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Countries like bolivia, and other countries that slap very large (>50%) import duties on foreign-made cars, have a very funny side-effect. Every 4 years it see
by IG_Semmelweiss 5y ago
Countries like bolivia, and other countries that slap very large (>50%) import duties on foreign-made cars, have a very funny side-effect.
Every 4 years it seems there is a model or brand that is cool, and that every elite seems to be driving. Is that the cool new car? The "in" brand. No. The cause is simple. Its 101 economics:
Import duties are usually managed on a country-by-country basis. Politicians will manage capital flight ("trade imbalance") by seeking higher levies on heavy industrial goods that are popular, like cars. Those levies lead to a situation where everyone seems to be driving the exact same brand new cars (and usually 1 particular make). However, its not that the brand is particularly popular, its only that the car maker offers the best value net of import duties, plus, importers are very wary of bringing cars with huge import fees.
So, the newer cars are always a few specific never-seen brands or makes. Then there are others driving slightly-older Y brand cars, far more generic. The oldest cars seem to have a lot of diversity and would resemble your average US used car sales lot.
The evolution of the duties can then be described as follows:
1) free market: very low cost to import any car
2) Some tough -but not insane- duties (particularly on US new cars).
3) Restriction / heavy levies on used car imports.
3) Very heavy import duties on most western new cars (vs Indian or Chinese makes).
- mrtksn 5y agoThat's interesting but Turkey has found a solution to the problem. Having one of the highest tax rates in the World[0], the country had to be creative, thus invented the "Special Consumption tax" or SCT , which is determined by the size of the engine and price bracket of the car. When you buy a car in Turkey, on top of the import duties(if any) a SCT is added(anywhere from %45 to %150), on top of that a VAT is added(yes, VAT is calculated over the final price with SCT), on top of that other smaller taxes are also added(radio tax, stamp tax etc) and you end up with ridiculously expensive cars and you have no way out because you can't drive an unregistered car and you can't register your car without paying everything you have to pay. Also, the used car imports are tightly controlled to prevent undercutting the local market, to the point that it doesn't make any sense to import. Bringing your car from a neighbouring country is something you can do but for most it doesn't work out because you are limited to 2 years(it was 6 months till a few years ago). This also inflates the second hand market, often making cars an investment because they barely loose value. Once you buy a car you are in the club now, you drive it for a year or two then sell it at a high price, put a bit more of your savings on top of it and buy yourself even better car. [0] https://jalopnik.com/why-this-150-000-porsche-costs-600-000-in-turkey-1847572799 https://jalopnik.com/why-this-150-000-porsche-costs-600-000-...
- fifticon 5y agoDenmark functions similar to this, i believe (i am danish).
- jacquesm 5y agoSame in NL. BPM.
- tragomaskhalos 5y agoTurkey has always had creative taxation schemes - as a British holidaymaker visiting in the 90s, everyone had to pop a fiver (sterling) into a hat at passport control.
- Jenk 5y agoIt was a tenner in 2011.
- eatplayrove 5y agoWait until you hear Turks have to pay 120 euros for a tourist visa to Europe...
- mrtksn 5y agoOr that Turks have to pay 50 liras each time they exit the country.
- mellavora 5y agoHey, that's even better than turning houses into investments, creating a house price bubble!!
- ab_testing 5y agoDon't worry, houses are still an investment in Turkey - just as everywhere else in world.
- 5y ago