Turkey's automotive tax overhaul boosts domestic vehicle sales, negatively impacts imported luxury and electric vehicles
The latest excise duty adjustments in Turkey have resulted in a significant increase in electric vehicle (EV) prices, particularly for imported and luxury EV models.
The special consumption tax (SCT) rates for the lowest bracket have risen from 10% to 25%, while luxury vehicles now face rates between 25% and 75% depending on the segment. This has led to substantial price hikes for EVs, with increases ranging from ₺500,000 to ₺1,000,000 (approximately $12,326 to $24,653), making many foreign EVs considerably more expensive.
In contrast, the SCT for economic and mostly domestically produced vehicles has been slightly lowered or kept relatively favorable (from 15% to 20%). This provides a competitive advantage to domestic EV manufacturers such as Türkiye’s Togg, though domestic EV market share remains limited at about 12.66% compared to 87.34% for imports.
The market share of domestic EVs is 12.66%, while foreign electric vehicle brands hold an 87.34% market share in Turkey.
Commercial vehicles have retained their current price advantage in the market, according to LenaCars General Manager Selcuk Nazik. However, he reported a potential 10%-20% increase in the D-segment, electric, and hybrid vehicles. Economy cars, on the other hand, have seen a 5%-10% decrease in price due to the new tax assessments.
The Trade Ministry is closely monitoring auto price changes following the latest SCT revisions and is investigating manipulative pricing, unauthorized sales, and other disruptive practices. As of now, ₺103 million ($2.53 million) in fines have been issued to 220 unlicensed individuals and companies by the Trade Ministry.
The tax reform aims to encourage domestic car sales but has harmed the affordability and competitiveness of imported electric vehicles, leading to higher EV prices and potentially reduced sales in the luxury and imported EV segments in Turkey.
- The growth in electric vehicle prices, especially for imported and luxury models, has become a topic of general news in Turkey, following the increase in special consumption tax (SCT) rates.
- Despite the price hikes, domestic EV manufacturers like Türkiye’s Togg still hold a competitive edge over foreign brands due to relatively favorable SCT rates for economic and domestically produced vehicles.
- In the aftermath of the SCT revisions, commercial vehicles maintain their price advantage, while there may be a potential 10%-20% increase in the D-segment, electric, and hybrid vehicles. Economy cars, conversely, have experienced a reduction in prices by 5%-10%.
- The Trade Ministry is actively investigating auto price manipulations, unauthorized sales, and other disruptive practices that could impact the market following the latest SCT revisions.
- As a result of the tax reform, the affordability and competitiveness of imported electric vehicles have been negatively affected, raising concerns about potential reduced sales in the luxury and imported EV segments in Turkey.
