Turkey

Last modification: 11 Jan 18

Chapter 1: Economic and business environment

Demographics

79.8 Million (2016)

Capital

Ankara

Major cities

İstanbul
Ankara
İzmir
Bursa 

Languages

Turkish

GDP
  • GDP(PPP) :1.6 Trillion USD, World Ranking GDP: 18th
  • GDP (per capital) : 21.198 USD , World Ranking DGP (pp) : 66th

The country's wealth is mainly concentrated in the northwest and west, while the east and southeast suffer from poverty, lower economic production and higher levels of unemployment. HOwer, in line with the continuous economic growth in Turkey during the recent decade, parts of Anatolia began reaching a higher economic standard.

Unemployment rate

%11,7 (March 2017)

Main industries

Automotive,Textile,Iron and Steel,Construction,Machine Industry

The Automotive industry reprensents a key asset in the country development with over produced 1 million vehicles. 

Currency

TL (Turkish Lira)

Interest rate

 % 9,26

Political key info

Governance : Unitary Parliamentary
18th largest economy in the World
8th largest economy in Europe

Inflation

%11,72 (May 2017)

Chapter 2 : Automotive market, segments & sales

Total Car park

11.3 million registered cars (2016)

New vehicle registrations (Cars, LCV, Trucks)
  • 756.938 passenger cars in 2016 (+4,32% year on year)
  • 226.782 LCV in 2016 (-6,45%)
  • 24.137 Truck in 2016 (-44,10%)
  • 96% of the cars sold in the Turkish market  are 1600cc or less due to the taxation systmen  
  • Sedan cars are very dominant %48
Top 5 brands (total market)
2016 (PC+LCV)  2016 PC
Volkswagen Renault
Renault Volkswagen
Ford  Opel
Fiat        Fiat
Opel   Hyundai

          

                        

Model preference top 5 (total market)
2016 PC  2016 LCV
Fiat Egea (Tipo) Ford Courier
Toyota Corolla Ford Transit
VW Passat Fiat Doblo
VW Polo Fiat Fiorino
Renault Clio VW Caddy
Used car market/renewal cycle

Since 2014, 4 million used cars have been brought for every year. Used car  market grows nearly 7%- 10% every year.
2016 sales 4.7 million.

Chapter 3: Company car market

Total Fleet Park (company cars)/Fleet penetration in total fleet sales
  • 249.872 new fleet cars (%38 of PC sales)
  • Sedans are most preferred
Evolution fleet sales (last 5 years)
  • Fleet sales have increased rapidly over the last 5 years. The 2016 Turkish True Fleet Market was outpacing 2015 by + 9.5%.
  • The share of leasing companies in fleet sales has been increasing year by year. Over the last three years the share of the vehicles acquired via rental and leasing companies has increased by 7%. Where in 2014 the share was 58%, at the end of 2016 it was 65%.
  • Compared to the European countries, operational leasing in Turkey is still not equally developed. Only 15% of company vehicles are leased.
Top 5 fleet brands (fleet market)
2016 PC
Renault
Volkswagen
Fiat
Ford
Dacia

 

Fleet Model preference top 5 (fleet market)
2016 PC Models
Renault Fluence
Renault Symbol
Volkswagen Passat
Ford Focus
Fiat Egea (Tipo)

 

Chapter 4: Taxation & legislation

4.1. Car Taxation


Looking at the car taxation system, it mostly relates to the engine volume of the car in cc. and net price. Buying cars – especially with cars above 2000cc being taxed above 160% – tends to be quite expensive.

In Turkey, there are mainly two types of taxes for cars. The first type includes the indirect taxes paid during the purchase of the cars. These taxes are the special consumption tax and the value added tax. The second type is some sort of a circulation tax, known as the motor vehicle tax and are paid annually by the owner of the car.

Special consumption tax
The special consumption tax is an indirect tax due for a number of goods including passenger cars. For passenger cars, the special consumption tax is accrued during the sale of the car to the end user, before the first registration of the car and only then.
The special consumption tax needs to be paid by the seller of the passenger car. It is included in on the invoice for the sale of the car. The amount due depends on the type of the vehicle and the engine type and also net price. It is calculated by applying the pre-determined rates on the sales price of the cars. ) it’s little bit complex,  based on both engine power and net price. Please find it in the below table.

VAT
The sale of passenger cars in Turkey is subject to the general  VAT rate of 18%. The sale of second-hand passenger cars, on the other hand, is subject to VAT at the rate of 1%.
The VAT payment liability for the sale of the passenger cars lies with the seller. As with the special consumption tax, VAT is charged to the end user within the invoice.

