Purisima bats for smaller cars

Trade and Industry Secretary Cesar Purisima is urging local automotive manufacturers to bring in cars with an engine displacement of 1,000 cc or less to help lessen the country’s fuel consumption and provide an alternative to cheap second hand imported cars.

According to Purisima, using small cars with an engine displacement of 1,000 cc or less consumers less fuel, is cheaper than the two-liter car models and is easier to maneuver in traffic.

The smaller cars, Purisima said, would also cost much less at around P300,000 to P400,000.

Using small cars, Purisima pointed out, are the trend in other countries.

To help encourage local automotive manufacturers to bring in the smaller, Purisima said, the government could look at possible incentives.

But Board of Investments (BOI) managing head Elmer Hernandez said that there are already a lot of available incentives provided under the revised Motor Vehicle Development Program (MVDP) and the Omnibus Investment Code.

For instance, under the MVDP, participants in the program would be entitled to import knocked-down parts and components at preferential tariff rates of one to three percent.

Automotive manufacturers could avail of additional incentives such as income tax holiday for those with pioneer status provided that: At least $100 million is invested including for the acquisition of existing assets or facilities’ exports of at least 10,000 units.

• At least $20 million incremental investments for modernization/expansion and manufacture of generic vehicles (e.g. ASEAN cars) that are designed/suited for the Asian market.

The automotive firms, furthermore, Purisima said, can register with the BOI with pioneer status if they manufacture transmission, engines, tools and dies for chasis and engine manufacturing or have common facilities for forging parts and components of motor vehicles.

Likewise, they can also register with the BOI if they engage in the design of customized Asian autos, trucks and buses.

At present the smallest engine displacement offered by local manufacturers is the 1,300 cc engine.

Cars that cost P600,000 or below are also subject to a minimal excise tax of two percent.