In for the long haul

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Armando-J-AguadoThere was a time when buying a new car was a truly expensive affair. One had to prepare a large cash down payment, secure a bank loan (with high interest rates) that would pay for the balance of the car, and before long, you would have to spend on other necessities like gas, car accessories, etc. To top things off, if by some unlucky turn of events you were unable to pay the bank, your car would be taken from you (the technical term is repossessed) and all your past payments would be forfeited.

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Those days are long gone. Today, down payments can be as low as 10 percent of the vehicle’s price, terms can go as long as 6 years, and banks would even throw in accessories and gas for free as additional perks. Needless to say, the ease of being approved for an auto loan in this day and time is unprecedented. The end result of this relative ease and convenience? Some 19,173. That number is how many vehicles were sold in the country last March 2014 alone, according to a report by the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI). This, however, pales in comparison to the total sold for the 1st quarter of 2014—51,643 vehicles. Now, these are national figures, and are by no means limited to Metro Manila. But it is not hard to imagine that of those more than 50,000 cars, a good number will end up going around and adding to the already horrendous traffic in Manila’s roads. On one hand, car companies really have little to complain about—sales are good, and if projections are to be believed, we can expect at least 230,000 new vehicles for the year 2014, already up from the numbers of previous years.

But the question remains—what about the greater good, the public welfare so to speak?

The Department of Public Works and Highways (DPWH) cannot expand and build new roads at the same exponential rate that cars are being sold in this country. So where does this leave us? Expect worsening traffic conditions, more overcrowding in trains that are already overcapacity, and millions of pesos in lost productivity due to the gridlock. Let’s be realistic: we cannot keep on operating this way. It is high time for car manufacturers, dealers, and the automotive industry in general to work with government in coming up with a comprehensive and long-term solution to the problem. The Unified Vehicular Volume Reduction Program (UVVRP), better known by most people as “number coding,” is not enough as it is, and its effects will only be further dulled with every new batch of vehicles that gets driven out of dealerships. At some point in the not so distant future, once a saturation point has been reached in the level of traffic, the government may have no choice but to begin to implement tighter controls on car sales. An example would be adding registration requirements that bring up the car’s purchase price further (similar to Singapore’s Certificate of Entitlement), which will subsequently lead to less people wanting to buy a car and instead settle for other means of transportation.

Ultimately, we need to ask ourselves: Until when will we continue to turn a blind eye to the slowly growing problem that is traffic? The burden is on our automotive industry to answer this, and to decide whether they are in it for the long haul by working on sustainable solutions with government, or on simply reaping the short-term rewards at the expense of the Filipino people.

The author is a Lecturer with the Management and Organization Department under the Ramon V. Del Rosario College of Business of De La Salle University Manila. He may be reached at armando.aguado@dlsu.edu.ph. The views expressed above are the author’s and do not necessarily reflect the official position of De La Salle University, its faculty, and its administrators.

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