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Developments in the automotive sector
The automotive sector in Turkey contracted by 35% annually in 2018 with sales of 642 thousand vehicles. The combination of rising prices on the back of currency depreciation and decline in purchasing power due to higher interest rates were the main reasons for the sector contraction. In an effort to stimulate the sector, the government introduced tax cuts with effect from 31 October 2018 which slowed down the contraction. Sales of passenger cars declined by 33% to 486 thousand in 2018, while sales of light commercial vehicles decreased by 42% to 135 thousand units. Heavy commercial vehicle sales contracted by 33% to 21 thousand units.

Despite weak domestic demand, solid export performance limited contraction in automotive production. In Europe, our most important export market, light commercial vehicle demand continued to grow while the decline in UK and Italy passenger car demand led to a 1% annual decline in Turkey’s export volumes to 1.3 million units. Based on figures released by the Automotive Manufacturers Association, export revenues increased by 11% annually to USD 32 billion and the automotive sector maintained its leadership position in Turkey’s exports. Total production volume declined by 9% annually to 1.6 million vehicles.

The Turkish bus market shrank by 29% in 2018 and ended the year with sales of approximately 3,800 buses. The contraction in sales was nearly 23% in mini and midi buses and nearly 50% in 12-meter and above city buses. The European bus market recorded an annual growth of 1.3%. Among the main markets, Italy enjoyed growth, Germany remained flat while Spain and France narrowed. Turkey’s bus export volume increased by 10% annually.

Developments in the tractor market
Turkey is the 5th largest tractor market globally in terms of number of tractors sold. Turkey’s tractor market size was 48 thousand units in 2018, implying 34% annual contraction. The decline in the market was driven by rising input and tractor prices leading to a decrease in the purchasing power of farmers.

As far as exports are concerned, the performance was robust with 15% annual increase in exports to 16 thousand units.

Developments in the defense industry
In 2018, the spotlight in the defense market was on domestic companies and manufacturing. In procurement, priority continued to be given to products and systems developed and produced in Turkey. After Otokar signed Turkey’s largest single defense export contract in 2017, mass production of the armored vehicles got underway in 2018.

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