Following heavy contraction in both production and automotive exports due to the ongoing global financial crisis, the government had cut the private consumption tax (ÖTV) for cars in a bid to breathe life into the ailing sector. The tax incentives, introduced in March for a three-month period that was then extended for another three months, have resulted in a noticeable rejuvenation in the domestic market as sales saw record increases.
Speaking to Today's Zaman, Muharrem Yazıcı from Fiat said the entire sector has set its sights on an extension of the incentives. Yazıcı said they expect the government to extend the term for the tax cuts through the end of the year, noting: “The markets were buoyed following the tax reductions. We want the current positive atmosphere to continue a while longer so that we can keep the lights on at the factories.” He said both dealers and manufacturers would only be able to stand on their own two feet if the tax benefits were extended.
Recalling that the Automotive Distributors' Association (ODD) recently introduced a package to the government covering some necessary measures for the future of the auto industry, he stated that incentives to encourage trading in older vehicles should support tax reductions in the sector in the coming months.
Yazıcı said similar applications yielded significant benefits in Europe and that the state could also increase its tax income as well as provide more safety on the roads. “The motor vehicle tax [MTV] and vehicle inspection fees are relatively lower for older vehicles in Turkey and replacing aging cars with newer ones will thus provide an increase in income.”
