Turkey's car market contracts after lira slumps, inflation surges

Turkey’s car market contracted by 15.9 percent in February.

Sales fell to 37,641 units last month, the Automotive Distributors Association (ODD) said on Wednesday. Sales of light commercial vehicles declined 12.7 percent annually to 12,011 units.

Turkish demand for cars is decreasing after a slump in the value of the lira late last year and a spike in inflation led to a surge in the price of vehicles and the cost of borrowing. The average weighted cost of a car loan has increased to 26.6 percent annually from 20.7 percent at the end of August, according to central bank data. The central bank began cutting interest rates in September to help spur economic growth, but banks raised the cost of borrowing for businesses and consumers due to concerns about inflation, which hit 48.7 percent in January.  

The total car and light commercial vehicle market shrank by 14.1 percent in the first two months of the year to 87,783 units. Car sales dropped by 16.8 percent to 66,661 units and sales of LCVs fell 4.5 percent to 21,122 units.

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