Government policies, which hold the automotive sector as the main cause of the wide current account deficit of the country, destabilize the automotive sector, as the constantly changing dynamics make alluring investments impossible and decision-making much harder, Automotive Distributors’ Association (ODD) Chairman Mustafa Bayraktar said during the General Assembly of the organization, where he was re-elected as the chair.
“A sector that doesn’t have a stable domestic market can only move like a mehter team [a traditional Ottoman military band],” Bayraktar said, referring to the team’s manner of marching, which is known as one step forward and two steps back.
He accused the government of putting the blame of the wide current account gap on the automotive sector without making a “scientific and objective” assessment of the situation in reference to loan limits introduced by the banking watchdog to abate the widening current account gap.
“Despite logging $13-billion foreign trade surplus in the past eight years, the automotive sector has faced tax hikes on the grounds of the current account deficit of budget performance,” he said.
“The ill fate of the energy and raw material-importing countries, like Turkey, is the current account deficit that rises after every growth year,” he said. “In order to make the right decision at the right times, we need to consider many factors and interpret what happens in the world and in Europe well.”
With the aim of raising the domestic savings rate and reducing the nation’s dependence on foreign capital to finance consumption, the Banking Regulation and Supervision Agency put hikes on car loan down payments, in use as of February.
According to the BDDK’s draft legislation, car loans will be limited to 70 percent of the total amount for vehicles that cost less than 50,000 Turkish Liras. The draft also foresees the restriction of consumer credit to a 36-month loan and car credit loans for 48 months.
The tough macro prudential measure coupled with New Year hikes on special consumption taxes and higher interest rates have caused the sector to record a 17 percent loss in February compared to last year. According to unofficial figures, the contraction is expected soar up to 40 percent in March.
Recalling the ODD had predicted the sector could achieve reaching a 1 million unit market in 2014, Bayraktar said the market expectations had advanced to around 600,000-700,000.
Emre Özpeynirci
