Car and truck manufacturers saw their biggest decline in sales so far in 2018, diving deep on the third month since the TRAIN law took effect.
A joint report released yesterday by the Chamber of Automotive Manufacturers of the Philippines, Inc. (Campi) and the Truck Manufacturers Association (TMA) showed that vehicle sales slid 22.8 percent in March to 28,216 units from 36,561 units in the same month last year.
This brought the year-to-date sales of member companies to 86,037 units, which was 8.5 percent lower than the 94,026 units sold in the same three months in 2017.
Campi president Rommel Gutierrez, however, said he was not surprised.
“The decline in sales in the first quarter of 2018 is not unexpected. The impact of the change in excise tax rates under the TRAIN law was anticipated for this particular period. We remain confident that the market will improve in the coming months,” he said.
The industry already saw a year-on-year decline in February when sales slid 3.2 percent. March’s car sales, by far, were the biggest decline in the year since the TRAIN law took effect this January.
The tax reform law lowered the personal income tax but imposed higher consumption taxes on goods such as sugary drinks and automobiles.
Due to the TRAIN law’s higher excise tax rates, most cars under the TRAIN law, which was aimed at raising more revenues for the government, were priced higher since Jan. 1. However, the measure lowered the tax rates imposed on cars in the luxury segment.
The industry expects to reach a flat growth at the end of the year, mostly due to the effects of the TRAIN law, Gutierrez had said in previous interviews.
Both passenger car and commercial vehicle segments dropped last month in terms of year-on-year and year-to-date.
For the month of March, commercial vehicles, which comprise more than 60 percent of the market, dropped 30 percent to 17,291 units from 24,708 units in the same month last year. In the first three months, the decline reached 8 percent to 57,130 units from 62,075 units previously.
On the other hand, passenger cars saw a 7.8-percent slide in sales last month to 10,925 units after selling 11,853 units in March 2017. Year-to-date, the segment sold 9.5 percent less at 28,907 units from 31,951 units previously.
Toyota Motors Philippines Corp. is still the market leader for the first three months of the year, but even the country’s biggest car company suffered a 15.4-percent drop in sales.
Mitsubishi Motors Philippines Corp., which had the second largest sales year-to-date, grew 18.4 percent. Ford Motor Co. Philippines Inc. was at third place, suffering a 17-percent drop in terms of units sold.