Auto loans up 27% at end-March
CAR LOANS secured from local banks posted a double-digit surge at end-March to hit close to P400 billion, latest data from the Bangko Sentral ng Pilipinas (BSP) showed, which comes ahead of the government’s plans to raise excise taxes on motor vehicles.
Philippine banks released P397.05 billion in automobile loans as of the first quarter, jumping by 26.8% from the P313.085 billion in credit approved during the same period in 2016, according to central bank data.
More consumers are tapping bank lending to buy cars as they take advantage of a low interest rate environment. Car loans made up 5.42% of the P661.363 billion of total consumer credit as of end-March, higher than its 5% share a year ago, according to BSP data.
Broken down, universal and commercial banks granted P215.64 billion in auto loans, while thrift lenders handed out P180.448 billion.
On the other hand, loans approved for the purchase of motorcycles posted a 17.5% increase to reach P13.083 billion, rising from P11.135 billion recorded during the first three months of 2016.
In sum, motor vehicle loans soared by 26.5% to hit P410.133 billion, coming from P324.22 billion previously. The climb is also faster than the 24.3% surge tallied in March during the same year-ago period.
The increase in car loans come ahead of a proposal from the Department of Finance (DoF) to raise the excise taxes on cars, as part of the first package of its tax reform program currently under plenary debates at the House of Representatives.
President Rodrigo R. Duterte yesterday certified House Bill (HB) 5636 as urgent, which would allow the chamber to approve the measure speedily. With the certification, the House plenary may approve the measure on second and third reading on the same day, placing it on track to meet its May 31 target to conclude the discussions and pass it on to the Senate.
Finance Undersecretary Karl Kendrick T. Chua has said that the government can shore up around P24 billion in fresh revenues under the agency’s original four-tier classification for higher car taxes by 2018, the first year of implementation.
Under the DoF’s proposal previously discussed as HB 4774, the excise tax on automobiles will be raised to 4% from the present 2% if the net manufacturer’s price/ importer’s selling price is up to P600,000.
Luxury cars valued P2.1 million or higher will be imposed a tax of P1.224 million plus 200% of the value in excess of P2.1 million. The current rate is 512,000 plus 60% of the value in excess of P2.1 million.
However, legislators decided to adopt five brackets under the new proposal, with a two-year grace period before the higher rates kick in. Mr. Chua has said this will reduce potential tax collections by P10 billion for next year.
Mr. Chua told members of a Senate consultative meeting earlier this month that Filipinos have already been “advancing” their car purchases after the DoF announced its tax reform plan in September 2016, with car manufacturers already seeing sales skyrocket over the past months.
Car manufacturers have been appealing for lower tax rates and additional price brackets for taxing vehicles, saying that the DoF’s proposal appears to be “confiscatory.”