The fluctuation in exchange rates since the beginning of the year also shows its effect on automobile prices.
At this point, almost all new cars sold in the market have passed into the 80 percent SCT zone.
The few vehicles that fall under the 80 percent slice consist of the cars with the lowest equipment of the cheapest models of the brands.
To exemplify this situation, Fiat Egea is one of the two models that fall below the 80% SCT rate.
While only the 1.4 gasoline and manual transmission version of Egea remains in the SCT zone of 70 percent, it is understood that another model with the same SCT rate is the Hyundai i10.
All versions of the i10, which is a domestically produced car like Egea, except for the top equipment package, are priced at 70 percent SCT.
LAST UPDATED IN JANUARY
To be remembered, the last change in the SCT system was made in January and the number of slices was increased.
In this context, cars between 353 thousand TL and 401 thousand TL fall into the 70% SCT segment, while cars more expensive than 401 thousand TL fall into the 80% SCT segment.
Determining the price of automobiles in Turkey with the exchange rate and SCT system causes every increase in the exchange rate to be directly reflected on the prices.
When the increased prices as a result of the increase in foreign currency exceed the scales in the SCT system and raise the cars to the next tax bracket, a higher amount of increase is reflected to the consumer than the increase in foreign currency.
PRICES INCREASED 50 PERCENT
According to Cardata data, the increase in zero km vehicle prices in the January-September 2022 period has reached 50 percent. At this point, there are no vehicles in the 45 percent, 50 percent and 60 percent SCT segment.
The fact that almost all cars sold in Turkey are priced with 80 percent or higher SCT creates an expectation of an SCT update rightfully in the eyes of consumers.
So much so that thousands of people in need of a car could not find a car at the dealers until August due to those who bought the car for investment purposes and had to buy second-hand cars more expensive than zero kilometers.
Although the 6-month and 6 thousand kilometer limit imposed on second-hand cars in August prevented purchases for investment purposes, this time it became difficult for those who could not find a car in dealerships for months due to rising prices. The credit limit imposed by the BRSA in vehicle purchases and the difficulties in accessing credits are among the other factors that make it difficult to purchase automobiles.
All of this causes the consumer to expect that prices will decrease and access to automobiles will be easier with the SCT update.
THE SHARE OF SCT IN THE BUDGET INCREASED
However, it is useful to look at the other side of the coin. When the government’s budget targets are examined closely, a SCT reduction is hardly on the horizon. In the budget target announced at the beginning of the year, the expected income from the SCT, which is taken over the sale of new vehicles, was 72 billion 449 million liras.
While this target was met in the first 7 months of the year, in the additional budget target announced in June, it was envisaged that an additional 70 billion 285 million TL would be obtained from the SCT taken from automobile sales until the end of the year.
In addition, according to the data of the Ministry of Treasury and Finance, while the share of SCT collected from automobiles in the general budget was 4.7 percent in 2021, this rate is expected to increase to 5.6 percent by the end of 2022.
Considering that the market grew with the effect of sales made for investment purposes in May, June and July and the total market shrank by nearly 20 percent in August, it can be said that the SCT revenue target in the budget can only be met by the end of the year.
To sum up, the SCT reduction, which has been an expectation for a long time, may not be effective in reviving sales, as it will come to vehicles that cannot be found at the dealership due to the continuing supply problem.
NO SUPPLY, THE GOAL IS
At this point, it is useful to take a closer look at the budget targets once again.
If a SCT reduction comes, the SCT revenue received by the state per vehicle will also decrease. In such a scenario, despite the recovery in sales and the decrease in SCT revenue per vehicle, total SCT revenue is expected to increase due to the growth of the market.
However, this may not be possible under the extraordinary conditions we are going through.
Due to the supply shortage experienced in the sector for a long time, it is highly probable that a possible SCT reduction will not be able to expand the market at the desired level in the short term and therefore the state will not be able to increase its SCT revenue.
As a result, additional budget targets and the shortage of supply in the market tell us that the expectation of SCT reduction is not a realistic expectation, on the contrary, if the market shrinks for different reasons in the coming months, even a SCT increase may come to the fore in order to meet the budget target.
If a SCT reduction or baseline update step is to be taken, either the budget targets will need to be updated or the supply problem will need to be resolved.