Honda could cut production, jobs if excise dampens sales
HONDA Cars Philippines, Inc. may consider reducing its work force as an austerity measure ahead of a proposed increase in excise tax that is expected to dampen demand, a top official said.
Toshio Kuwahara, president and general manager, said that the proposal to hike the excise tax on automobiles will eventually curtail production, and then put at risk some jobs in their current work force of around 600.
“If the tax goes high and demand goes down, we may have to think whether we can sustain our current number of employees,” he told reporters on Dec. 19 on the sidelines of a company event.
Mr. Kuwahara was referring to the Department of Finance’s proposal to increase the current rates of excise tax on automobiles as one of the ways to generate revenue that may be foregone with the reform of the income tax system.
The package, which awaits congressional approval, more than doubles the current excise tax to 5% from 2% for automobiles with prices below P600,000; 20% for automobiles priced between P600,000 and P1.1 million; 40% for those priced between P1.1 million and P2.1 million; and 60% for vehicles selling above P2.1 million.
He said he hopes that the government will consider some exemptions to soften the blow on car companies manufacturing locally.
Honda has a manufacturing facility in Sta. Rosa, Laguna where it produces its current best seller — the City model — at an average of around 9,000 units per year. The manufacturing center accounts for 400 of Honda’s 600 jobs.
“If demand goes down, especially for the City, of course we have to reduce production,” he said.
“I want to keep the current excise tax system. However, if they want to change it, and if I may request something, I would request them to keep the current tax system at least for the completely knocked down units (CKD) and those that are locally manufactured,” he said, when asked for how the government could help manufacturers.
Officials of the Trade Department’s Board of Investments (BoI) could not be reached for comment.
According to Mr. Kuwahara, Honda’s City model unit accounts for 40% of its monthly average sales, depending on the season. The rest of the models sold in the Philippines are imported. Around 2,000 Honda- branded cars are sold every month.
Mr. Kuwahara said that he hopes the current demand for the City can be sustained at around 800 units a month.
According to data jointly released in November by the Chamber of Automotive Manufacturers of the Philippines, Inc. ( CAMPI) and Truck Manufacturers Association (TMA), Honda sold 1,608 units last month, up 2.5% from a year earlier but down 9.2% from October. —