The tax burden
 As a summary of the above-stated explanations,the tax burden on the purchase of a passengercarwill be calculated as follows:
A - The type of the car: engine with 2000cc
B - The sales price: 50,000 TRY
C - The specialconsumption tax (B × 50%):25,000 TRY
D - The value added tax ([B +C] ×18%]: 13.500 TRY
E - Total tax burden (C +D): 38.500 TRY
F - The total sales price (E + B):88.500 TRY
G - The ratio ofthe tax burdenon price (E ÷B): 77%

Engine Net Price SCT VAT Total
1600 cc 40000 TL 45% 18% 71%
  70.000 TL 50% 18% 77%
  70.000 TL + 60% 18% 89%
1600 cc-2000 cc 100.000 TL 100% 18% 136%
  100.00 TL + 110% 18% 148%
2000 cc   160% 18% 207%

Annual circulation tax – motor vehicle tax
The motor vehicle tax, which is an annual circulation tax in Turkey, is levied due to the fact that a vehicle is registered in Turkey and is payable by the real or legal persons for whom the car is registered. The annual circulation tax is payable in two installments, one in January and one in July.The figures are revised each year by the revaluation rate announced by the Ministry of Finance. The Council of Ministers also has the authority to revise and differentiate the figures based on the technical facilities and the fuel- oil type of the vehicles.
Rumor has it that Turkey was/is going to change the motor vehicle tax to be linked to CO2 emissions, following the example of the UK and Germany.

4.2. Income tax – Taxable persons


In principle company cars are mainly tool cars, cars necessary for the job.  No lump-sum methods exist to value the benefit in kind due for the private use of a company car. It is up to the discretion of the employer to determine the private part and related benefit in kind, a discretion apparently not often scrutinized by the Turkish tax authorities.

4.3. Company car


The cost of passenger cars that are acquired or leased can be deducted from the tax base on the condition that they are used for business purposes. These costs include the depreciation of the passenger cars in the assets, the leasing expenses and other car-related expenses including the fuel- oil, maintenance and others.

Only the motor vehicle tax paid for passenger cars and motorcycles cannot be considered deductible expense and should be added to the corporate tax base, in accordance with the Motor Vehicle Tax Law.
The general depreciation rate applied for passenger cars is 20% (five years). There is no lump-sum limit or ceiling for the amount of the depreciation expense on passenger cars.

When company cars are used for private purposes as well, in accordance with the Income Tax Law a benefit in kind should be considered as salary and subjected to income taxation.

4.4. Income taxes – drivers’ personal taxation 4.5. Electric vehicles


Electric vehicles can already enjoy a significant lower special consumption tax from 3% up to 15%, compared with 45% to 145% for combustion engines. It is expected that in Turkey this, and the elaboration of the electric charging facilities, will stimulate the sale of electric vehicles in Turkey with a positive outlook for these vehicles in the next 10 years.

4.6. Future developments


The Turkish government is considering changing the annual motor vehicle tax into a CO2 emission-linked tax. When comparing this potential change with lessons learned from Western Europe – and taking into account the relatively low amount of the motor vehicle tax – the question remains whether the impact would be sufficient to change the buying behaviour of consumers.
If the environmental objective is primordial, linking the special consumption tax for vehicles to the CO2 emissions of cars would almost certainly influence the buying behaviour stimulating consumers to purchase environmental friendly cars. Similar changes in countries like Belgium and the Netherlands have clearly proved this effect.
Furthermore, linking the annual tax to CO2 emissions might endanger a social objective of not “punishing” the less fortunate who cannot afford new, less polluting cars.

4.7. Legal background (import taxes)


*Source: http://www.globalfleet.com/analysis_of_turkish_car_taxes_58130-en-524-188088-1853.html and And Yasin Akgun (PricewaterhouseCoopers) 

Chapter 5: Car policies

Company car entitlement
In principle, companies are allocating corporate vehicles for managers and higher levels as benefit car. Sales teams are also given a car: a pool car or dedicated car.

Which sectors provide most fleet cars?
Finance (Banks), Pharmeticual companies,Service sector

Which job functions often include a company car?
Sales Team, Managers

Which reference car(s) is given to:

Entry/junior sales level Clio,Polo,Symbol
Senior sales / management level Megane,Octavia,Egea (Tipo)
Executive level Passat,C200d,A4

Chapter 6: Funding methods

Overview of penetration of funding methods (buy or lease statement): 

  • 67% Cash payment Self Purchase ,
  • 14% Car Credit
  • 6% Financial Lease,
  • 13% Operational Lease

Type of suppliers (captive versus multibrand, international versus local…)

Captives:

  • RFK ( Renault Fleet Leasing) white label with Fleetcorp
  • MBK (Mercedes Benz Leasing) white label with Fleetcorp
  • CBK ( Citroen Business Lease) white label with ALD

International leasing companies: 

  • Leaseplan
  • ALD
  • TEB Arval
  • ​Fleetcorp

Local leasing companies: 

  • Hedef
  • Intercity
  • Derindere
  • Garenta
  • Garanti
  • VDF

The car rental and leasing companies are represented by TOKKDER (established in 1996): http://www.tokkder.org
TOKKDER publishes the "TOKKDER Operational Leasing Sector Report".

6.1 Outright purchasing


Still the main financing method in Turkey

6.2 Renting (Finance Lease)


Financial lease is the least preferred finance method in Turkey.

