Industry Trend Analysis - New Tax Hike Adding To Consumer Squeeze - DEC 2017
BMI View: The recent announcement of a hike in the Motor Vehicle Tax will add further negative pressures to an already difficult picture for the Turkish new vehicle marke t. The market was already in a process of downward adjustment after hikes to Special Consumption Tax for cars implemented in 2016 and a more recent slowdown in household earnings growth .
We forecast a 2.6% decline in Turkish vehicle sales for 2017 as a planned motor vehicle tax hike for passenger cars in 2018 leads many consumers to bring forward their planned purchased to Q417 but still fails to completely outweigh the negative impact of a previous tax increase implemented in November 2016. In line with this view, we also forecast another year of sales declines in 2018, with a forecasted 2.5% fall, as the new motor tax raises the cost of car ownership further at a time when household earnings growth and, therefore, consumer purchasing power growth is already slowing.
Tax Hike Effects Weighing on 2017 and 2018 Sales
|Passenger Cars Holding Market Back|
|Turkey - Vehicle Sales, Units|
|f = BMI forecast. Source: Automotive Manufacturers Association (OSD), BMI|