Buying a car in countries with high taxes can be a daunting task, especially in Turkey where taxes make the prices incredibly high. In Turkey, luxury car brands are forced to put small engines in their larger models to fit into lower tax brackets. For example, Mercedes sells the latest E-Class with a 1.5-liter engine to comply with the tax regulations. This strategy allows the E-Class to start at around $63,400, but with taxes factored in, the price can skyrocket to over $137,000.
Subheading 1: Absurd Taxes in Turkey
Turkey imposes a hefty Special Consumption Tax (ÖTV) on new cars with engines smaller than 1.6 liters. The tax rate starts at 45 percent of the car’s value and can go up to 80 percent for vehicles priced above $8,500. When the ÖTV is combined with the Value Added Tax (VAT) of 20 percent and registration taxes, the final price of a car can be significantly inflated. This high tax burden makes buying a car in Turkey a costly affair.
Subheading 2: Downsized Engines by Luxury Brands
Luxury car manufacturers like Mercedes and BMW have resorted to equipping their models with smaller engines to avoid excessive taxes in Turkey. For instance, the Mercedes E180 has a 1.5-liter engine, while the BMW 520i features a 1.6-liter unit, both falling under the 1.6-liter threshold to avoid higher tax rates. This downsizing strategy allows these cars to remain somewhat affordable in the Turkish market.
Subheading 3: Impact on Performance
The downsized engines used to mitigate taxes in Turkey have an impact on the performance of luxury cars like the Mercedes E180 and BMW 520i. Despite being equipped with mild-hybrid setups, these models may lack the power and acceleration expected from vehicles in their respective segments. With limited engine displacement, the performance of these cars may not match that of their global counterparts.
Subheading 4: High Taxes for Larger Engines
Cars with engines larger than 2.0 liters face even higher tax rates in Turkey, with ÖTV reaching as high as 220 percent. This astronomical tax burden, combined with VAT and other levies, makes purchasing a luxury vehicle with a larger engine an almost impossible task for the average consumer. The exorbitant taxes on larger engines further contribute to the overall costliness of buying a car in Turkey.
Subheading 5: Challenges of Buying a New Car in Turkey
The steep taxes on new cars in Turkey present significant challenges for consumers looking to purchase luxury vehicles. The inflated prices resulting from ÖTV, VAT, and other taxes make buying a new car a luxury reserved for the wealthy elite. With limited options for affordable vehicles due to tax regulations, many consumers may opt for used cars or alternative modes of transportation instead of buying a new car in Turkey.
In conclusion, the high taxes imposed on new cars in Turkey have a significant impact on the automotive market and consumer purchasing behavior. Luxury car brands resort to downsized engines to avoid excessive taxes, resulting in performance compromises. The exorbitant taxes on larger engines further exacerbate the costliness of buying a car in Turkey, making new car ownership a luxury few can afford. The challenges of navigating the Turkish car market underscore the complexity and affordability issues associated with purchasing a vehicle in a country with high tax rates on automobiles.