Toyota PHL expects slower demand

…amid proposed new taxes, but retains production target

THE country’s biggest car maker is not revising its projected production output for 2017 despite the expected implementation of a new taxation scheme that would raise the prices of vehicles.

Satoru Suzuki, president of Toyota Motor Philippines (TMP), in an e- mail interview said the local subsidiary of the Japanese auto brand “bases its production volume according to market demand.”

“If necessary, TMP may decrease production volume in the short term, just after excise tax implementation, to better manage our inventory,” he said.

In an earlier interview held at the sidelines of the 50th meeting of the Board of Governors of the Asian Development Bank that took place on May 4-7 in Yokohama, Japan, at which event he spoke, Mr. Suzuki said TMP targets to produce “around 60,000” vehicles at its Santa Rosa, Laguna plant in 2017 — the same target the company set at the beginning of the year.

In 2016 TMP built 56,906 vehicles composed of 22,986 Toyota Innova MPVs and 33,920 Toyota Vios subcompacts. During the same period it sold 158,728 vehicles.

TMP anticipates the looming price increases that will come as a result of the proposed new taxes will impact domestic vehicle sales — initially, at least — with its chief admitting the company expects “some demand slowdown.”

“But I believe this is only [for a] short time. Soon, [ demand] may be going up again,” Mr. Suzuki said.

Still, he noted TMP has made some adjustments in its opera-

tions, “especially for the high-end models,” referring to the pricier variants of the Innova, which under the proposed new tax package will be subject to heftier duties than cheaper models.

“We reduced our production, then we reduced our stocks. But now, we are receiving more demand, so we increased production,” Mr. Suzuki said.

A substitute bill now filed in Congress has softened taxes planned to be imposed on vehicles. Proposed to be implemented in two stages — the first to take effect on January 1, 2018 and the next exactly a year later — the plan seeks to levy on the first year as much as a 3% tax on vehicles costing P600,000 and below; P18,000 plus 30% of value exceeding P600,000 for vehicles costing more than P600,000 up to P1.1 million; P168,000 plus 50% of value exceeding P1.1 million for vehicles priced more than P1.1 million up to P2.1 million; P668,000 plus 80% of value exceeding P2.1 million for vehicles costing more than P2.1 million up to P3.1 million; and P1.468 million plus 90% of value exceeding P3.1 million for vehicles priced more than P3.1 million.

By January 1, 2019, the auto taxes, under the plan, will rise further to 4% on vehicles priced P600,000 and below; P24,000 plus 40% on any amount over P600,000 on vehicles priced at more than P600,000 up to P1.1 million; P224,000 plus 60% on any amount over P1.1 million on vehicles priced at more than P1.1 million up to P2.1 million; P824,000 plus 100% of any amount over P2.1 million on vehicles priced at more than P2.1 million to P3.1 million; and P1.824 million plus 120% on any amount over P3.1 million on vehicles priced at more than P3.1 million.

230,000 VIOS IN 6 YEARS

Toyota said it is also committed to the production output for the model it enrolled in the government’s Comprehensive Automotive Resurgence Strategy (CARS) program, in which TMP is required to build at least 200,000 Vios cars over a period of six years in order to qualify for fiscal and non-fiscal incentives available to three locally made vehicles that can be accepted in CARS.

“As of this time, we are not considering the revision of our committed production volume of 230,000 [ Vios] units in six years. We are hoping that the excise tax change will have lesser impact on CARS models for the whole six-year period,” Mr. Suzuki said.

The TMP chief also bared the company is focusing “on the preparations for the smooth implementation of our CARS project,” and that “there are no specific discussions” on whether TMP will apply for the third and final slot available in the CARS program.

The second of three slots under that incentive scheme was earlier awarded to the Mirage sedan and hatchback whose maker is Mitsubishi Motors Philippines Corp. — with