LenaCars/Nazik: 2025 Will Be the Year for Leaders Managing Declines in New and Used Vehicle Sales and Operational Fleet Rentals.
Forex - The year 2024, which we are about to leave behind, has been filled with economic difficulties and uncertainties in the automotive industry, as in all sectors. Although there was no significant decrease in sales figures, profitability has decreased significantly. Comprehensive research conducted by LenaCars indicates that the high-priced vehicle stocks carried over from 2023 are being sold at a loss in 2024, and factors such as inflation, rising financing costs, and increasing real costs have put serious pressure on companies' income statements, revealing an average loss of 30%.
LenaCars General Manager Selçuk Nazik emphasized that 2025 will be the year for those managing a decrease in new and used vehicle sales and operational fleet leasing, with the policy interest rate becoming the most decisive fundamental factor.
In the new vehicle segment, this year also saw sales exceeding 1 million with a 44% increase compared to the average of the last 10 years. From January to November this year, a total of 1,068,260 new cars and light commercial vehicles were sold, and with high sales expectations for December, total sales for the year are expected to reach 1.25 million units.
On the used vehicle side, sales continued with a minimal loss of 3.5% in the first 10 months, surpassing 7 million, and LenaCars General Manager Selçuk Nazik predicts that the year will close with over 7.5 million. He pointed out that the most fundamental determinant in the automotive industry is the policy interest rate. "Until May 2023, low interest rates supported both vehicle sales and prices. However, the shift to a tight monetary policy as of June 2023 caused a decline in used vehicle sales. While the decline continued until July 2024, sales rebounded in the second half of the year, reaching the highest level of the last 10 years with 680,849 units sold in October. The perception that sellers were heavily losing and prices would rise, while buyers thought prices would drop further, was broken by July 2024. Sellers started to let go of their vehicles despite losses, while buyers strengthened their purchase motivations as they realized prices were stabilizing and not dropping further. Even though the expected interest rate reduction did not occur in the last quarter, buyers’ concerns about rising prices turned into purchases," he stated.
Rising costs have negatively affected rental companies.
Research by LenaCars also revealed the general picture in daily and operational rentals. Despite the growth in the tourism sector in 2024, high foreign exchange rates, rising fixed costs, and borrowing costs have negatively impacted daily car rental companies. Despite a 7% increase in the number of visitors arriving in Turkey, profitability in daily rentals has declined due to rising exchange rates and costs. The development of the vehicle fleet in long-term rentals remained at just 1.2%. While 1,516 companies declared bankruptcy in 2023, this number rose to 3,011 in 2024. This situation, combined with collection problems and rising costs, led to revenue loss.
Chinese automobile brands like BYD will support sales.
Sharing expectations for new vehicle sales in 2025, LenaCars General Manager Nazik stated, "The first half of the year will be quite tough, with both total sales volumes and profitability declining in the first half, while equity will keep companies afloat. However, in the second half, there will be a stabilization paralleling the interest rate policy and other socio-economic developments.
In a pessimistic scenario, the new vehicle market may reach 1 million units. We will follow the impact of China in 2025, witnessing strong moves from brands like BYD. These will have a positive impact on the numbers. However, it does not look good for domestic brands. The sector is expected to experience job losses in the first half of the year. This process will force all firms to reduce fixed costs and operate efficiently,” he explained.
In the used vehicle market, he stated that they expect a more balanced market compared to 2024, adding, “If there continues to be such sharp measures regarding mandatory insurance practices, the costs incurred here will reflect on used car prices. Potential interest rate reductions in the first quarter of the year will at least help prevent job losses through minor movements. Situations like the removal of the UTTS and ZMMS lead to increased costs in rentals. We do not expect growth in operational fleet leasing in the new year. We can say that in 2025, automotive stakeholder companies will go for downsizing, and those who can manage this process correctly will continue to strengthen. Companies need to focus on efficiency, manage downsizing properly, and especially strengthen their equity to remain active. They should be more focused and cautious in terms of efficiency, applying the 80/20 rule in terms of equity/external resource ratio. We hope the coming year will not resemble the year we are leaving behind.”