Turkey's proposed 40% tariff on Chinese car imports will have an impact on Chinese automakers

CBN

2024-06-11 11:17Posted on the official account of Shanghai Yicai

Turkey has decided to impose an additional tariff of 40% on cars imported from China, with a minimum of $7,000 per vehicle, according to a presidential decision released on June 8, which will be implemented on July 7.

In the statement, the Turkish Ministry of Commerce said that the purpose of imposing tariffs is to increase the market share of domestically produced vehicles and reduce the current account deficit: "The Import Regime Decision and its annexes, the international agreements that we have signed are parties to, are intended to ensure consumer safety, protect public health, protect the market share of domestic production, encourage domestic investment and reduce 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% surcharge on EV imports from China, bringing the tariff to 50%. In addition, according to the previous decree issued by the Turkish Ministry of Trade, 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 are internal combustion engine vehicles, and the policy of imposing tariffs has been extended to all automotive fields.

According to a recent report released by Landing Law Firm, Turkey's restrictions on the import of electric vehicles from the mainland will undoubtedly have a certain impact on the mainland's electric vehicle brands. These brands may need to re-evaluate their strategy in the Turkish market, consider whether it is necessary to establish more service networks in the local area, or to find other partners or channels. It is worth noting that the sales of Chinese cars in Turkey are not high, but they show a rapid growth trend. Especially in the electric vehicle market, Chinese brands account for nearly half of the market share, and this has an impact on local Turkish companies.

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% of Turkey's electric vehicle market. In addition, Togg plans to invest 22 billion Turkish lira (about $2.4 billion) in the field of electric vehicles over the next 13 years, and is committed to achieving a production target of 175,000 units per year, covering five models. This strategy of the Turkish government is clearly aimed at protecting the country's industry and reducing the trade deficit. Togg will leverage the government's policy support and its advantages in local production and services to enhance its brand recognition and attractiveness 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 purchase tax reduction and exemption, providing car purchase subsidies, etc., to encourage the popularization of new energy vehicles. At the same time, the government is planning a massive expansion of EV charging infrastructure. According to a report by 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 household charging points by 2030 to address the problem of incomplete charging infrastructure. The Turkish government has also adjusted the Special Consumption Tax (SCT) applicable to electric vehicles, which involves raising the tax base limit for cars with power less than 160 kilowatts. This adjustment will move more EVs into the bottom 10% of the SCT bracket, further encouraging the shift to electric mobility.

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

The significant increase in the proportion of electric vehicles in Turkey is mainly driven by Togg, Turkey's first domestically produced electric vehicle brand, and the market participation of emerging companies such as Tesla. Turkey's first pure electric smart SUV model TOGG T10X has been officially listed on the road, the car opened pre-order on March 16, the guide price of 953,000 lira (about 338,700 yuan), this move marks 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 be exported overseas by 2025, and the total production is expected to exceed the million mark by 2030. According to the report, in the first four months of this year, Togg led the market with about 20,000 deliveries, while Tesla has also 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 four months of this year since it launched operations in November.

"Due to the underdeveloped industry in Turkey, foreign brands occupy the vast majority of the market, taxes are high, and local brand cars are smaller, so the overall price of models is high. After the last tariff increase, the performance of Chinese automakers in Turkey is still very good, and the imposition of tariffs this time will have a certain impact on Chinese automakers, with increased cost pressures, certain obstacles to development, and a certain slowdown in scale growth, but due to the large trade deficit and the underdeveloped local auto industry, Chinese automakers should be able to overcome the challenges. Cui Dongshu, secretary general of the passenger association, told reporters.

In the Turkish market, the automotive industry is weak, and foreign brands occupy the vast majority of the market share, and foreign brands such as Volkswagen, Fiat, Renault, and Ford all have factories in Turkey. According to public information, about 70% of Turkey's car production in 2023 is aimed at the international market, and during the same period, Turkey exported more than 950,000 vehicles to the international market. In 2023, Turkey is the second largest European car exporter after the UK. In 2023, Fiat, Renault, Volkswagen, Ford, Volkswagen, Peugeot, Opel, Citroen, Toyota, Hyundai, and Dacia are the top 10 automakers in terms of sales, accounting for 72.6% of the market share. In the Turkish car market, Chinese brands include Chery, MG, BYD, Hongqi and Dongfeng. Chery ranked 11th with 41,000 units, MG ranked 20th with 14,000 units, and BYD ranked 37th with 839 units. Among them, BYD started its business in Turkey in November last year.

Since the beginning of this year, the sales of Chinese automakers in the Turkish market have begun to grow rapidly. In the first four months of this year, Chery's sales reached 21,000 units, ranking sixth. MG sold more than 7,000 vehicles, ranking fifteenth, while BYD sold 862 vehicles.

"The number of brands entering the Turkish market is starting to increase. As far as electric vehicles are concerned, in the first four months, SAIC MG sold 1,069 units, BYD sold 862 units, and Nezha, Cialis, and Leap sold about dozens of units. Cui Dongshu told reporters that the tariff policy issued by Turkey will slow down the expansion of Chinese brands to a certain extent.

Cui Dongshu believes that the increase in China's automobile 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 automakers have strong competitiveness, so they have raised auto tariffs to protect their own auto industry.

It is worth noting that the EU has launched a countervailing investigation into Chinese electric vehicles and is about to impose tariffs, while Turkey has signed a customs union agreement with the EU. There is a view that it may be easier for Chinese automakers to enter the EU when they enter the Turkish market. 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 has skyrocketed. "Turkey is part of the Eurasian continent, and it is more troublesome and meaningless to re-export from Turkey to Europe, and Chinese brands are mainly sold to Western Europe, and to a lesser extent in southern and Eastern Europe." Cui Dongshu told reporters.

(This article is from Yicai)