6.3 Full Service Leasing (operational leasing)

 

  • Definition Operational Leasing sector grows very fast. 16% of company cars are operational leasing. It is predicted that this figure will be 2 times in 5 years. SMEs have started to better understand the fleet management. In fact, nearly all global companies do operational fleet leasing in the market. But SMEs and local big companies are yet at the very beginning of the journey. 
  • Turkey's operational leasing sector increased by 62.800 new vehicles in the first half of 2017, bringing the total number of vehicles in full service leasing to 337.500.. 

Evolution of total number in operational leasing (source: TOKKDER)

2017 337.500 + 2,1 %
2016 330.600 +19,3%
2015 277.200 +17%
2014 236.900 +14,3%
2013 207.000 +21,9

Average contract duration (source: TOKKDER)

< 18 months 5,8%
18 - 30 months 25,7%
30 - 42 months 59,1%
> 43 months 9,4%

Prefered currency for contracts (source: TOKKDER)

EURO 81,2%
USD 1,4%
TL 17,4%
  • Pro’s and con’s
    - No risk in second hand vehicle sales because of volatile in vehicle market
    - Registering leasing payments directly under operational cost item, P/L statement and hence,decrease your tazx base compared to investment spending for vehicle purchas
    - All operational expenses will be stated only in one invoice

Chapter 7: Fuel

Fuel type segmentation:
- Diesel: 76%
- Other: 24%

Fuel Card Solution:
Turkey has a different solution then fuel cards. The stations are equiped with automatic payment systems. The fuel company is putting a chip on the cover of the fuel tank cover. Drivers can get fuel from the stations and the company is invoiced every 2 weeks.

 

Chapter 8 : TCO components

Most important cost factors in TCO
​Fuel and finance are the most important factors. Interest rates are too high. So the cost of the money is high and Fuel prices are too high.

Maturity of TCO usage
About 80% The of car selection is based on price, not on TCO. Turkish market is more price & car oriented. The TCO concept is not yet wellknown, although several initiatives are trying to educate the market (Fleet Academy).

Chapter 9: Safety, insurance and telematics

Safety
Turkey loses about 10,000 lives every year due to read traffic crashes. It has a road traffic fatality rate of 13 deaths per 100.000 population. The majority (55%) of those killed are drivers and passengers of four-wheelers though pedestrians also constitute a significant proportation (19%) of these fatalities. According to the recently published WHO Global Status Report on Road Safety, though there are laws on speed, blood alcohol concentration for the general population, seat-belt wearing and helmet wearing, they are inadequately enforced. In addition, there is no adequate provision of infrastructure for non-motorized modes of transport. Turkey is one of the ten countries included in the Road Safety in 10 countries project which will be conducted over 5-years by a consortium of six international partners. (Source: World Health Organization)

Telematics
Telematics are mostly only used to see the location of the car/driver but more and more fleet professionals are now looking at the data to reduce TCO.

Chapter 10: Environment

Trends in taxation, legislation and city restrictions (CO2, diesel… )
Two years ago the tax on hybrid vehicles was reduced.
This has reduced the price of Toyota cars especially. The price of the CHR hybrid has dropped by 25%.  On the other hand İn Turkey there isn’t any taxation system based on CO2.

At the same time, tax assistance is provided for the first time in electric cars

CO2 figures availability
Only 14% of the cars sold in Turkey in 2016 are under 100 gr/km,  100-120 gr/km 44% and  120 gr/km and  more and 41%.

Chapter 11: Mobility

Trafic conditions
Turkey is the 10th busiest country in terms of traffic jam . Also Istanbul with a population of 18 mio. Second city in the world.

Driving in Turkey
In order to drive legally in Turkey for stays of more than 90 days, you must have a valid driver’s license, along with either an international driving permit or a notarized Turkish translation of your current driver’s license. You must also always carry your car registration certificate and proof of a valid car insurance policy with you when driving. You may drive with your native driver’s license for six months, after which you will be required to apply for a Turkish license.

Keep the following rules in mind:

  • The legal driving age in Turkey is 18 for motorcycles and passenger cars.
  • Using mobile phones while driving is illegal, and you will be fined for such behavior.
  • The legal blood alcohol limit is 0.5‰. If you are caught driving above this limit, you will face a heavy fine and your license will be immediately confiscated for at least six months.
  • All passengers are obligated to wear seatbelts while in the vehicle.
  • Children under the age of 12 are required to sit in the back seat.

Speed limits in Turkey are as follows:

  • 50 km/h in towns
  • 90 km/h on major roads
  • 120 km/h on highways

Mobilty conditions for employees mobility 
Public transportation is not enough in Turkey, so white-collar people usually use their own car or service bus. The subway metro  network is expanding very quickly but it is still not enough.

Mobility solutions (car sharing, taxi, Uber, car pooling…)
Car sharing is very new and very rarely used. Taxi is the most popular mobility solutions. Uber is increasing day by day as it is in the whole world. But it is not legal in Turkey

Chapter 12: Key trends to watch