Last week, new steps were taken towards the SCT-dominated automotive market and a 6-month limit was introduced – 6,000 kilometers for companies, tunnels and rental companies. Following this development, the Italian Competition Authority (RK) has launched an investigation into four primary second-hand companies in the sector for violation of Article 4 of the Competition Law.
“SCT REDUCTION IS NOT ON THE ORDER OF THE DAY”
Before the market got over the shock of these developments, Treasury and Finance Minister Nureddin Nebati said he plans to raise SCT at a meeting. Then, in his tweets on Friday, he announced that it was a joke and that the reduction of SCT was not on the government’s agenda.
According to a rumor that emerged last week, the government is preparing to raise excise duties on ultra-luxury vehicles. All these developments have increased the stagnation of sales in the automotive market.
THE MEASURES TAKEN SHOULD HAVE LIMITED EFFECTS
Speaking to WORLD, automotive industry representatives stressed that the government’s measures to prevent exorbitant prices, especially in the second-hand market, will have a limited effect on its purpose. According to some, such measures harm the market the most. Industry representatives said the main problem is the exchange rate, difficulties in accessing consumer finance, high interest rates and a tax system based on SCT, unique in the world. The authorities stressed the need to review all aspects of the tax structure applied to the Turkish automotive industry by adopting the views of all stakeholders rather than temporary measures.
“ZERO MILES DOES NOT AFFECT VEHICLE SALES TOO MUCH”
Ali Haydar Bozkurt, President of the Automotive Distributors Association (ODD), assessed market developments last week. Evaluating the preparations for the 6-month, 6,000-km limit for the sale of brand new vehicles purchased by companies, Bozkurt said: “The main objective with the studies on the new regulation is to reduce the ‘balloon’ prices of second-hand vehicles. but no. It aims to prevent zero-kilometer vehicles from falling into the tunnel market. Kilometer zero will not affect vehicle sales, as the availability of new vehicles continues to be slightly below demand.
He said the deal will affect institutions queuing up for a new vehicle and buying the vehicle directly to sell it, but it will have a limited effect on real people. Bozkurt stressed that the normalization of the new vehicle supply will eliminate this situation.
HOW WILL THE PRICE NORMALIZATION BE?
Stating that the excise rhetoric that occupied the agenda last month, especially on second-hand vehicles, caused some stagnation and therefore a slowdown in prices, Bozkurt said it will be seen over time if its effect is long-lasting. term.
Bozkurt said: “After all, there is still not enough supply on the side of the new vehicle. The growing number of COVID-19 cases around the world has begun to put pressure on production again, and the currency-based cost of the car in production continues to rise. All things considered, it appears that under normal circumstances, the supply problem will be a bit difficult to solve in the near future. Unfortunately, as with any product whose price is expected to rise continuously and there is a shortage of supply, the processes we are going through right now come to the fore. We hope that the supply problem will be solved as soon as possible, the increase in production costs of vehicles based on foreign currency ends, the exchange rate does not increase against TL so that we can gradually return to normal market conditions “, he has declared.
“THE TAX STRUCTURE MUST BE REVIEWED”
Stressing the need to reassess all aspects of the tax structure applied to the Turkish auto industry, Bozkurt said: “It is important for Turkey to look at the auto industry more strategically. The automotive industry is one of the important industries of developed and developing countries. To protect and support it, we need to take the necessary steps together as part of a sustainable medium-term plan to adapt to the changes taking place in the world. In order for consumers in our country to prefer new technologies in parallel with developments in the world, issues should be dealt with in every aspect and auditing practices should be initiated after the necessary preparatory work, in particular fiscal.
THE CHEAPEST CAR 400 thousand TL
The market, which was desperate for the reduction of the SCT, has raised expectations for the regulation of the tax base. Because the prices of new cars continue to rise. With the new increases in August, the number of models in the SCT segment dropped to two by 80 percent. This number surpassed 10 in July. The price of the cheapest car was based on 400 thousand TL. The number of models under 400 thousand TL does not exceed the fingers of one hand.
BASE UPDATE EXPECTATIONS INCREASE
Making a statement on this topic, ODD chairman Ali Haydar Bozkurt said: “I don’t think there will be a decrease in SCT, but it should be noted that the tax base should be updated and the SCT application should be reconsidered to some extent. which encourages new technologies. In the Special Consumption Tax (SCT) applied to motor vehicles, a phased system was introduced as of 2016. In today’s conditions, the absence of a model that can benefit from low tax brackets leads to unfair treatment for consumers. To date, most models on sale fall within the 80% tax bracket. Looking at it today, there has been an expectation in the industry regarding updating base amounts, especially at the point where which prices have arrived due to exchange rates, given that almost all models are included in the 80 percent SCT segment. “
PEOPLE, NOT COMPANIES
Last week, however, some representatives of galleries and dealers in the sector met and discussed the possible consequences of the 6-month ban on the sale of new cars. Industry officials present at the meeting, arguing that individual consumers rather than companies sell brand new second-hand vehicles, united in the view that if such a restriction is not imposed on individuals, the impact of the importance to be assumed will be limited to the market. Authorities are planning to transfer this common view to the public.