Turkey Extends Tax Cuts on New Cars

The Turkish government is extending tax cuts on cars through March to bolster the country’s sagging auto industry.

The move will maintain reductions to the country’s former 18% value-added tax and 45% special consumption tax on vehicles. The incentives, unveiled in November to revive the country’s sagging auto industry, had been scheduled to end on Dec. 31.

The extension will continue to freeze the VAT on commercial vehicles at 1% and lower the special consumption tax on cars by as much as 15 percentage points for cars equipped with engines that displace less than 1.6 liters.

The collapse of the Turkish lira caused domestic demand for light vehicles to plummet by one-third last year. Toyota Motor Corp. predicts the market this year will total about 550,000 units compared with highs of one million units in 2015 and 2016.

Turkey’s domestic car maker shrank 34% to 543,200 units through the first 11 months of 2018, including a 42% drop to only 46,200 vehicles in November, according to the country’s Automotive Distributors’ Assn.