The automotive aftermarket cannot get out of the recession!

Automotive Aftermarket Products and Services Association (OSS) announced the sector evaluation for the second quarter of 2024. According to the results of the survey conducted by industry representatives, the stagnation in the automotive aftersales market continues.

Costs and cash flow problems are growing

There was a decrease in both domestic sales and exports compared to the same period last year. Although industry representatives expect a recovery in the coming quarters, cost pressure and cash flow problems continue to put pressure on the industry.

According to the survey results, domestic sales decreased by 2.67 percent in dollar terms compared to the same period in 2023. While the sales of distributor members increased by 3.11 percent in dollar terms, there was a significant decrease of 11.96 percent in producer members. Industry representatives expect a recovery in the third quarter of 2024 and predict a 2.5 percent increase in domestic sales in dollar terms.

Despite the stagnation in the sector, there is a relatively positive picture in employment. While 31.7 percent of the members participating in the survey stated that they increased their employment compared to the first quarter of 2024, 48.3 percent stated that they maintained their employment.

The rate of members who reduced their employment remained at only 20 percent. Industry representatives stated that the biggest problem they faced in the second quarter of 2024 was the excessive increase in costs with 78.3 percent. Cash flow problems came in second place with 61.7 percent.

In addition to these two important problems, loss of business and turnover (48.3 percent), cargo cost and delivery problems (40 percent) and problems in employment (40 percent) were listed as other important problems of the sector. 23.3 percent of the respondents cited legislative changes and 21.7 percent cited problems at customs as other factors that negatively affected the sector.

Stagnation and uncertainties in the sector also negatively affect investment appetite. According to the survey results, the rate of members planning to make new investments in the next three months remained at the lowest level of the last period with 20 percent. The rate of those planning to invest among producer members decreased to 13 percent. For distributor members, this rate is 24.3 percent.

The average capacity utilization rate of manufacturers in the second quarter of 2024 was 75.22 percent. This rate was at 77.33 percent in the first quarter of 2024. In the second quarter of the year, members’ production decreased by 2.17 percent compared to the same quarter of 2023. A negative picture also prevails on the export side. In the second quarter of 2024, members’ exports decreased by 1.3 percent in dollar terms compared to the same period in 2023.

OSS Association President Ali Özçete stated in his evaluation that the contraction in consumer demands exceeded expectations and this made industry stakeholders uneasy. Stating that cash flow problems also increase collection problems, Özçete said that the decrease in capacity utilization rates increases concerns about the future.

Özçete, “Although the outlook is pessimistic in the short and medium term, the positive rate in new vehicle sales keeps long-term expectations strong.He stated that he maintains his hope for the future of the sector. He also stated that the stabilization of exchange rates and the balancing of spare parts prices give positive signals in the fight against inflation.