August 29, 2013 / 4:57 PM / 4 years ago

UPDATE 1-Tofas CEO sees flat Turkish auto market despite headwinds

(Adds quotes, details)

By Evren Ballim and Nick Tattersall

ISTANBUL, Aug 29 (Reuters) - Turkish auto sales will reach around 820,000 vehicles in 2013, almost unchanged from last year, the chief executive of automaker Tofas said on Thursday, while the European market will see a more marked improvement from 2015.

Tofas, which makes light commercial vehicles for Italy's Fiat and France's PSA Peugeot Citroen, is sticking for now to its 2013 production and export targets of 255,000 and 160,000 vehicles respectively.

But economic conditions in Turkey in coming months could mean those goals will be narrowly missed, CEO Kamil Basaran told Reuters in an interview in Istanbul, citing rising interest rates and a weakening lira.

"In September and October little by little (the rising cost of loans) will be added into prices. Exchange rate increases will be priced in too," he said.

"Prices for imported brands, under pressure from the euro and dollar, will increase more and competition will become more of an issue," he added.

Tofas - a joint venture between Fiat and Turkey's Koc Holding - imports Fiat Group vehicles from the Fiat, Alfa Romeo, Lancia, Jeep, Maserati and Ferrari brands.

The Turkish economy was the fastest-growing in Europe in 2011, expanding 8.5 percent, but grew only 2.2 percent last year as domestic demand slumped. This year growth is expected to come in at between 3 and 4 percent.

The lira has fallen 14 percent against the dollar from a peak at the start of February and hit a record low on Wednesday on concern about possible U.S.-led strikes on neighbouring Syria, and after the central bank ruled out rate hikes to defend the currency.

The weak lira has eaten into profits at Turkish firms with high forex exposure, including national flag carrier Turkish Airlines, the country's largest telecoms group Turk Telekom and supermarket chain Migros.

Tofas exports light commercial vehicles to 80 countries in Europe, the Middle East, North Africa and South America, and will soon start selling its New Doblo van in North America, offsetting the impact of a weak lira on domestic sales.

Last year it produced 256,428 vehicles and exported 154,069. (Writing by Nick Tattersall; Editing by David Holmes)

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