Catch a dashing AUV before taxes, prices rise

BUSH ULTIMATUM TO U.N.: Not only Saddam Hussein has been given an ultimatum by George W. Bush. Even the UN Security Council faces an implied ultimatum by the American president – give the US in the next voting the go-signal to invade Iraq or the US will go it alone.

That is, if the US insists on a showdown vote in the Security Council. As of this writing, we still don’t know what the lonesome trio – US, Great Britain and Spain – will decide to do in their planning session on Azores island off Portugal.

It seems only one thing can hold back Bush at this late stage of the game – his own opinion surveys. Until now, Bush’s surveys in the US show that he still has American public support for what he is about to do.

Until and unless a threshold (undisclosed) of negative opinion in the US is reached, he will go ahead. The opinion of the rest of mankind does not matter to this holy crusader who has divided the world into black and white, into good and evil.

Our bishops ask the faithful to pray for Bush. Yes, we should. And also for us and our children.

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BRISK SALES REPORTED: There is a scramble for Asian utility vehicles (AUVs). Even average salaried employees who are not sure they can afford it are borrowing like mad just to be able to catch an AUV before the prices go up.

Business has been so good that the Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) boasts of a sales improvement of 32.5 percent in the first two months of this year for their passenger and commercial vehicles.

Some car salesmen tell us that the surge in AUV sales is fueled mainly by rumors that prices are about to go up partly because of pressure on the cash-strapped government to raise the tax rate and withdraw some exemptions.

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AUVs LOOKING SPORTY: Also, there is a shift in interest from sedans to utility vehicles as the latter have a higher clearance (to stay above street flooding and road debris), have more passenger and cargo space, and are perfect for family outings and long trips.

Besides, those who look at the body and not the engine now find the designs of the new AUVs more sleek and fetching with their finer finish. The dashing look feeds the fantasy of one driving an SUV (sports utility vehicle) instead of its cheaper cousin.

For instance, the shell of the Toyota Tamaraw, the run-away favorite for so-called mega-taxis that take in multiple passengers, has given way to the sporty Revo. Izusu’s Hilander has been transformed into the Crosswind, a handsome creation that threatens the more expensive SUVs of the middle-upper classes.

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CRV SCALED DOWN: The breaking into the market of cheaper but extremely attractive utility vehicles prompted Honda, for one, to modify its CRV to be able to slash its P1 million-plus retail price and fend off the cheaper Crosswinds and Revos chasing it.

The sports CRV that normally sits five was made a 10-seater by replacing the two bucket seats in front with a bench for three and installing small jump seats at the back.

Honda installed a more economical 2-liter engine that runs some 12 kilometers per liter (compared to the 7 kms of the previous model) by combining the best features of Honda’s VTEC and Toyota’s multi-valve engines.

To further cut costs, the CRV was converted from four-wheel to two-wheel drive, the suspension replaced with cheaper equipment, and the car’s local content was increased.

The vehicle was thus reclassified as an AUV and granted the same exemption from excise tax as the 10-seater AUVs roaming around Metro Manila as mega-taxis. Its tag price was slashed by some P200,000.

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BREATHING SPELL: The new CRV is thus able to attract shoppers looking at Revo, Crosswind and other dressed-up AUVs. In the process, however, Honda has lost some of its high-end buyers.

Naturally its competitors are questioning the CRV’s exemption from excise tax, which has reportedly amounted to P1.56 billion in foregone taxes.

The finance department moved to slap back the excise tax, but Honda, as expected, was able to secure a court temporary restraining order (TRO). So the CRV continues to sell at a competitive price, while supplies last.

The breathing spell provided by the TRO fueled more rush buying since nobody knows how long Honda can hold back the reimposition of excise tax on its CRV. We won’t tell you the judge who issued the TRO.

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TAX AVOIDANCE?: This is just one of the highlights of the continued questioning of practices of members of the chamber of automotive manufacturers (Campi).

There are also industry reports that Toyota Motors have imported brand-new Altis sedans from Taiwan without paying the usual additional tariffs for brand-new vehicles. The Altis is among the best-selling sedans in town.

A congressional panel chaired by Tarlac Rep. Jesli Lapus has received information that Ford Philippines had avoided payment of more than P400 million for converting their 4x2 vehicles to 4x4 (four-wheel).

Ford was also reported as owing the customs bureau some P488 million in back taxes for allegedly declaring its CBU (completely built units) imports as CKDs (completely knocked down).

An imported CBU is taxed 30 percent, while a CKD unit, which still has to be assembled, is slapped only a 3 percent duty.

This is reportedly one of the tax reasons, by the way, why Toyota’s RAV 4 (brought in as CBU) is/was more expensive that the previous CRV (imported as CKD) even if the RAV 4’s features need not make it costlier or superior.

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BUSINESS PRACTICES: With many business tricks of its members under question, the Campi hardly has any moral right to question the legal importation of used vehicles that are reconditioned and sold at much lower prices, sometimes at about half the price of new units.

Members of Campi (a misnomer since they are actually indentors, importers and assemblers, not manufacturers) have been pressuring the government to stop the importation of used vehicles.

But the demand for second-hand cars will continue to rise as long as the prices of new cars imported by alleged manufacturers remain prohibitive and exploitative. Nobody wants a used car, except probably vintage vehicles, if an affordable brand-new substitute is available.

Data collected by congressional committees and business researchers, meanwhile, show the yawning gap between the landed cost of imported motor vehicles and their price tags in sales showrooms.

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CURBING OVERPRICING: The government cannot dictate prices in a deregulated field, but there must be some way to curb the greed of importers (masquerading as manufacturers) of CBU and CKD brand-new vehicles.

One thing that can be done is to publish in the newspapers and the Internet the landed cost of each model and the corresponding taxes. The buying public can pick it up from there. Other countries publish the ex-factory prices of motor vehicles for the guidance of consumers.

Until prices of new vehicles, including trucks and heavy equipment, are brought down to reasonable levels, we think consumers should be allowed the choice of buying cheaper slightly used units.

Besides, under trade liberalization and the concept of fair play, there is no good excuse for government to pamper alleged car manufacturers who only cheat the government and exploit consumers.

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