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Estimating light-vehicle sales in Turkey

Author

Listed:
  • Ufuk Demiroglu
  • Caglar Yunculer
Abstract
This paper is motivated by the surprising rapid growth of new light-vehicle sales in Turkey in 2015. Domestic sales grew 25%, dramatically surpassing the industry estimates of around 8%. Our approach is to inform the sales trend estimate with the information obtained from the light-vehicle stock (the number of cars and light trucks officially registered in the country), and the scrappage data. More specifically, we improve the sales trend estimate by estimating the trend of its stock. Using household data, we show that an important reason for the rapid sales growth is that an increasing share of household budgets is spent on automobile purchases. The elasticity of light-vehicle sales to cyclical changes in aggregate demand is high and robust; its estimates are around 6 with a standard deviation of about 0.5. The price elasticity of light-vehicle sales is estimated to be about 0.8, but the estimates are imprecise and not robust. We estimate the trend level of light-vehicle sales to be roughly 7 percent of the existing stock. A remarkable out-of-sample forecast performance is obtained for horizons up to nearly a decade by a regression equation using only a cyclical gap measure, the time trend and obvious policy dummies. Various specifications suggest that the strong 2015 growth of light-vehicle sales was predictable in late 2014.

Suggested Citation

  • Ufuk Demiroglu & Caglar Yunculer, 2016. "Estimating light-vehicle sales in Turkey," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 16(3), pages 93-108.
    • Handle: RePEc:tcb:cebare:v:16:y:2016:i:3:p:93-108
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    References listed on IDEAS

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    More about this item

    Keywords

    Light vehicles; Light-vehicle stock; Number of registered cars; Light-vehicle scrappage; Automobile sales; Turkey; Turkish economy;
    All these keywords.

    JEL classification:

    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

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