Retrospective on CJ Berzin, “Turkey’s Automotive Industry: Driven to Grow” from Turkey: Bridging Two Worlds PerspecƟves on Business and Economics, Volume 28, 2010 CJ Berzin ’10 is now Sr. Finance Manager-Business Development at the PharmaceuƟcal Companies of Johnson & Johnson. Since 2009, has Turkey decreased the tax on fuel and implemented permanent auto tax breaks as the author suggested? In 2010 the current VAT (value-added tax) of Turkey was 18% and the gas tax was raised by 8%. Since then, the automoƟve market hit its lowest point in 2019 due to rising interest rates and decreasing consumer confidence. In response, the following year “Turkey increased its special consumpƟon tax on mid-range and expensive cars…, but also liŌed the lower thresholds at which the duty is imposed, meaning that more vehicles could be taxed at unchanged lower rates” (Sezar & Lawson, 2020). Despite not implemenƟng a permanent auto tax break, this led to a decline in interest rates, which in turn resulted in an increase of sales. In contrast, fuel taxes have done nothing but increase. As of May 2020, “Turkey raised the special consumpƟon tax on some petrol and diesel oil types, liquefied petroleum gas, propane and butane by between 54189%, prompƟng hikes in pump prices” (Dinar et al., 2021). This could prove very detrimental for Turkey’s economy due to the predicted 0.4% rise in inflaƟon these gas taxes could cause and the deterrent it might provide to auto investors. Is the automotive industry still the cornerstone of the Turkish economy? Has the Turkish automotive industry completed the transformation it had started from a manufacturing hub to a regional center of excellence and development? As of 2017, the Turkish automoƟve industry was considered a thriving sector with a plan to increase its exports. However, due to the coronavirus outbreak in 2019, automoƟve sales all over Europe plummeted sharply as a result of lockdowns being enforced. “FromJanuary toNovember, the market shrank by 25.5%, to around 9 million units, the data showed” (Daily Sabah, 2021). Yet, Turkey’s industry managed to end the year of 2020 in a stable state due to increased demand. Thus, even with all of the obstacles presented, the automoƟve industry has managed to conƟnue its role as Turkey’s economic cornerstone. Yet despite the steady growth of the industry, “Turkish manufacturers must conƟnue researching and invesƟng to maintain a technological edge against compeƟtors conƟnually improving the quality of their output” (Güven, 2017) in order to become a regional center of Turkish excellence and development. References Daily Sabah. (2021, January 7). Turkey bright spot in European auto industry in pandemic year. Dinar, M., Sezar, C., & Butler, D. (2021, May 20). Turkish fuel price hike expected to raise inflaƟon by 0.4% - economists. Reuters. Güven, S. (2017, August 8). Turkey's automoƟve industry on steady growth track. WardsAuto. Sezar, C., & Lawson, H. (2020, August 30). Turkey raises tax on cars but liŌs lower rate thresholds. Reuters. RetrospecƟve by Sidney Jankanish ’23, PoliƟcal Science and InternaƟonal RelaƟons Martindale Retrospectives 4 November 2021
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