Auto sales in Turkey maintained an upward trend in August as citizens continued buying cars, which had previously benefited from cheap loan campaigns and lifting of the coronavirus lockdown.
Sales of passenger cars and light commercial vehicles (LCVs) skyrocketed by 134.5% year-on-year last month, according to data released by the Automotive Distributors’ Association (ODD) Wednesday.
A total of 61,533 vehicles were sold across the country, marking a significant rise from 26,234 in August 2019, the data showed.
The increase, however, comes after Turkey on Sunday announced a hike in taxes on most imported cars. It increased its special consumption tax (ÖTV) on mid-range and expensive cars, but also lifted the lower thresholds at which the duty is imposed, meaning that more vehicles could be taxed at unchanged lower rates.
Taxes for cars with engine capacity of 1,600 cubic centimeters (cc), the majority of automobiles Turkey imports, the ÖTV was raised to 80% from 60%. For electric cars with a capacity of more than 2,000 cc, the rate was raised to 130% from 100% and high segment cars will jump to 220% from 160%.
The value-added tax (VAT) on all car purchases remained unchanged at 18%.
Passenger cars accounted for 44,372 of the sales last month and LCV sales stood at 17,161, up by 106% and 265%, respectively, year-on-year.
Based on the 10-year August average, sales were up 4.1%. Accordingly, passenger car sales were up 1.3%, while light commercial vehicle sales jumped by 12.5%.
The August performance follows the 387.5% increase in July, reflecting a rash of purchases after the country’s partial coronavirus lockdown was lifted and a series of cheap loan campaigns were launched.
The country’s three largest public lenders – Ziraat Bank, VakıfBank and Halkbank – in early June introduced low-interest loan packages for individual and corporate customers who want to purchase new and secondhand passenger vehicles.
However, interest rates increased as of August after the Central Bank of the Republic of Turkey (CBRT) took steps to tighten liquidity conditions to support the Turkish lira. The bank has so far taken backdoor steps to tighten policy, including liquidity measures and directing lenders to borrow at higher rates.
It had halved the overnight borrowing limits of lenders and cut liquidity limits offered to primary dealers to zero.
Data by the Banking Regulation and Supervision Agency (BDDK) on Wednesday showed that vehicle loans provided by the public banks surged by 91.66% to around TL 2.23 billion ($302 million) as of July, compared to TL 1.16 billion at the end of 2019.
Sales up 68.4% in 8 months
From January to August, Turkey's automotive market expanded 68.4% on an annual basis to 403,002 units, up from 239,317 units in the same period of last year.
Passenger car sales increased 64.2% to 317,394 and LCV sales soared 86.1% to 85,608 in the first eight months of 2020.
Data showed that cars in the A, B and C segments with low tax rates made up 86.2% of the car market. The C-segment cars had a 62.7% with 199,091 units and B-segment cars held a 23.1% share with 73,162 units.
Sedan models were the most preferred cars with 43.8% share and 139,129 units, followed by SUV with 29.4% and 93,211 units. On the other hand, some 223 electric and 9,248 cars were sold in the said period.
Cars below 1,600 cc constituted 94.8% of all of the sales made in the January-August period and increased by 66% year-on-year. Sales of cars between 1600 cc-2000 cc were up 23.9% year-on-year and held a 2% share in the overall sales. Sales of cars above 2000 cc dropped by 1.6% year-on-year, the data showed.