Automobiles Check 1

The automotive industry, severely hit by the global financial crisis, needs the introduction of new incentives, Ömer Burhanoğlu, the chairman of the Automotive Parts and Components Manufacturers Association (TAYSAD), has said, urging a cut in value-added tax (KDV) in particular in order to rejuvenate the heavy vehicle industry.

Speaking to the Anatolia news agency yesterday, Burhanoğlu stated that the sector is still suffering from the adverse impact of the global financial crisis and that production, especially of commercial vehicles, is about to come to a halt because of the lack of an incentive. The production of trucks and tractors is limping along at the same figures as seven years ago, he said, stressing the urgent need for a cut in the KDV.

While Turkey’s exports of automobiles decreased by 32 percent in the first 10 months of this year compared to same period of last year due to the crisis, European countries have seen an increase in their auto exports each month thanks to incentives introduced in the sector by their own governments, Burhanoğlu said, adding: “The sector’s exports are expected to be around 650,000 by the end of the year. Last year 79 percent of 1,172,000 vehicles produced in Turkey were exported. This year only 72 percent of 710,917 vehicles produced in the first 10 months of the year were exported.”

Automotive industry exports reached $7.7 billion in value in the first 10 months of this year and $4 billion in sub-industry exports, totaling $11.7 billion for all auto industry exports between January and November 2009, representing a 41 percent decline over the same period of last year. The sector’s exports are predicted to reach about $15 billion by the end of the year, Burhanoğlu said.

Burhanoğlu, saying the automotive industry has been enduring tough times because of the recession, pointed out the positive results from the cut in the private consumption tax (ÖTV) which was introduced in March and lasted until the end of September this year. The sector breathed a sigh of relief with the sales figures for light vehicles, which also increased in production; however, sales of heavy vehicles such as trucks, tractors and minibuses were not influenced by the positive impact of the incentives as the rate of ÖTV was already low for these vehicles, he said, urging a cut in the KDV to ensure the rejuvenation of this vehicle group. The sector is in urgent need of incentives, Burhanoğlu stressed, adding that if there are no incentives, the domestic market will seriously suffer.

According to data released by Burhanoğlu, 84,550 vehicles were produced in October of this year and of them 45,452 were automobiles. The number of vehicles produced in the first 10 months of this year was 710,917 and of them 420,379 were automobiles, he added. These figures show that during this period there was 26 percent decline in the production of automobiles, 38 percent in trucks, 51 percent in minibuses and 20 percent in buses.

The tax cut for cars purchased as replacements for vehicles registered before Dec. 31, 1999 will have been provided to one in four cars sold on the local market this year, industry data showed yesterday.

According to the Korea Automobile Manufacturers Association’s estimates, 340,000 vehicles will be purchased this year to replace automobiles registered 10 or more years ago.

With the total automobile sales expected to come in at 1.37 million, cars that receive the tax cut will account for 24.8 percent of the total.

So far about 284,000 vehicles have already received the tax cut, accounting for 34.2 percent of automobile sold locally since the measure was introduced in May.

Although the measure has succeeded in stimulating the auto market and caused monthly sales to rise above last year’s figures since May, some in the industry are voicing concerns that sales will again drop next year as a large number of motorists were prompted into buying new vehicles while the tax cut is in place.