Automotive sales increased in November: They presented a plan to remove SCT

According to data from the Association of Automotive Distributors (ODD), in November 2022 car sales increased 37.8 percent compared to the same month of the previous year and reached 59,222.

In the period January-November 2022, car sales decreased 2.4 percent compared to the previous year and fell to 505,886 units.

ODD officials shared with the authorities a plan that contemplates the gradual elimination of the special consumption tax (SCT), which is one of the main government revenues and slows down the growth of the domestic market, within a period of 10 years.

In accordance with the complex tax system, where double taxes, including SCT and Value Added Tax (VAT), are charged on new vehicle sales, SCT taxes increase as the price of vehicles increases.

9 out of 10 vehicles entered the special tax of 80 percent.

Annual inflation has hit 85 percent since last month, while car prices have risen more than 100 percent since the start of the year, according to expert estimates.

Due to the price increases, 9 out of 10 vehicles sold fell under the high excise tax of 80 percent.

Although the SCT bases were increased last week and the SCT rate for some vehicles decreased, the vehicle tax burden is expected to reach its previous level with the increase in prices in a few months.

ODD: WE SHARE A TAX REDUCTION PLAN WITH ANKARA

ODD Board Chairman Ali Haydar Bozkurt pointed out at today’s press conference that the high tax burden has negative effects not only on vehicle sales, but also on investments in manufacturing facilities, the decision of the manufacturers to bring clean technology vehicles to Turkey. and the aging of the vehicle fleet.

Stating that the SCT earned from the sale of vehicles is one of the main revenue items in the budget, so it cannot waive this tax all at once, Bozkurt said they shared the tax reduction plan with Ankara, which it also takes into account reflections on tax revenue, investor appetite, production and export of second-hand vehicles.

While the association represents dealers, meaning the sales side, Bozkurt stated that they offer a plan that represents the entire domestic auto ecosystem, saying, “Where do we need to take this (tax) business so we can bring this business to world standards; Expand the domestic market, make Turkey stand out in terms of investment. What we find as a solution proposal is to gradually reduce the SCT in the long term. Create and announce the strategic roadmap of the automotive industry”.

‘THE GOVERNMENT TAX INCOME DOES NOT DECREASE’

According to the study presented, if the average SCT is reduced by 6 points each year, the state’s tax collection will not decrease until 2030 compared to today, as the market will grow.

According to the study’s impact analysis, after 10 years, that is, by 2034, the market for cars and light commercial vehicles will increase from 800,000 units to 2.25 million units, and only sales of cars to 1.5 million units.

As growing domestic market producers attract companies, Turkey’s production capacity will increase by 50 percent to 3 million units, and its exports will rise from $30 billion to $50 billion at current prices. , taking advantage of being close to European countries. , thanks to investments in new factories or capacity increases from scratch.

Increased production and exports will ensure that the government achieves its goal of closing the long-term current account deficit, while market growth will ensure that tax revenues do not decline.

‘AUTHORITIES ALSO MOUNTED, WE ARE MORE AHEAD’

Bozkurt drew attention to the fact that while international manufacturers began to produce electric and new-tech vehicles, at the same time they shifted from China-based production to production close to consumer markets:

“While Europe is in a hurry to protect its industry and its industry, and there are advantages created by the process that Turkey is going through, it is time to adopt this strategy. Today, we are experiencing a transformation process in the automotive industry. Today is that day, if you do this after 10 years, the one who took the horse will have passed Üsküdar.”

Expressing his interest in the authorities’ proposal, he said: “It has been shared very recently. They said, ‘This job is worth working for,’ and they formed a team from their own unit. This is the first plan, as far as we know, of trying to figure out the exit scenario. We are at the beginning of the work, we’ll see,” Bozkurt said, giving no further information on the authorities’ reactions.

DOMINGO GROWED 36.7 PERCENT IN NOVEMBER

Domestic sales data for November 2022 were also shared at the meeting.

Thus, while the market for automobiles and light commercial vehicles climbed to 82,311 units in November with an increase of 36.7 percent, sales in January-November 2022 remained below 1 percent of the previous year and were located at 668 thousand 63 units.

According to ODD forecasts, the automobile and light commercial vehicle market is expected to complete the year between 725K and 775K, and the total market, including heavy commercial vehicles, is expected to complete the year in the range of 750 thousand – 800 thousand. units.

The light vehicle market was approximately 737 thousand units last year, and the total market was 773 thousand units.

According to estimates by the institution, the production of the main automotive industry is expected to complete the year between 1.38 million and 1.47 million units, and exports between 1.04 million and 1.1 million units.

Bozkurt said he forecasts the availability problem, which dominated the auto market last year and this year, will continue into early next year. (Reuters)