Car Wars II: The Auto Industry Strikes Back

"The Philippines stands to lose US$1.951 billion in export earnings and P11.55 billion in taxes if the importation of used motor vehicles continues". This was the general statement imparted by the Chamber of Automotive Manufacturers of the Philippines or CAMPI to the media personnel present during a media forum hosted by the chamber last April 15 (Friday) at the Makati Room of the Shangri-La Makati.

CAMPI president Elizabeth Lee said that these financial figures are the contribution of the automotive industry in support of the government’s efforts to generate revenue for the Philippine economy. She said that while CAMPI appreciates the recent Executive Order (EO) imposing a P500,000 surcharge on imported used motor vehicles (which the Motor Vehicles Importers Association [MVIA] based in Subic Freeport decries as unjustifiable and unfair), the continuous importation of these is hampering the growth of the industry and affecting the income of 74,700 workers employed in 537 direct, allied and supporting industries, while exposing thousands of consumers and millions of road users to unsafe and non-roadworthy vehicles.

Eddie Jose, the president of the Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP), stated that there are 44,000 workers employed in 256 companies manufacturing parts and components of locally assembled vehicles. He estimated that exports of motor vehicle parts and components generate about US$1.801 billion annually, which is foreign currency that the country desperately needs. He added that the continued proliferation of imported used motor vehicles will erode the demand for locally assembled ones and affect the employment of the workers and the businesses of the manufacturers.

The Philippine Automotive Association (PAA), which represents about 15,700 employees working in 240 dealer outlets nationwide, is likewise affected by the influx of these imported vehicles. Imported used motor vehicles created a downward trend in the sales of locally assembled vehicles, which forced the car dealers to resort to giving big discounts to car buyers and reducing their profits in the process. According to George Blaylock of the PAA, because of lower margins, some dealers had to cut down on their employment and disenfranchised some workers while others had to close down altogether. He, however, is optimistic that with the market acceptance of the Excise Tax, the lower prices of small, fuel efficient cars, and the number of automotive choices available, local car dealers will remain bullish with the resurgence of the local car market.

Frank Mero, the president of Automotive Industry Workers Alliance (AIWA) said that car manufacturing affects the lives of about 16,000 workers and their families. He compared this with the 6,000 direct-hire workers that the MVIA claims would be affected if the importation of used motor vehicles is banned and doubts if this claim is really substantiated. Mero stated that if EO 156, which bans the importation of used vehicles and Republic Act 8506, which bans the importation of right hand vehicles is finally and fully implemented, the affected 6,000 workers may find employment among legitimate local car manufacturers, parts manufacturers and car dealers.

CAMPI, MVPMAP, PAA and AIWA are united in their stand that the conversion from right hand drive (RHD) to left hand drive (LHD) of imported used motor vehicles not only violate the law, but also constitutes a threat to road safety. The industry associations reiterated its appeal to the concerned government agencies to strictly implement the safety requirements against converted vehicles and their violation of these (such as wiper orientation, headlight beam pattern, and the position of the door for passenger vans) exposes the not only the driver and passengers to extreme danger but also other motorists and pedestrians as well.

The industry association acknowledges that despite efforts of government to curb the importation of these used motor vehicles, influential parties continue to lobby for its legitimization. On the other hand, they expressed their appreciation and full support to Customs Commissioner Alberto Lina for issuing Customs Memorandum Order 16-2005 enjoining all shipping and airline companies and other common carriers to strictly observe RA 8506.

In a related development, the industry association stated that it fully supports the proposed Lemon Law that will govern the rights and obligation of the buyer and seller of motor vehicles. CAMPI, MVPMAP, PAA and AIWA opined that it is clearly important to define by law the parameters in handling consumer complaints involving motor vehicles to safeguard the interests of the buyer and the seller. The industry emphasized that the proposed legislation should strike a reasonable balance between the rights of both parties, and should be crafted to be equitable, realistic and doable. They foresee the Lemon Law as a timely and relevant piece of legislation that will reinforce their goal towards the growth and improvement of the local automotive industry.

CAMPI, MVPMAP, PAA and AIWA versus the MVIA; 537 affiliated players against an importers association; 74,700 versus 6,000 affected employees; P11.55B versus P1.0B in tax collections; US$1.951B in exports versus uh, duh — the differences are obvious, yet the "car wars" continues. While the battles are being waged, a winner is emerging from the smoke: Juan dela Cruz is ultimately the winner for getting the best and the most out of the auto industry.