The SCT base update was put into effect on Thursday, November 24. Finally, the changing bases in August 2021 were increased with the new decision. The basis for the 45% SCT rate is from 120 thousand liras to 184 thousand liras; The basis for the SCT rate was increased from 200 thousand liras to 280 thousand liras. However, the life of the arrangement was short lived. The rise in the exchange rate and the increase in production costs will bring new hikes in automobile prices on 1 December. Many models will rise to the upper segment with the price hikes.
According to the news of Aysel Yücel from How One Economy, the December 1 date for the regulation of the SCT base increase, which will provide a certain reduction in automobile prices, brought automotive sales to a standstill. Because for the first time, a preliminary date was given for a tax assessment, which created an expectation in the sector. Considering the reactions from the industry, the date was moved forward. On Thursday, November 24, the SCT base increase was made. Automotive Distributors Association (ODD) President Ali Haydar Bozkurt and many industry representatives stated that the update did not meet the expectations. Parallel to high inflation, the sector expected at least 100 percent increase in tax base, while this rate remained at rates ranging from 40 percent to 53 percent. Before the previous baseline update, most recently in August 2021, around 50 different models were below the 80 percent mark. Since then, almost all models have entered the 80 percent segment due to the 90 percent increase in the exchange rate, the increase in production costs and the reflection of these costs on vehicle prices. The new tax base arrangement allowed a limited number of models to fall into a lower tax bracket. The discount rate also ranged from 5.5 percent to 19 percent.
4% INCREASE IN LAST MONTH DUE TO EXCHANGE DIFFERENCE
But the big problem with the base is that the edit doesn’t even last a week. Car prices are most affected by the Euro exchange rate. The fluctuation in the exchange rate is immediately reflected in the prices. In recent months, the fluctuation in the exchange rate has caused automobile prices to increase one after the other. Especially since September, many brands have started to raise money three times a month. The euro rate, which rose from 18.20 to 19.40 in just the last month, caused automobile prices to rise by an average of 4 percent. This rate is much higher in some models whose SCT zone has changed after the hike. Brand representatives and industry experts signaled that new hikes are on the way on December 1st. The hikes are not just due to the exchange rate. The increase in production costs is another important factor that increases prices.
Hüsamettin Yalçın, General Manager of Automotive data analysis company Cardata, stated that it is inevitable to raise several times a month during periods of high inflation and rapid increase in the exchange rate. We anticipate that automobile prices will increase by 5-10 percent on average by the end of the year. Starting next week, it will lose the tax advantage that many models have gained with the increase in the tax base,” he said.
THERE IS ONLY ONE VEHICLE IN 45 PERCENT
Only one model could enter the 45 percent SCT, which is the lowest tax bracket after the tax base regulation. It was the i10 model produced by Hyundai in Turkey. With the base update, the price of i10 decreased by 15 percent to 282 thousand 750 TL. However, Hyundai has signaled that these figures will last until November 30, while announcing its new updated price list.
Although Hyundai officials do not give a clear figure on the increase rate, according to the information we have obtained from the dealers, the company plans to raise more than 7 percent on 1 December. This means that i10 can only stay in the 45 percent SCT for 1 week. On the other hand, it is predicted that i20, which is in the 60 percent SCT bracket and is in higher demand, will also move to the next higher tax bracket. It is stated that a similar situation will be experienced in other best-selling models such as Fiat Egea and Renault Clio. Before the tax base increase, only 2-3 models remained under the 80 percent SCT. Sector representatives state that there will be no vehicles in the lower tax bracket again until January with the price hikes.
NEW REGULATION EXPECTATION IN BATS
The limited rate of increase in the tax base created an expectation for a new regulation in brands. Automotive manufacturers have difficulty in making supply plans for 2023, when uncertainty prevails, and the fact that the SCT bases do not meet the expectations complicates the strategy of the brands. Zafer Başar, General Manager of Skoda, made the following assessment to the EKONOMİ newspaper:
“The update rates in the SCT base values were shared with the public, with an average ranging between 40 and 53 percent. The last adjustment was made on 13 August 2021. When calculated over the exchange rates of that date, the rate of increase in the tax base fell behind the rate increases. Considering the increased producer inputs and thus the cost increases in foreign currency, the improvement made in the ratio of the current producer inflation would have offered an opportunity to create a more predictable planning and sales strategy for the sector in the medium term. However, we saw that the authorities intervened when necessary. That gave us hope for a new arrangement that we need next year.”
NO VEHICLES AT LIST PRICES! ‘ACCESSORIES’ GAME
With this change, with the decrease in the prices of vehicles under 595 thousand TL and below, the citizens who thought not to miss this opportunity took the road to the dealers. Citizens who visit the dealerships of the car brands that are on sale receive the answer of “no car” from the dealers. Dealers give citizens days for December and January; citizens, on the other hand, are worried about the increase in cars in December.
On the other hand, it is noteworthy that there are many new cars in the car parks of some car dealerships, and the answer is given that these vehicles are the ones that have been ordered before.
On the other hand, some customers who went to the dealer encountered numbers above the list price of the brands. Some “opportunistic” dealers push the price up with the accessory game. Namely, it is claimed that some dealers are trying to make a profit by adding various accessories to their vehicles and selling the car above the list price. It is claimed that these dealers took the difference without an invoice and somehow evaded taxes. Although brands create a ‘mystery shopper’ team and increase controls to prevent such incidents, the problem cannot be resolved.
REGULATION HAS SECOND HAND AND UPPER SEGMENT
The supply problem in zero kilometer vehicles benefited the second-hand car market. Otoshops General Manager Melih Mutlu, one of the players in the second-hand automobile sector, evaluated the effects of the base update on the second-hand market. Mutlu stated that the uncertainty in the market was eliminated with the increase in the base and this situation reactivated the market and said, “Even though the consumers wanted to implement their postponed purchasing decisions, this time they encountered a supply problem during the purchasing phase. For this reason, the demand for second-hand vehicles will increase in the coming days and the market will begin to move. The cost-based increases that will come in December and as of the new model year will trigger consumers who postpone their demand to buy both new and second-hand vehicles.
Experts state that the prices will go up with the price hikes for new vehicles and the increasing demand for second-hand vehicles. On the other hand, another group that was positively affected by the increase in the tax base was the higher segment vehicles with a price above 595 TL, although they were not covered by the regulation. Alp Gülan, Chairman of the Board of Gülan Automotive, said, “With the disappearance of uncertainty, C SUV and D segment customers, who postponed their vehicle purchase, also started to purchase. The stagnation in the sales of these vehicles has increased,” he said.