7% net, annual vs 11.5% in May). While May data revealed sub-par home sales at less than 50K units compared to pre-Covid trend of ca 100K units/month, builders are flagrantly hiking prices to boos profit margins. According to Central Bank, annual increases in home prices reached 17.75% YoY as of May. One of the strangest places where the credit frenzy and low rates are reverberating is the auto market, where most dealers have emptied their inventories.
Xinhua: Car sales in Turkey boom despite COVID-19 concerns
The automotive sector in Turkey is experiencing a boom in June with sales jumping by 120 percent when compared to the same period the previous year, according to sector representatives, reported Xinhua News Agency.
Ayhan Serhan Atasoy, director of sales for a prominent gallery, told Xinhua that everyone wants to buy a car these days, as they do not want to use public transportation anymore over the concerns of getting infected.
“I have been working in the automotive sector for 20 years, and I haven’t seen such a big increase in sales,” Atasoy said.
During the quarantine period between March and June, sales in the gallery decreased by 50 percent, according to the director.
But, when the government eased COVID-19 restrictions on June 1, people taking advantage of low-interest rates of the banks flocked into car galleries, he continued.
As a result, second-hand cars were sold out in almost 15 days at his gallery, and his teams started having difficulties in meeting the demands of their customers for new cars.
“Now those who purchased a brand-new car, have to wait for at least two and half months to get their vehicles, as we are submitting the orders to the factories abroad and wait for their deliveries to the country,” Atasoy said.
“The process was simpler and faster, but due to the pandemic, everything is slowed down,” he added.
The prices of second-hand cars have been continuously increasing as the demand remains too high and new cars are out of stock, according to Semih Eryukseldi, a salesperson for the gallery.
“The values of some of the second-hand cars have already surpassed those of the new ones,” Eryukseldi told Xinhua.
According to Turkey’s Automotive Industry Association, automotive exports are the largest contributor to national exports of the country with a 14.2 percent share during the first five months of this year, despite the pandemic. The industry accomplished 1.2 billion dollars of export in May alone.
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