Last week new moves were made towards the SCT rumor-dominated car market, introducing a 6-month 6,000km limit for companies, galleries and rental companies. Following this development, the Competition Authority (RK) launched an investigation into four leading second-hand companies in the industry for violating Article 4 of the Competition Act.
“SCT REDUCTION IS NOT ON THE AGENDA”
Before the market got over the shock of these developments, Finance and Finance Minister Nureddin Nebati stated that he had plans to increase the SCT at a meeting. Then he announced with his tweets last Friday that this was a joke and SCT reduction is not on the government agenda.
According to a rumor that surfaced last week, the government is preparing to increase excise duty on top luxury vehicles. All of these developments led to an increase in sales stagnation in the automotive market.
EXPECTED MEASURES HAVE LIMITED EFFECT
Auto industry officials told WORLD that the government’s measures to prevent exorbitant prices, particularly in the used car market, will have limited impact on their purpose. According to some, such measures hurt the market more. Industry representatives cited the exchange rate, difficulties in accessing consumer finance, high interest rates and a tax system based on the SCT, which is unique in the world, as the main problems. The authorities stressed the need to review all aspects of the tax structure of Turkey’s automotive industry by gathering the opinions of all stakeholders, rather than taking temporary measures.
“ZERO MILES WILL NOT INFLUENCE VEHICLE SALES TOO MUCH”
Ali Haydar Bozkurt, President of the Automotive Distributors Association (ODD), assessed market developments last week. Assessing the preparations for the 6-month and 6,000-kilometer sales limit for brand-new vehicles purchased by the companies, Bozkurt said: “The main objective of the new regulatory studies is to reduce the ‘balloon’ prices for Reduce used vehicles. It is designed to prevent zero mile vehicles from falling into the gallery market. Zero mileage will not affect vehicle sales as new vehicle availability remains slightly below demand.
He said the deal will affect the institutions that queue up for a new vehicle and buy the vehicle directly to sell it, but it will have a limited impact on real people. Bozkurt emphasized that the normalization of the supply of new cars will eliminate this situation.
HOW WILL THE NORMALIZATION OF PRICES BE LIKE?
Bozkurt said that the excise tax rhetoric that has dominated the agenda over the past month, particularly for used cars, has led to some stagnation and thus a drop in prices, Bozkurt said that time will tell if the impact is long-term will.
Bozkurt: “After all, there isn’t enough replenishment on the new car side. The increasing number of COVID-19 cases around the world has started to put production under pressure again and the currency-based cost of the automobile in production continues to rise. Considering all of the above, it seems that under normal circumstances, the supply problem will be a bit difficult to solve in the near future. Unfortunately, as with any product that is expected to continue to rise in price and supply is becoming scarce, the processes we are going through are coming to the fore. Let’s hope that the supply problem will be solved as soon as possible, the increase in the cost of production of vehicles based on foreign currencies will end, the exchange rate against TL will not increase, so that we can gradually return to normal market conditions,” he said.
“TAX STRUCTURE NEEDS TO BE REVIEWED”
Bozkurt stressed the need to re-evaluate all aspects of the tax structure applied to Turkey’s automotive industry, saying, “It is important for Turkey to take a more strategic view of the automotive industry. The automotive industry is one of the most important industries of both developed and developing countries. In order to protect and support this, we must collectively take the necessary steps to adapt to the changes in the world as part of sustainable medium-term planning. In order for consumers in our country to prefer new technologies in parallel with developments in the world, the issues should be considered in every respect and, after the necessary preliminary work, especially taxation, the practice of revision should begin.
THE CHEAPEST CAR 400 thousand TL
The market, despairing of the SCT cut, raised its expectations for the tax base regulation. Because new car prices continue to rise. With the new price hikes in August, the number of models in the 80 percent SCT segment has dropped to two. That number surpassed 10 in July. The price of the cheapest car was based on 400,000 TL. The number of models under 400,000 TL does not exceed the fingers of one hand.
INCREASED BASE UPDATE EXPECTATIONS
In a statement on the matter, ODD President Ali Haydar Bozkurt said: “I don’t think there will be a reduction in the SCT, but it should be noted that the tax base should be updated and the SCT application should be reviewed in a manner.” , which promotes new technologies. A graduated system was introduced for the special consumption tax (SCT) for motor vehicles from 2016. In today’s conditions, the lack of a model that can benefit from low tax brackets leads to an unfair treatment of consumers. As of today, most of the models on offer are in the 80 percent tax bracket. If we look at it today, there has been an expectation in the industry regarding the update of the base amounts, especially at the time when the prices have arisen due to the exchange rates, since almost all models are included in the 80 percent SCT segment. “
PEOPLE, NOT COMPANIES
On the other hand, a number of representatives from galleries and dealers in the industry met last week and discussed the possible consequences of the 6-month sales ban for new cars. Sector officials, who argued at the meeting that individual consumers are more likely to sell brand new used cars than businesses, agreed that unless a similar restriction is imposed on individuals, the impact of increased prominence on the market will be limited. Authorities are working on a plan to share this common view with the public.
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