Brand New Car Sales On 7 Year Low
In January, the Philippines government implemented a tax reform law, and the excise tax hike on automobiles and other goods represents the first package of a comprehensive tax reform program pursued by the administration of President Rodrigo Duterte.
The excise tax rose from 2 percent to 4 percent for those priced up to 600,000 pesos ($11,000).
New auto sales in the Philippines had surged in recent years, topping 200,000 units in 2014, 300,000 units in 2016 and 400,000 units last year.
However, this year, according to the data gathered by the Manufacturers of the Philippines Inc. and the truck Manufacturers Association, new vehicle sales in the first nine months of 2018 has plunged 13.8 percent from last year, selling only 261,057 units. It highly unlikely for the domestic auto market to see an increase in sales in the remaining months. Compared to last year, there was a last minute demand due before the tax hike was implemented.
The President of Toyota Motor Philippines Corp., Satoru Suzuki said that the Filipino consumers have become reluctant to purchase high-priced items partly due to the relentless inflation. Due to that, he forecasted that even adding car sales for the remaining months of 2018 will not help the industry recover before year end.
Filipino consumers have become reluctant to purchase high-priced items due partly to accelerating inflation, said Satoru Suzuki, president of Toyota Motor Philippines Corp. under Toyota Motor Corp., adding car sales will not recover within this year.
Industry sources also attribute the sluggish car sales this year to a limit of 65,000 registered vehicles for ride-sharing services such as Grab imposed by the Land Transportation Franchising and Regulatory Board, weighing on new car sales in the Southeast Asian country.
Among the top 10 automakers operating in the Philippines, seven have experienced drops in sales in the first nine months of this year. Toyota, one of the leading carmakers in the Philippines suffered a 17.6 percent drop in new car sales in the January-September period this year to 109,402 units.
By category, passenger car sales, which accounted for nearly one-third of the total, fell 20.2 percent from a year earlier to 81,078 units and commercial vehicle sales decreased 10.6 percent to 179,979 units, according to the data.
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