The automotive market enters 2023 with new hikes. Many brands worked over the weekend to update their price list. While the rate of increase is expected to be 4 percent on average, this rate will be higher in some models that will change the tax bracket.
Increases in automobile prices do not stop. In 2022, which we left behind, brands had to update their prices almost every month in parallel with the increase in the exchange rate and increasing costs. In some months, the frequency of raises by brands was as high as three. Last year, there was an average of 70 percent increase in automobile prices. The price of the cheapest car in Turkey was based on 400 thousand TL. The first week of 2023 started with hikes.
According to the news of Aysel Yücel from Ekonomim, the price lists of brands such as Renault, Volkswagen and Hyundai could not be reached at the weekend. Consumers who entered the price list category of these brands encountered the text ‘our prices are being updated’. Many brands that update prices are expected to announce their hike rates by noon today.
Raises are not reflected all at once
The brand representatives we spoke to said that one of the most important reasons why automobile prices started the year with a hike was the rise in the Euro exchange rate in December. On the other hand, as the global inflation and energy crisis increase production costs, the cost of leaving the factory of vehicles coming from abroad continues to increase.
Alp Gülan, Chairman of the Board of Gülan Automotive, who is the dealer of Nissan, Renault, Dacia, Fiat, Peugeot, Opel and Citroen, stated that many brands did not reflect the price increases at once, speaking to the EKONOMİ newspaper, and said: got up to. This has an effect on the raises. On the other hand, the increase in production costs is reflected in prices. The ex-factory price of vehicles coming from abroad has increased.
The increase in energy costs is reflected in prices. On the other hand, even though logistics costs are decreasing, raw material prices are increasing. Prices are going up due to the effect of both. Although we cannot fully predict the raise rates, we generally see that brands try not to go above 4 percent. Because, when a 7-8 percent hike combined with the SCT, prices suddenly increase because the tax bracket changes. For this reason, we do not expect all cost increases to be reflected as a raise at once. In general, brands keep the rate of increase limited and increase again in the coming days,” he said.
With the hikes, the number of models under the 80 percent SCT is expected to decrease rapidly. Before the previous base update in August 2021, about 50 different models were below the 80 percent mark. The tax base adjustment, which was made in November and was below expectations, allowed a limited number of models to fall into a lower tax bracket.
Most of these models were in the upper tax bracket just one week after the tax base adjustment. As of this week, the number of vehicles under 80 percent SCT is expected to decline much faster.”
Demand is strong despite hikes but no tools
Automotive sector representatives predict that demand will not be weak in the first half of the year despite the price hikes. Because before the election, problems of access to credit are expected to ease in parallel with the monetary expansion policy. Last year, there was a large segment that could not buy a vehicle due to the difficulty of accessing credit. On the other hand, the EYT regulation is expected to make a positive contribution to the market.
Increasing the excise duty exemption limit for disabled vehicles from 450 thousand 500 liras to 1 million 4 thousand 200 liras is expected to have a positive impact on sales. However, the stocks are completely out of stock at the moment. Because the automotive sales, which were mobilized with the disappearance of the uncertainty about the SCT update, accelerated even more than the expectations with the last days of the year. Consumers, who predicted that new price hikes would come in 2023, almost flocked to the dealers.
When the vehicles in the dealerships were exhausted, the vehicles on the road began to be sold. Industry representatives state that there are no vehicles in the market due to the high demand last month. Brands are making an effort to bring in more vehicles, especially in the first half.
2nd hand prices are on the rise
Industry officials state that second-hand prices continue to increase. Prices have increased by over 5% in the last two months. In parallel with the increase in new vehicles, second-hand prices are expected to increase. Because second hand demand is increasing.
The new General Manager of Otoshops, Melih Mutlu, said, “Due to the expected price hikes for brand new cars, the second-hand market is very active, and we do not expect a decrease in demand in the short term as it is predicted that supply problems will continue in 2023. We expect that the monetary expansion policy will be followed before the election and the demand will continue to increase with the positive contribution of EYT.”
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