Listed local carmakers face problem of shrinking profit

The profits of automotive companies listed on Borsa Istanbul plunged in the first nine months of 2024 even though vehicle sales remain robust.

Several factors, such as rising costs, a higher share of imported cars in the market and FX rates all eat into the auto companies' bottom line.

The combined net income of the eight automotive companies whose shares are traded on the stock exchange was 39 billion Turkish Liras in the January-September period, down 55.8 percent year-on-year.

In the first nine months of this year, six of the listed carmakers posted profit, while two of them reported losses.

This happened against the backdrop of strong sales. For instance, from January to September, passenger car sales grew 1.3 percent from the same period of last year to more than 675,000 units, according to data from the Automotive Distributors and Mobility Association (ODMD).

The association recently reported that passenger car sales hit nearly 846,000, a 0.5 percent increase on an annual basis.

One of the main reasons which impacted carmakers' profits was rampant inflation.

In an environment of high inflation, companies faced high costs, which also affected their competitiveness.

The share of imported vehicles in the domestic market rose during this period which contributed to the shrinking profit.

Data from the Automotive Manufacturers' Association (OSD) showed that 71 percent of passenger cars sold in Türkiye in January-September were imported vehicles.

The production of new models was launched with delays which also weighed on carmakers' profits.

Declining demand for cars in Europe which is the local auto industry's main export market was another reason for poor profit performance.