HSBC's Target Price Updates for Turkish Automotive Stocks

A Critical Analysis of the Turkish Automotive Sector by HSBC

One of the leading financial institutions in the UK, HSBC, highlighted in its comprehensive assessment of the Turkish automotive sector that record sales levels in the domestic market for 2025 have not adequately reflected the profitability performance of industry players. Despite this situation, the bank has upwardly revised its target prices for automotive stocks.

Record Sales Limited Impact on Profitability

According to the report, the Turkish automotive market is expected to grow by 10% in 2025, reaching approximately 1.42 million units. However, a significant portion of this growth is driven by imported electric and hybrid vehicles. HSBC reveals that increasing competition has weakened firms' pricing power, which in turn has created negative pressure on profit margins.

Recovery in Profitability Pushed to 2026

HSBC anticipates that limited pricing power and rising costs will keep the recovery of profitability in the sector constrained until 2026. According to the bank’s 2026 scenario, the Turkish automotive market is expected to follow a largely horizontal trend at quite high levels, with a balanced contribution from passenger and light commercial vehicles. Prices are likely to be under pressure in the first half of 2026 due to competition, but a limited improvement may occur in the second half with potential easing in interest rates.

Increasing Share of Electric Vehicles, Export Pressure Continues

HSBC estimates that the market share of electric (BEV) and plug-in hybrid (PHEV) vehicles will reach around 45% in 2025. This trend will be supported by the increase in model diversity and tariff regulations. However, the anticipated only 1-1.5% growth in the European light vehicle market in 2026 emerges as a factor limiting the profitability potential of export-focused manufacturers.

Updated Target Prices

As a result of stock-based evaluations, the bank has raised the target price for Doğuş Otomotiv (#DOAS) from 200 TL to 260 TL, maintaining its “Hold” recommendation. The target price for Ford Otosan (#FROTO) was increased from 120 TL to 130 TL, continuing the “Buy” recommendation. The price for Tofaş (#TOAS) has been raised from 300 TL to 435 TL, with the recommendation remaining “Buy.” The target price for Türk Traktör (#TTRAK) has been revised from 600 TL to 625 TL, keeping the “Hold” view intact.