It is Necessary to Look at the Development of the Market in a Long-Term and Strategic Way

Ali Haydar BOZKURT

Automotive Distributers' Association (ODD)

Chairman of Board

 

Our domestic market potential is very high compared to Europe

The automotive industry is a sector that requires long-term foresight and significant investments in terms of the size of its investment and activity areas as well as the unique characteristics and value of the product. Considering the new technologies, it is critical for our country's economy to establish policies that will bring domestic automotive market back to 1 million levels while maintaining a trusting and stable environment. These developments are very important for the automotive industry, which moves in parallel with the economy. Our domestic market potential is very high compared to European countries. We aim to progress in a way that will catch up with the figures in the EU in the number of cars per 1,000 people by developing the sector. However, the domestic market numbers of the automotive sector continue to remain below the domestic market level of one million units realized in our sector in 2015.

 

There are a variety of reasons for both the 53% drop in July compared to June and the fact that July was below expectations. Lack of vehicles comes in the first place. When you look at the sales reports on a brand basis, you can see that the brands that typically sell between 3,000 and 5,000 units remain in much smaller numbers and are not vehicles. The second reason why sales were less than expected was that SCT was expected to fall. There was an artificial expectation of a decrease in SCT, and therefore, those who hesitated postponed buying a vehicle, and some demands were shifted to those who were waiting. Another issue that affected sales last month was the difficulty in accessing the loans. We are getting feedback from many people that their loans have not been approved. Of course, the large price rise compared to last year was one factor that had an impact on sales. When all of them came together, we came across the table in July. But a large part of these factors we have mentioned is the availability of vehicles. Demand continues on both the fleet and retail side, and if there were enough vehicles, the decline in the overall market would not have been so great.

 

Aside from the inflationary environment, the factors that limit demand in our sector, taxation, updating the SCT bases, loans, and exchange rates continue to be major challenges that directly concern us.  As is well known, the automotive industry is a sector with high added value. A very important resource is also created by the employment in addition to taxes. When we look at it today, since almost all models fall into the 80 percent SCT segment, there has been an expectation in the sector regarding the update of the base amounts, especially at the point where the costs have increased due to exchange rates.

 

According to the domestic market estimates for 2022, it will be a success to catch up with the domestic market numbers from last year in light of the current supply and demand balance and the indicators for the current period.

 

A long-term roadmap is needed

A long-term roadmap including production incentives and funding resource planning should be developed in addition to taxation. This step will make it easier for individuals to access automobiles and will position Turkey as a candidate for an automotive base. We have a significant place in automobile manufacturing, but our goal is to take the burden of Europe and develop it more. To achieve this, we need to use predictable strategies to expand our domestic market. Domestic market development is critical in order to say, "We can lead this business," and to attract investment. Along with these investments, there will be a large amount of employment to be achieved. Exporting 80–90% of the vehicles produced will also benefit the country considerably. A long-term road map should be drawn for this. 

While determining this roadmap, what we need to do today is a shift to a tax system that explains the technologies of the era in a way that does not reduce current public revenue. Especially, we observed the positive impacts of measures taken in relation to the pandemic on the environment. Consumer habits and expectations have also changed during the pandemic process. The trend towards environmentally friendly vehicles such as hybrids and electric vehicles is increasing day by day. In this regard, the implementation of regulating the taxation system applied to the Turkish automotive sector only based on engine volume needs reconsideration.

 

As of 2016, a gradual system was introduced in the special consumption tax on motor vehicles. In today's conditions, the lack of a model that can benefit from the low tax bracket makes consumers aggrieved. As of today, most of the models on sale are in the 80% tax bracket. 

 

The automotive industry continues to exist successfully in our economy as a sector that requires long-term foresight and significant investments due to the size of its investment and activity areas, as well as the unique characteristics and value of the product. Especially in terms of new investments, the importance of our taxation system has been seen once again. For consumers in our country to prefer new technologies in parallel with the developments in the world, the issues should be addressed from all aspects, and after the necessary preparatory work, especially taxation, revision applications should be initiated. 

 

TAXATION OF ENVIRONMENTALLY FRIENDLY VEHICLES