Increased tax benefits spark decreases in prices for select automobile models
The Turkish government has implemented changes to the Special Consumption Tax (SCT) rules for passenger vehicles, effective from August 1, 2025. These changes have resulted in a mixed impact on vehicle prices, with domestically produced cars seeing price decreases and imported luxury and electric vehicles experiencing price hikes.
The SCT rates for domestically manufactured fossil fuel-powered passenger cars have been lowered, leading to price reductions in various models. For instance, the Citroën C3 Aircross and C4 models dropped around 3%, Honda Jazz e:HEV by about 3%, Fiat Egea sedan by 5.5%, and Volkswagen Polo and related models fell roughly 2.7%. The BYD SEAL electric vehicle saw the largest price decrease at 10.7%, and Toyota’s hybrids experienced reductions between 5.5% and 7.4%.
Conversely, SCT rates for imported luxury passenger cars have increased by 10 to 20 percentage points, while electric vehicles (EVs) have had their tax rates raised by 15 percentage points across all ranges. This tax hike is expected to increase prices on higher-end EV models, potentially dampening demand for imported EVs and luxury imports.
The government's rationale behind these changes is to encourage domestic vehicle production and reduce the current account deficit by reducing consumption of imported vehicles while supporting vehicles produced locally. The tax adjustments are designed based on technical criteria including engine displacement and electric battery capacity, with a net limited overall inflation impact on vehicle prices.
The changes have been observed across various brands, with Opel's Corsa and Frontera models dropping by 2.8 percent, and Volkswagen's Polo, T-Cross, and Taigo models recording an average price decrease of 2.73 percent. Toyota's C-HR Hybrid was reduced by 7.4 percent, and its Corolla Hybrid, Corolla Cross Hybrid, and Corolla Hatchback Hybrid models saw discounts of up to 5.5 percent.
The changes were made through a presidential decree and published in the Official Gazette last week. The revisions to the SCT rules for passenger vehicles are aimed at supporting domestic production and reshaping market dynamics in Turkey's automotive sector, starting August 2025.
- In an attempt to support local production and reduce the current account deficit, the Turkish government has decreased the SCT rates for domestically manufactured fossil fuel-powered passenger cars, thereby leading to price reductions in various models such as the Citroën C3 Aircross and C4, Honda Jazz e:HEV, Fiat Egea sedan, Volkswagen Polo, and BYD SEAL electric vehicle.
- In contrast, the SCT rates for imported luxury passenger cars and electric vehicles have increased, potentially boosting prices on high-end EV models and diminishing demand for imported EVs and luxury imports, as part of the government's initiative to reshape market dynamics in Turkey's automotive sector.
