Latest Stories

Skid Marks

Why is the luxury car segment struggling?


With the economy supposedly improving and many businessmen optimistic with our country’s economic outlook, it is surprising that the luxury car segment has taken a double-digit slide. Worth mentioning also is the forecast of the Chamber of Automotive Manufacturers in the Philippines Inc. for overall car sales to increase by roughly 8 percent by yearend, including those of manufacturer sales that are not Campi members.

I asked around, interviewed heads and executives of various luxury brands (none of whom wanted to be quoted for fear of the expected ramifications), and they’re all blaming the Bureau of Internal Revenue.

The luxury car market accounts for roughly 5-7 percent of the total car market. This would be your usual luxury brands from Audi, BMW, Ferrari, Jaguar, Lamborghini, Lexus, Maserati, Mercedes-Benz, MINI, Porsche, etc. It’s a very small segment, almost insignificant to the overall car market.

There are rumors that a local powerhouse automotive group already plans to bring in Lotus, those small, lithe and wonderful sports cars from Hethel in Norfolk, England, French brand Peugeot is in launching mode and Bentley is also making an appearance in our local shores in the next few months.

However, car marketing 101 tells us that the higher-priced the vehicle SRP is, the higher the overall profit margin and of course absolute profit amount per car is, with far less effort required than, say, selling a single subcompact hatchback or sedan.

It is very lucrative business. More importantly, these companies train and employ thousands of high-skill, high-paying technical jobs. Nowadays, Filipinos are far less concerned about being inconspicuous, preferring to enjoy their hard-earned money by indulging in some four-wheeled fantasy machine.

The moneyed folk are also turning over their business empires and/or estates to the second or even third generation who are less concerned with fitting into a particular model their predecessors had in their days. And with more and more flashy metal arriving in our shores, why is it then that the luxury car market is down?

Wealth and affluence apparently has its privileges, and the requisite price to pay. Since the Aquino administration’s been hot on shoring up the budget deficit, it has been keen to intensify its drive on tax evaders and improving the overall tax collection efficiency targets. And I guess, anyone driving a multimillion-peso vehicle is a prime suspect for being a tax evader.

Even during the Arroyo administration, the norm has been for luxury car buyers to register their expensive exotics in the names of a trusted accomplice, be it a loyal driver, yaya/maid, an office worker/secretary, or a friend living abroad, but while holding onto an open deed of sale signed y the aforementioned registered owner.

So in case the real and actual owner needs to present proof of ownership, he or she will just present the open deed of sale, and while holding in possession the official receipt of said luxury vehicle. These people who are dummy registered owners of said vehicles usually are the so-called NPAs, or those with No Permanent (registered) Addresses.

So it makes it more difficult for the BIR to track these people down, perform the requisite lifestyle check and examine if they are indeed paying the right taxes.

I wonder if every rich person now is a tax evader in the eyes of the BIR.

In all honesty, I actually applaud the BIR’s commitment to improve tax collections and their fight against tax evaders. We need these taxes, to build more and better roads, bridges and other public infrastructure which will improve our local economy, and our way of life. Commissioner Kim Jacinto-Henares has been very good at her job leading the BIR. But my grief is that practically every luxury car brand/manufacturer is, in the words of a car executive, being harassed by the BIR to show them (the BIR) the list of all their clients who bought luxury cars, which will then allow the BIR to go after these owners, in a nutshell.

Isn’t that invasion of privacy? Doesn’t the BIR need specific court orders for something like that?

Guilty or not, nobody wants to be scrutinized by an outside, third-party organization if they are paying their taxes properly. I do not possess the solution myself as to how the BIR and these luxury car brands can help find the balance to their concerns, the BIR’s desire to find potential tax evaders, and the luxury car brands’ desire to keep their customer database confidential.

But all I know is that it is hurting a segment of the automotive industry, and keeping nice cars off our roads.

Follow Us

Follow us on Facebook Follow on Twitter Follow on Twitter

Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: auto , luxury car , Motoring

Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94


  • US teacher fired over comment on black president
  • Magnitude-7.5 earthquake shakes Mexican capital
  • Title of new Hillary Clinton book: ‘Hard Choices’
  • Filipinos, Dutch re-enact crucifixion of Christ
  • 14 killed in car bombing in Homs
  • Sports

  • Nadal ousted by Ferrer in Monte Carlo quarters
  • Pacquiao shorts in Bradley fight sold for P1.7M in LA auction
  • Ryu pitches Dodgers past Giants
  • Alonso sets the pace in Chinese GP practice
  • Heat seek Three-peat but Spurs, Pacers top seeds
  • Lifestyle

  • Levine designs womenswear with help from fiancee
  • Gabriel Garcia Marquez, Nobel laureate, dies at 87
  • Ford Mustang turns 50 atop Empire State Building
  • Pro visual artists, lensmen to judge Pagcor’s photo contest
  • ‘Labahita a la bacalao’
  • Entertainment

  • Myx TV premieres Asian American ‘docu-series’
  • A nutty finale for ‘Scandal,’ TV’s craziest show
  • EXO postpones release of mini album ‘Overdose’
  • ‘X-men’ filmmaker slams ‘fabricated’ sex attack claims
  • Singer Chris Brown’s bodyguard on trial in DC
  • Business

  • US commerce secretary spells out economic facet of ‘pivot to Asia’
  • Italy sells luxury state cars on eBay
  • Asian shares mostly up in quiet trade
  • Dollar up in Asia on US jobs data, Ukraine deal
  • Barbie doll has a problem
  • Technology

  • Nasa’s moon-orbiting robot crashes down
  • Netizens pay respects to Gabriel Garcia Marquez
  • Nokia recalls 30,000 chargers for Lumia 2520 tablet
  • Facebook rolls out ‘nearby friends’ feature
  • Netizens seethe over Aquino’s ‘sacrifice’ message
  • Opinion

  • Editorial cartoon, April 17, 2014
  • A humbler Church
  • Deepest darkness
  • ‘Agnihotra’ for Earth’s health
  • It’s the Holy Week, time to think of others
  • Global Nation

  • Las Vegas ‘Pinoy Pride’ fest hails Filipino heritage
  • Marking Jesus’ journey on Good Friday
  • Filipina accomplice arrested for fake bills in Malaysia
  • DoH denies Filipino nurse no longer positive for MERS virus
  • WHO warns vs spread of MERS-Cov, urges vigilance in taking precautions
  • Marketplace