Toyota Philippines poised to hike prices

TOYOTA MOTOR Philippines Corp. (TMPC) is ready to raise prices to preserve margins, as the automaker may see flat to lower sales this year following the impact of higher excises taxes.

TMPC Vice-President Michael G. Masamayor told reporters on Tuesday that vehicle sales may hover around 170,000 this year, almost 8% lower than the 183,908 units sold for the entire 2017.

“We still haven’t realized the full impact of this excise tax, exchange rate, Comprehensive Automotive Resurgence Strategy program, new model. Lahat ’yan maghahalo. Let the dust settle first,” GT Capital Maria Carmelo Luza Bautista said, noting that the target is conservative and may be adjusted.

Vehicle sales contracted by 3% in February as the excise taxes began to bite, according to the joint report from the Chamber of Automotive Manufacturers of the Philippines, Inc. ( CAMPI) and Truck Manufacturers Association (TMA).

Signed into law by President Rodrigo R. Duterte in December, the Tax Reform for Acceleration and Inclusion — that increased taxes on automobiles, fuel, minerals, various investment products, and a host of other items, besides imposing new levies on sugarsweetened drinks and others — took effect at the start of the year.

After implementing two price hikes totaling 4% last year because of the weak peso, TMPC is on a wait-and-see stance if there will be further price increases.

“Moving forward, the idea is protect the margins. If we feel a price increase is warranted and we feel relative to demand it will still be within the capacity of absorption, there will be no hesitation to make an adjustment,” Mr. Bautista said.

Even before the higher taxes kicked in, sales of the Vios have been taking a hit after the Land Transportation Franchising and Regulatory Board reduced the cap on the number of Uber and Grab vehicles allowed on the streets. Monthly sales have dropped below 3,000 units from 3,500 units before the limit was put in place, Mr. Masamayor said.

By July, TMPC will introduce the full- model- change Vios, its entry to the government’s CARS Program. Officials declined to comment on the retail price of the locally manufactured Vios, saying it depends on a lot of other factors.

Toyota is also bringing to the Philippines, its ninth biggest market globally, next month the Rush, a subcompact multipurpose vehicle which competes with the Mitsubishi Xpander in Indonesia.

Riding on the growth in the countryside, TMPC aims to end the year with 70 dealerships, with upcoming sites in Tuguegarao, Isabela; San Jose del Monte, Bulacan; and Subic Bay. Two new dealerships were opened in Silang, Cavite and Calapan, Oriental Mindoro in the first quarter of 2018.

TMPC is part of GT Capital Holdings, Inc., the holding firm for tycoon George S. K. Ty’s business empire which also has interests in banking, property, infrastructure and insurance.