MANILA, Philippines — Toyota Motors Philippines Corp. (TMP) said it expects a significant drop in sales next year as it grapples to comply with volume requirements under the government’s Comprehensive Automotive Resurgence Strategy (CARS) program due to the planned implementation of higher automobile taxes.
TMP president Satoru Suzuki said the company is anticipating a five to 10 percent decline in sales next year from a projected 180,000-unit turnout this year.
“No growth (for sales next year), instead reduction because of the tax. Maybe five to 10 percent reduction from this year,” Suzuki said.
“Because there is a lot of demand this year from customers supposed to be buying the car next year. They already bought this year. So some portion from next year have already been eaten up so we have a negative starting point,” he said.
The company expects to regain back the double-digit growth in sales experienced the previous years by 2019, he added.
With the first tax reform package or the Tax Reform for Acceleration and Inclusion (TRAIN) bill already signed by President Duterte into law on Tuesday, Suzuki continued to lament the turnout for the new taxes to be levied on automobiles.
Suzuki said he is “not happy” with the outcome as it offsets the incentives given to local car manufacturers under the CARS program.
“We expected some benefit to the local production, exemption to locally manufactured. But there is no advantage given to local manufacture segment like our Vios. So incentives (from CARS program) become meaningless,” he said.
The all-new Vios is TMP’s entry to avail of government incentives under the CARS program.
Under the program, TMP has committed to locally produce at least 230,000 units of Vios for six years or 33,000 units per year on the average.
With the imposition of higher taxes, Suzuki said this commitment becomes “hard and challenging” to achieve.
“Now our price is going up, how to secure the minimum production volume required in the CARS program is our challenge now,” Suzuki said.
He said the higher taxes would lead to less people being able to buy the Vios.
Under the TRAIN, the tax rate of brand-new vehicles worth P600,000 and below will be raised to four percent, those between P600,000 and P1 million by 10 percent, those priced between P1 million and P4 million by 20 percent, and those worth more than P4 million by 50 percent.