Tofas fell to the lowest level in more than a week after a report that Turkey ruled out tax incentives for citizens to trade-in old vehicles, quashing optimism that the carmaker could benefit from a “cash for clunkers” program.
Tofas Turk Otomobil Fabrikasi AS, as Tofas is formally known, fell 2 percent to 12.3 liras at the closed in Istanbul, the lowest close since Sept. 18. The number of shares traded was 1.2 times the three-month daily average, according to data compiled by Bloomberg. The Borsa Istanbul National 100 Index dropped 0.4 percent, slumping for a seventh consecutive day.
Turkey “does not find it correct to give incentives by scrapping cars,” Finance Minister Mehmet Simsek was cited as saying by Haberturk newspaper today. “Incentives in special consumption tax is out of the question,” Simsek said. The comment was in contrast to an Aug. 28 statement from Industry Minister Nihat Ergun, that the government was about to finalize scrap-car incentives.
“Simsek’s words came as a surprise for the market,” Kivanc Uysal, an analyst at Seker Securities in Istanbul, said by phone. “Government incentives were expected to support domestic production, benefiting Tofas.”
Istanbul-based Tofas, co-owned by Fiat SpA and Turkey’s Koc Holding AS, posted net income of 109.2 million liras ($54 million) in the second quarter, missing the average estimate of 127.6 million liras in a Bloomberg survey of 11 analysts. The shares rose 2.1 percent this quarter, compared to a 2.4 percent slump in the benchmark index.
Tofas’s Fiat brand passenger cars had an 8.4 percent share of the local market as of the second quarter, according to an investor presentation on the company’s website. Istanbul-based Ford Otomotiv Sanayi AS had 8.3 percent of the market, the document shows. Ford Otomotiv shares fell 0.7 percent in Istanbul today, slumping for a fourth day.
On Sept. 20, Star newspaper reported that the government may provide an average incentive of 5,000 liras per vehicle for older passenger cars, citing a draft plan. The offer may include cutting the special consumption tax for those whose cars are over 20 years old, the newspaper said. There are more than two million such cars on Turkish roads, according to data from the statistics office in Ankara.
Eleven analysts recommend buying Tofas shares, while 14 have hold recommendations and three advise selling, according to data compiled by Bloomberg.