Billions to be transferred to capitalists for the first fully “homemade” car in Turkey

As Turkey unveils its "fully" domestic car with the support and propaganda of the AKP government and Erdoğan himself, the producers including several capitalist groups of Turkey are to receive vast financial and tax incentives from the state
Wednesday, 01 January 2020 12:22

Turkey, who is already a big exporter to Europe of cars made domestically by firms such as Ford, Fiat Chrysler, Renault, Toyota, and Hyundai, unveiled its first fully domestically-produced car on Friday, saying it aimed to eventually produce up to 175,000 a year of the electric vehicle in a project expected to cost 22 billion lira ($3.7 billion) over 13 years.

Considering that the total number of cars sold in the first 11 months of 2018 is 316,427 and the market is recessing due to the increase in foreign exchange rates, the predictions of the project do not seem realistic.

The consortium that is undertaking the first fully homemade car project, Turkey’s Automobile Initiative Group (TOGG), was established in mid-2018 by five industrial groups: Anadolu Group, BMC, Kok Group, mobile phone operator Turkcell and Zorlu Holding, the parent of TV manufacturer Vestel.

The state will support the group with tax breaks and other incentives. The presidential decree regarding the incentives was published on December 27. However, as understood from one of the articles of the decree, the project was started on October 20, 47 days before the decree. According to the related article, financial incentives have already been launched on November 30.

The incentives include VAT and customs tax exemption, 100% reduction rate and 100% contribution to the investment rate, meaning that TOGG will not pay any corporate tax, income tax support over employee wages for 10 years, free land to be granted by the government, purchase guarantee by the government.

Furthermore, 360 million Turkish liras of salaries of 300 qualified personnel to work on the project, who earn 20 times the gross minimum wage, will be compensated from the state budget and 80% of the investment loans to be received until the end of 2027 will be compensated from the budget.

As a result, billions of taxpayers’ money will be transferred to the capitalists in TOGG for the production of "fully" domestic cars.