Turkey: Cars exempt from latest tax hike take lead in overall sales

Today's Zaman (Istanbul) - Cars that have an engine displacement of less than 1,600 cc had the largest share in overall passenger car sales in Turkey in the first 11 months, with 89 percent of the total, according to recent data, indicating that a recent tax hike urged more buyers to prefer models fitted with such an engine.

In an attempt to raise tax revenue, the government increased the private consumption tax (ÖTV) on vehicles that have an engine displacement of between 1,600 cc and 2,000 cc from 60 percent to 80 percent. Customers who want to buy a vehicle with an engine of over 2,000 cc now pay 130 percent ÖTV rather than the previous 84 percent following the tax increase.

Latest data from the Automotive Distributors Association (ODD) show that 89 percent of all passenger cars sold in the January-November period were cars with an engine volume below 1,600 cc, while the share of cars sold with an engine volume of between 1,600 cc and 2,000 cc was only 9 percent.

The ODD report shows that total automobile sales in the first 11 months increased by 22.8 percent over the January-November period of 2010, to reach 504,208 units. Turkey saw around 850,000 cars sold in 2010, and the figures indicate that this year's total car sales will likely remain below the number of units sold last year. Light commercial vehicles also remained highly popular as the sale of such vehicles increased by 14.1 percent in the same period and reached a figure of 230,825 units.

Other data in the report show the change in customer tendency in the Turkish auto retail market as the ODD report said the share of passenger cars with diesel engines in total sales increased to 61 percent in the first 11 months from 53 percent during the same period of 2010. Also, the sale of cars with an automatic transmission increased by 31 percent in the given period.

Meanwhile, October's ÖTV hike has also led to an increase in second-hand vehicle sales in Turkey. Observers predicted the total number of used cars sold in Turkey would jump to 2 million from last year's 1.5 million due to the "tax boom."