Bank parking lots full of seized motor vehicles

Certain banks have begun to take drastic measures in an attempt to recuperate out-standing debts.

Banks that have already put the brakes on granting loans due to the credit crunch are also closely monitoring loans they issued before the freeze. The parking lots of Turkey's banks, especially the ones located in smaller cities, are overflowing with impounded vehicles of people unable to make their car loan repayments. The number of vehicles repossessed by banks has risen by 60 to 70 percent.

Other financial institutions, besides banks, are also painting a similar picture. The number of vehicle owners Volkswagen Doğuş Tüketici Finansmanı, or VDF, a consumer financing company, is planning to pursue legal proceedings against rose nearly 100 percent compared to a year and a half ago, said Kemal ?ren, managing director of the firm.

Significant increase in the past year and a half
VDF, which offers different financial options for those who purchase brands such as Audi, Citro'n, Derbi, DOD, Gilera, Harley Davidson, Hyundai, Jaguar, Kia, Mazda, MG, Moto Guzzi, Piaggio, Porsche, Rover, Scania, Seat, Skoda, Subaru, Suzuki, Vespa and Volkswagen, have taken action against 3,200 vehicle owners within 18 months.

The legal proceedings for 1,500 vehicles have been completed and they will be resold by trustees in the upcoming days, ?ren said.

"There is approximately a 100 percent increase in the number of legal proceedings compared to 18 months ago. Our portfolio consists of nearly 90,000 vehicles, and 3,200 legal proceedings constitute four per thousand of this portfolio," he continued. "We do not regard this increase as distressful for the time being, but the sector is likely to witness contraction and problems with payments in the upcoming period. Bad loans may be on the rise with the contraction of the economy.

Next year will be difficult." ?ren noted that the period to launch legal proceedings was four months at VDF. Explaining the measures taken to protect customers during the period of launching legal proceedings, ?ren said, "Company policy designates when to launch legal proceedings. For instance, if a customer has paid 32 months of a loan that has a maturity of 48 months, we show tolerance. We wait for five or six months without pay."

Speaking on the condition of the anonymity, a bank authority said the increase in legal proceedings was already expected. "We used to allow three months for bad loans before legal proceedings. With a recent decision, we have reduced this to two months."

Another top-level bank authority also confirmed the situation of the bad loans. "There is increase, but it will not be like the 2001 crisis, because banks had granted loans very carefully following the 2001 crisis. The banking system is more robust."



The toll in three months
Within the last three months, banks have confiscated 400 cars in the southeastern city of Adıyaman, said Zafer Ersoy, chairman of Adıyaman Chamber of Commerce and Industry. "There are concerns regarding a further increase. The situation is valid for the entire country. There are problems for home loans. Over 40 houses have been confiscated and put to sale by banks in Adıyaman."

Vehicle and home loans have a crucial role in the stagnation of the market, said Mehmet Aslan, chairman of the Gaziantep Chamber of Commerce and Industry. "All people have stopped shopping, in order to pay home and vehicle loans." Aslan advised restructuring loan installments to bestir markets.

At present, the rate of loan refusals rose by as much as 75 percent, said İbrahim Aybar, chairman of the Association of Automotive Distributors, or ODD, and the managing director of Renault Mais. In Turkey, 75 percent of vehicle sales are made with loans, he said, adding, "Everybody should make maneuvers to bestir the market during this period. Sales narrowed 39 percent in October, compared to the same month of last year. The sector has been contracting since June."