THE 2017 Manila International Auto Show (MIAS) opened Thursday amid widespread uncertainty about the impact of the proposed increase in the vehicle excise tax on what is otherwise a rapidly growing market for cars and trucks.
Some two dozen auto brands were represented at the show, along with heavy trucks, equipment and motorcycle manufacturers. The first day of the show, traditionally reserved for introductions of completely new models, saw major launches by Hyundai and Mazda.
Most company officials who spoke with The Manila Times shared a similar sentiment: While growth is expected in 2017, forecasts from the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) as well as individual manufacturers are for vehicle sales across the entire industry to grow by 10 percent or more from 2016’s levels.
They said the implementation of the higher vehicle excise tax will have a strongly negative impact, and could cause many manufacturers, particularly those in the high-end segment, to fall short of their targets.
An official from Volkswagen Philippines, who asked not to be named, said his company was keeping its target for the year, which is to double its 2016 sales.
Volkswagen PH, a part of the Ayala Group, sold 1,060 vehicles in 2016, making it the leading European car brand in the country.
“We support the government, and we support the intent of the new tax,” the official said. “It’s just the levels (of the specific tax brackets) that we think should be discussed. For us, we have a bit of a range of vehicles in terms of price, so we don’t think we’ll be too badly affected overall, but some of the high-end dealers would likely feel some pressure.”
Under the proposed reforms the vehicle excise tax would be doubled from 2 percent to 4 percent for vehicles worth P600,000 or below, or raised to P24,000 plus 40 percent of value in excess of P600,000 for vehicles worth P600,000 but not more than P1.1 million, and P224,000 plus 100 percent of value in excess of P1.1 million for vehicles worth over P1.1 million but not more than P2.1 million. The excise tax will also be at P1,224,000 plus 200 percent of value in excess of P2.1 million for vehicles worth P2.1 million or higher.
“As far as the tax proposal goes, we’re really in a wait-and-see mode,” said Eric Baseleres, assistant vice president for the automotive division of Handyware Motors Corporation (HMC), distributor of China-produced Great Wall (Chenglong), Naveco, and Iveco trucks and Haval sport utility vehicles in the Philippines, introduced here just this year.
“For our commercial trucks, of course, it’s not an issue. That business is doing very well and we expect another strong year. For the Haval, the SUV market here is very good. It’s the most popular SUV in China, so we think it will do well. We’ll just have to see what happens with the tax, but you have to remember it will affect everyone,” he added.
The number of new entrants in the latter part of 2016 and this year and expansion of existing brands’ lines were signs of confidence in a strong automotive market, Pilipinas Taj Autogroup’s marketing manager Antonio Ibarle agreed.
Haval from China is among the new brands being sold in the country, while Indian manufacturers Mahindra and Tata expanded their line-up of vehicles. Taj is the distributor of Tata Motors in the Philippines. Its product line was expanded to include the cars this year along with its commercial trucks.
“We’re expanding. We plan to open five new dealerships in the country,” Ibarle said. “The excise tax will definitely be an issue. However, for us, our cars are priced at the lower end and won’t be seriously affected. So, we are moving ahead with our plans.”