Automakers hope second-half performance will improve

THE auto industry is hoping for an improved performance in the second half of the year after a lackluster first semester due to higher excise taxes, with estimates for the rest of the year currently favoring a slight yearon-year gain.

“Maybe the parameters of the first semester are not available in the second semester. Things might improve. First semester was pretty bad,” Dante C. Santos, president of the Truck Manufacturers Association, Inc. (TMA), told reporters Thursday in Taguig City during the 30th anniversary celebration of Toyota Motor Philippines, Corp.

“Conditions can’ be bad forever, so we need to analyze thoroughly how the second semester will play out. That’s what we want to project. Because we’re not very comfortable if we start by saying things will fall.”

Mr. Santos, also the first vicepresident of Mitsubishi Motors Philippines, Corp., said negative impact of tax reform came amid a depreciating peso, though the industry does not expect the currency to weaken further.

He added that the executive committee of both the TMA and the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) is now reviewing the industry’s outlook for the year.

“We don’t feel there will be big growth as before. Little changed, a little bit higher,” Mr. Santos added.

The industry has been signalling flattish growth for 2018 vehicle sales.

In an earlier phone interview, CAMPI President Rommel C. Gutierrez confirmed that adjustments were made to this year’s targets but declined to disclose details.

The auto sector was hit hard by the first package of the Tax Reform for Acceleration and Inclusion (TRAIN) , which raised excise tax rates on vehicles.

Automobiles costing less than P600,000 were levied around 3% in excise tax, up from 2% average, while those selling for P4 million or above were taxed at a new rate of up to 50%, more than doubling the average of 22% previously.

Joint data from CAMPI and TMA show that vehicle sales in the first six months of the year dropped 12.5% year on year to 171,352 units.

The group attributed this decline to “gloomy” economic conditions for car buyers, including rising inflation.

He said the industry is struggling to maintain vehicle prices at current levels

“As long as we can maintain prices, we will. We are trying to protect the market from higher prices,” Mr. Santos added. —