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Turkey increases brand new car prices as tax cut fails

The Turkish government has taken a decision not to extend the 15 percent Special Consumption Tax (OTV) cut on small cars which have less than 1.6 engine capacity.

The private sector put pressure on the government to extend the tax cut, but Turkish officials seemed resistant on the decision and the price hike will be effective soon, Haberturk reported.

The newspaper reported that removing the tax cut on cars would increase the price of brand new and second-hand cars.

Selim Karahan from Haberturk reported that the 15 percent OTV discount on cars which have less than 1.6 engine capacity had been affected last November.

However, Haberturk reported the tax concession was not extended and that rate increased from 35 percent to 50 percent.

Ali Bilaloglu, Chairman of the Automotive Distributors Association (ODD), recently made a statement on the tax increase demands that OTV should be zero on vehicles with a motor volume not exceeding 1,600 ccs until the end of 2019, and current one percent values added tax should be continued.

Turkish auto market shrinks 50 percent

ODD Chairman Bilaloğlu said despite all the precautions, the automotive sector in Turkey shrunk 35 percent in 2018 and in the January-May period of 2019; the number decreased by 50 percent compared to the same period of the previous year as Turkey manufactured 156 990 cars.

Istanbul Chamber of Commerce President Şekib Avdagiç also called on the government to extend tax cuts on cars.  As the government does not extend tax cut on cars with small engines, 18 percent value-added tax will be calculated over the new amount.

A car priced at 100 000 lira, will be sold at 159 300 lira with the 50 percent OTV tax and value-added tax as OTV will increase from 45 percent to 60 percent for a car with a price value of 120 000 lira and above.

Luxury car prices will go up more than 20 000 lira, the newspaper reported. If the government does not reduce the  OTV, brand new car prices will rise at an average of 11 percent. Second-hand car prices will also increase by between seven and eight percent according to reports.

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