Businessmen forgo official luxury cars

Emre Özpeynirci ISTANBUL / Hürriyet

Borusan Otomotiv’s Chief Executive Officer Eşref Biryıldız poses with a Range Rover model, one of the luxury offical cars hit by the tax increase in October 2011. Hürriyet photo

Businessmen are forgoing the use of company cars after the Special Consumption Tax (SCT) was hiked from 84 percent to 130 percent. Businessowners are now either continuing to use their existing cars or downsizing to lesser models.

The SCT on vehicles with engines over two liters was hiked from 84 percent to 130 percent by the government at the end of 2011. In the last six months, the sale of official cars like the BMW 7, Mercedes S series, Audia A8 and the Range Rover dropped to 193 vehicles and the overall percentage of sales of these models dropped from 2 percent in total sales to 0.9 percent. These vehicles are now being used primarily by politicians and other bureaucrats.

Borusan Otomotiv’s Chief Executive Officer Eşref Biryıldız said that the sale of the four most popular official car models dropped by close to 70 percent in six months.

“With the SCT reaching 130 percent, the price of these models has gone up by at least 100,000 Turkish Liras. Even if you are very rich, this will still impact sales,” said Biryıldız. While these luxury cars made up five percent of sales in 2008, this number dropped to 1.7 percent in 2011 and down to a further 0.8 percent in the first six months of this year, Biryıldız said.

Increase in 1.6 liter motor sales in 2012
“The government’s SCT hike last October has been effective,” Biryıldız said. Sales of luxury vehicles will hit a maximum of 400 by the end of 2012, which is 50 to 60 fewer than last year, according to Biryıldız.

Biryıldız also said that sales of vehicles with motors in the 1.6 liter range saw a sharp increase from 20 percent to 46 percent and is now approaching 50 percent.

The English Rolls-Royce is one of the casualties of the SCT. Biryıldız said that after the SCT, they decided not to distribute the luxury vehicle in Turkey since it does not make sense to spend that much money to bring a car that will not sell in the Turkish market.