Analysing the determinants of profitability in turkish automotive sector via panel data analysis : An application on Istanbul Stock Exchange

The aim of this study is to analyse the factors affecting the profitability of the 5 major automotive companies operating in Turkish automotive industry as the leading sector via panel data analysis. Profitability determinants have been examined as an microeconomic and macroeconomic factors under the main headings. In the model that the dependent variable is return on assets, the data set consists of 5 firms' cross-section data and time series of 46 periods from 2006 to 2017 and total of 22 independent variables. In order to ensure that no problems arise in obtaining the data and to establish a balanced panel data system, only the automotive enterprises whose main activity is production and listed on Istanbul Stock Exchange have been focused. The microeconomic factors that constitute the independent variables of the study are grouped under the titles of liquidity, activity and financial structure ratios. Macroeconomic factors used as independent variables are; industrial production index, consumer and producer price index, exchange rate, GDP, volatility index, interest, exports and imports. As a result of the applied panel data regression analysis, cash rate, tangible asset turnover and import variables have a significant positive effect on the profitability of the companies operating in the automotive sector, and debt ratio and industrial production index affecting in negative direction. According to this result, automotive enterprises that want to increase their profitability should focus on more internal resources to finance their assets and to increase their share of their liquid assets and fixed assets within their total assets.