Turkey automotive tax revenues decline amid falling sales

Turkey's automotive sector is experiencing a significant contraction, leading to a decline in Special Consumption Tax (ÖTV) revenues. In July, ÖTV revenue from the automotive sector fell by 2.55% compared to the same month last year. For the first seven months of the year, tax collections reached approximately 419-420 billion TL, which is only about 44% of the annual target of 900 billion TL.

Vehicle sales in July saw a sharp decline of approximately 25% compared to the previous year. Projections for August suggest continued weakness, with sales expected to reach around 75,000 units, down from over 102,000 units in August of the previous year. This downturn is attributed to shrinking domestic sales, as well as declines in production and exports.

Amidst these fiscal challenges, a legislative proposal has been submitted to the Grand National Assembly of Turkey regarding an ÖTV exemption for retirees. While there is significant public interest in whether retirees will be able to purchase vehicles without this tax in 2026, the proposal has not yet passed into law. Currently, no such exemption is in effect, and the specific terms regarding eligible individuals and vehicle brands remain unconfirmed.