(Bloomberg) -- A campaign by Turkish state-run lenders to spur domestic demand has boosted the shares of carmakers, as local units of Fiat SpA and Ford Motor Co. surged in early trading on Thursday.
TC Ziraat Bankasi AS, Turkiye Halk Bankasi AS and Turkiye Vakiflar Bankasi TAO said in a joint statement that they will offer cheaper loans to citizens when they buy domestically-made vehicles from select manufacturers including Fiat, Ford, Honda and Renault Mais.
Tofas Turk Otomobil Fabrikasi AS, a joint venture between Fiat and Turkey's Koc Holding, climbed as much as 5.3% to 19.9 liras in Istanbul after the statement, the biggest advance since June. Ford Otomotiv Sanayi AS, a partnership of Koc with Ford, rose up to 2.6%. Karsan Otomotiv Sanayii ve Ticaret AS, a maker of commercial vehicles, was up as much as 5.2%.
“The impact on Tofas shares should be more pronounced,” said Harun Dereli, an analyst at Ziraat Securities in Istanbul. Tofas is the only listed company that manufactures a passenger car model in Turkey, he said, referring to the “Egea” brand.
The annual interest rate on vehicle loans will be as low as 5.88%, the three banks said. That compares with a current average rate of 20.8%, according to data compiled by Bloomberg.
The campaign comes amid a dismal period for carmakers, which face a significant slump in domestic market demand. Total vehicle sales have been below their 10-year average since April last year, according to data provided by the Automotive Distributors' Association. In the first eight months of the year, domestic sales dropped 46% compared to 2018.
To contact the reporter on this story: Taylan Bilgic in Istanbul at tbilgic2@bloomberg.net
To contact the editors responsible for this story: Onur Ant at oant@bloomberg.net, Jon Menon, Paul Jarvis
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