Turkey announces!

A presidential decision published by Turkey on June 8 shows that Turkey has decided to impose an additional 40 percent tariff on cars imported from China, with an additional tariff of at least $7,000 per vehicle, and will be implemented on July 7.

The Turkish Commerce Ministry said in the statement that the purpose of imposing the tariffs was to increase the market share of domestically produced vehicles and reduce the current account deficit: “The import regime decision and its annex, to which we are parties, are international agreements aimed at ensuring consumer safety, protecting public health, protecting the market share of domestic production, encouraging domestic investment and reducing the current account deficit.”

It is worth noting that this is not the first time that Turkey has imposed tariffs on Chinese cars. In March 2023, Turkey imposed an additional 40 percent surcharge on tariffs on electric vehicles imported from China, raising the tariff to 50 percent. In addition, according to a decree issued by the Turkish Trade Ministry, all companies importing electric vehicles must establish at least 140 authorized service stations in Turkey, and set up a dedicated call center for each brand. According to relevant statistics, nearly 80% of Turkey’s cars imported from China belong to internal combustion engines, and the tariff policy has been expanded to all automotive fields.

A recent report released by Landy Law firm shows that Turkey’s restrictions on the import of electric vehicles to China will undoubtedly have a certain impact on China’s electric vehicle brands. These brands may need to re-evaluate their strategy in the Turkish market and consider whether there is a need to build more local service networks or look for other partners or channels. It is worth noting that the sales of Chinese cars in Turkey are not high, but reflect a rapid growth trend. Especially in the electric vehicle market, Chinese brands occupy nearly half of the market share, and this has had an impact on local companies in Turkey.

As Turkey’s first electric vehicle manufacturer, Togg, a consortium of five domestic automotive suppliers and a telecommunications company, has set a target of capturing 30 percent of the Turkish electric vehicle market. In addition, Togg plans to invest 22 billion Turkish lira (about $2.4 billion) in the electric vehicle sector over the next 13 years, and aims to achieve the production target of 175,000 units per year, covering five models. The Turkish government’s strategy is clearly aimed at protecting its own industry and reducing its trade deficit. Togg will take advantage of the government’s policy support and the advantages of its local production and services to enhance its brand recognition and appeal among Turkish consumers.

At present, the Turkish government is actively promoting the development of the new energy vehicle industry, and has introduced a series of preferential policies, including reducing and reducing purchase taxes and providing subsidies for car purchases, to encourage the popularity of new energy vehicles. At the same time, the government is planning a massive expansion of electric vehicle charging infrastructure. According to the report of the Turkish Ministry of Industry and Technology, the number of charging points in Turkey is expected to reach 1 million public areas and 900,000 home charging points by 2030 to address the problem of inadequate charging infrastructure. The Turkish government has also adjusted the special excise tax (SCT) applicable to electric vehicles, which involves raising the tax base limit for cars with less than 160 kW of power. This adjustment will bring more electric vehicles into the lowest 10% SCT bracket, further encouraging the shift to electric mobility.

Turkey’s electric vehicle market is growing rapidly. According to the Turkish Automobile Distribution and Mobility Association, the total market for cars and light commercial vehicles in Turkey in 2023 reached 1.233 million units, an increase of 57.4 percent compared to the previous year. Of these, 66,000 pure electric vehicles were sold, accounting for 6.8% of total sales in Turkey, compared with 1.2% in 2022. Turkey’s energy market regulator expects the number of electric vehicles in Turkey to increase by about 180,000 by 2025. Research institute BMI forecasts that the share of electric vehicles in Turkey’s domestic car sales will reach 30.4 percent by 2032.

The significant increase in the proportion of electric vehicles in Turkey is mainly due to the promotion of Turkey’s first domestic electric vehicle brand Togg, as well as the market participation of emerging companies such as Tesla. Turkey’s first pure electric smart SUV model TOGG T10X is now officially on the road, the car opened on March 16, the guide price of 953,000 lira (about 338,700 yuan), marking that Turkey has officially become the first country in the Middle East with independent research and development production capacity of new energy vehicles. The Turkish government expects that TOGG’s series of models will basically meet the domestic market demand and export overseas by 2025, and the total output is expected to exceed the million mark by 2030. According to the report, Togg led the market with about 20,000 deliveries in the first April of this year, while Tesla has sold about 12,000 electric vehicles since entering the market in April last year. In addition, BYD has delivered 839 vehicles in Turkey in the first April of this year since launching operations in the country in November.

“Because Turkey’s industry is underdeveloped, foreign brands occupy the vast majority of the market, taxes are high, and local brand cars are small, so the overall model price is high.” After the last tariff increase, the performance of Chinese car companies in Turkey is still very good, and the imposition of tariffs will have a certain impact on Chinese car companies, the cost pressure will increase, the development will be hindered, and the scale growth will be slowed down, but due to the large trade deficit and the underdeveloped local auto industry, Chinese car companies should be able to overcome the challenge.” Cui Dongshu, secretary general of the association, told reporters.

In the Turkish market, the auto industry is weak, foreign brands occupy the vast majority of the market share, Volkswagen, Fiat, Renault, Ford and other foreign brands have factories in Turkey. According to public data, about 70% of Turkey’s vehicle production in 2023 is aimed at the international market, and over the same period, Turkey exported more than 950,000 vehicles to the international market. By 2023, Turkey will be the second largest exporter of cars to Europe after the United Kingdom. In 2023, Fiat, Renault, Volkswagen, Ford, Volkswagen, Peugeot, Opel, Citroen, Toyota, Hyundai, Dacia are the top ten car companies in terms of sales volume, accounting for 72.6% of the market share. In the Turkish car market, Chinese brands include Chery, MG, BYD, Hongqi and Dongfeng. Chery was 11th with 41,000 units, MG was 20th with 14,000 and BYD was 37th with 839. Among them, BYD opened its business in Turkey last November.

Since the beginning of this year, the sales of Chinese car companies in the Turkish market began to grow rapidly. In the first four months of this year, Chery sold 21,000 vehicles, ranking sixth. Mg sold more than 7,000 units, ranking 15th, while BYD sold 862 units.

“The number of brands entering the Turkish market is starting to increase. In terms of electric vehicles, in the first April, SAIC MG sold 1,069 vehicles, BYD 862 vehicles, Nezha, Celith, zero Run sales are around dozens of vehicles.” Cui Dongshu told reporters that the tariff policy issued by Turkey will slow the expansion of Chinese brands to a certain extent.

Cui Dongshu believes that the increase in China’s auto import tariff policy is mainly due to Turkey’s large trade deficit and economic downturn, and raising tariffs can increase fiscal revenue. On the other hand, Turkey is promoting the development of the electric vehicle industry, and Chinese car companies have strong competitiveness, in order to protect the domestic auto industry, raising car tariffs.

It is worth noting that the EU has launched an anti-subsidy investigation into Chinese electric vehicles and is about to impose tariffs, while Turkey has signed a customs union agreement with the EU. There are views that Chinese car companies entering the Turkish market may make it easier to enter the EU. However, Cui Dongshu believes that the move has something to do with the free trade agreement, but Turkey’s economy is mainly under pressure and inflation is soaring. “Turkey is part of the Eurasian continent, and it is cumbersome and meaningless to re-export from Turkey to Europe, and Chinese brands mainly sell to Western Europe, with fewer sales in southern and Eastern Europe.” Cui Dongshu told reporters.