The Factors Affecting Automobile Demand in Türkiye

Abstract

Per capita demand for cars is significantly higher in societies with higher purchasing power. Globally, demand for automobiles has been growing steadily, especially in developing countries. In Türkiye, where the automotive sector plays an important role in exports and the overall economy, per capita demand for automobiles has also been steadily increasing. This study examines the effects of national income and labor force participation rates on Türkiye's automobile demand. Using data from 1990 to 2022, the number of automobiles per 1,000 people is analyzed as the dependent variable, while national income per capita and labor force participation rate are analyzed as independent variables. The results of this study show that while labor force participation rate and national income per capita are expected to influence automobile ownership, the findings suggest that these variables do not exhibit a significant direct relationship with car ownership in Türkiye. The error correction coefficient (ECT) is found to be statistically significant, indicating that the system adjusts to long-run equilibrium within approximately 11.75 periods. However, both the long-run and short-run coefficients for the labor force participation rate and national income per capita are not statistically significant. This suggests that other factors, beyond income levels and labor force participation, may play a more substantial role in determining automobile demand. These results imply that the dynamics of automobile ownership in Türkiye are influenced by a broader range of factors, including infrastructure development, government policies, and consumer preferences, rather than solely by income and labor force participation rates. Future research could further explore the impact of these additional factors on car ownership, providing a more comprehensive understanding of the drivers behind automobile demand in Türkiye.