Market leader Toyota Motor Philippines Corp. (TMP) is not giving up on its commitment under the government’s car program despite feeling disappointed that even locally produced cars will face higher excise taxes, thus making current incentives “meaningless.”
TMP president Satoru Suzuki told reporters on Wednesday that they would have a hard time committing to a previous target under the Comprehensive Automotive Resurgence Strategy (Cars) program, an initiative under the Aquino administration that incentivizes the local production of large volumes of cars in the Philippines.
Toyota, one of two car firms that have qualified for the program, promised 230,000 units of the Vios model.
“[We are] not happy. There’s no advantage given to the locally manufactured segment,” Suzuki said.
“We have to complete our requirement of the Cars program, which is the 200,000 [units] minimum for six years. Still, we won’t give up yet, but this (the goal of making 230,000 units) became very hard,” Suzuki said.
President Duterte signed this week the Tax Reform for Acceleration and Inclusion (Train) Law, the first package of the administration’s comprehensive tax reform program. The law covers, among others, higher car excise taxes imposed on the net manufacturing price or the importer’s selling price depending on a bracket.
Because of this, TMP expects a 5-10 percent decrease in total company sales in 2018, Suzuki said. He expects recovery starting in 2019.
Toyota’s Vios model falls under the P600,000 to P1 million bracket, according to Suzuki.
Under the Train Law, the manufacturing price would be slapped a stiffer 10-percent excise tax. Based on the current regime, the unit would have been taxed only 20 percent of the excess of P600,000 plus a base tax of P12,000.
Local production of an all-new Vios model would start July next year. A total of 30,000 to 35,000 units are expected by the end of 2018.
Suzuki said he also could not understand why Congress imposed lesser taxes on luxury cars.
“That’s my second disappointment. I cannot understand the intention why [they would] motivate the rich people. I believe the government needs more money,” he explained.