Fleet management in Turkey
Fleet operators across the world are finding themselves navigating a rapidly changing landscape – and for those in Turkey it’s no different.
From transport electrification to supply chain disruption and fleet funding considerations, we shine a spotlight on the Turkish market and the challenges faced by operators.
Supply and demand
Vehicle sales in Turkey reached a record high in the first half of 2023, up 55 per cent from the previous year. However, demand still significantly exceeds supply.
Turkey’s automotive supply chain crisis, primarily caused by the global chip shortage and ongoing conflict in Ukraine, has seen further setbacks in recent times as a result of significant delays at ports.
For fleets, these disruptions have led to them facing extended delivery times and higher prices of the limited number of available vehicles.
They have also been affected by the country’s Special Consumption Tax, imposed on vehicles and calculated based on engine capacity and net price. A significant increase to this tax is expected, which will mean a further hike in vehicle prices.
To lease or not to lease
Since 2019, Turkey has grappled with persistent double-digit inflation, reaching more than 61 percent in September 2023. This surge, coupled with government pressures that have caused banks to tighten credit access, has resulted in soaring leasing costs, which in turn has led to fleets preferring to purchase vehicles outright.
For those organisations that do decide to lease, the longest contract length is usually 24 months. The high inflation rate has prevented leasing companies from offering 36 to 48-month contracts, as longer-term contracts come with greater financial risks especially when vehicle depreciation, maintenance costs, and the unpredictability of resale values are taken into account.
Going green
With the United Nations’ ban on sales of internal combustion engine (ICE) vehicles scheduled for 2040, petrol and diesel vehicles continue to dominate the Turkish fleet sector.
But while vehicle electrification in Turkey is still in its infancy – battery-powered vehicles still only account for a modest 2.21% market share – electric vehicle (EV) sales are on the rise and they are set to play a pivotal role in transforming the country’s automotive landscape in the coming years.
In the first five months of 2023, sales increased by almost 327 per cent year-on-year – coinciding with the launch of Turkey’s first domestically-produced EV, the TOGG T10X.
One of the biggest barriers to adoption remains an inadequate public charging network, and with a large chunk of the population living in apartments, access to home charging facilities is limited.
The Turkish government and charging companies are working hard to upgrade the infrastructure. In 2022, the Industry and Technology Ministry announced that 20 million Turkish Liras was being made available for EV charging station investments, while the Energy Market Regulatory Authority recently announced that the country ranks first in terms of fast charging points per vehicle in Europe (with one charger for every 14 vehicles).
Earlier in the year, Eşarj, Turkey’s first electric vehicle charging network, also announced plans to build 1,000 charging stations by the end of 2023, with at least one fast charging station in each province.
In terms of incentives for prospective buyers, EVs are exempt from both the SCT and VAT.
A safer fleet
In 2022, there were 1.233 million accidents on Turkey’s roads – 16 per cent of which resulted in death or injury.
According to the Turkish Statistical Institute, accidents increased year-on-year by 4.9%. However, in 2021, Turkey implemented lockdown measures which significantly reduced the number of people on the roads. The reduction in traffic may have contributed to a lower baseline for accidents, making the increase not entirely unexpected.
Turkey has been making efforts over the years to improve road safety, enforcing stricter fines and penalties for speeding, running a red light, drunk driving, using a mobile phone and driving without a seatbelt. Investments have also been made to help improve the country’s highways and urban roads.
Turkish fleets are also taking proactive steps to mitigate risk. Many have deployed telematics systems to monitor driver behaviour and enhance safety, while driver training programmes are used to improve motoring skills and reduce accidents.