ACC eyes Asean BMW suppliers

Asian Carmakers Corp. (ACC), the country’s official BMW distributor, is considering importing its vehicles from Asean neighbors, instead of continuing sourcing its supply from Germany and the United States.
The shift may be made if the planned higher excise tax on cars will affect demand for BMW vehicles, a top official said.

Company president Maricar Cristobal-Parco told reporters that importing from member states of the Association of Southeast Asian Nations (Asean) would allow the company to keep its prices competitive given the perks provided under the Asean Free Trade Agreement.

ACC currently imports the bulk of its requirement from Germany and the rest from the US. It is now considering getting its vehicles from Indonesia, Malaysia and Thailand, which are producing BMW units.

The plan was prompted by the proposed tax reform measure that would jack up the excise tax rates on cars. The prospective tax rate increase, according to Parco, is “too drastic.”

There are two versions of the first package of the administration’s comprehensive tax reform program—House Bill 5636 and Senate Bill 1408. HB 5636, which was passed in May, provided for smaller hikes but the rates still fell outside what was considered “considerate increase.”

Both bills are expected to affect demand for vehicles in general, but the impact would likely be greater for the luxury car segment.

“We will have to look at other options if that is the case. We need to source from the region to make sure we have competitive pricing for the local market because if we source from the Asean, we have the AFTA, and then the taxes would be more palatable in the market,” she said.

This would depend on the final version of the first package, especially now that Senate is still working on its version of the tax proposal. She said this would also be a factor in deciding whether to introduce hybrid and electric vehicles in the local market.

Parco said ACC would maintain the current size of its distribution network until a tax measure would be finalized and implemented.

ACC currently has eight dealerships in the country, four of which are in Metro Manila while the others are in Pampanga, Cebu, Bacolod, and Cagayan de Oro City.

ACC is part of the Chamber of Automotive Manufacturers of the Philippines Inc. (Campi), which, together with the Association of Vehicle Importers and Distributors Inc. (Avid), had filed a position paper against the proposed excise tax rate increase.

Under HB 5636, the hike in excise tax would be implemented within a two-year period, starting in 2018.

Under the bill, cars belonging to tax brackets above P2.1 million would be charged a rate of 80 percent to 90 percent in 2018 and 100 to 120 percent in 2019.