Demand for premium cars to continue, dealer thinks

Demand for premium cars will continue to propel a local dealership’s confidence in its car business in Cebu as well as in other parts of the Visayas and Mindanao, despite a price increase anticipated in 2018.

In an interview, Auto Central Group President Brian L. Chua said that while a slowdown is expected starting in the first quarter of next year due to the impending higher excise tax, the premium automotive segment will continue to post good sales.

“The prices will increase, but (there will be) people who will always buy premium,” said Chua on Saturday at the sidelines of the launching of the all-new Subaru XV at the Ayala Center Cebu. Auto Central Group is the sole dealer of Subaru, a premium Japanese brand, in Cebu for eight years now.

Based on the Tax Reform for Acceleration and Inclusion Act (TRAIN) proposed by the Department of Finance (DOF), premium vehicles will be the most severely affected by the excise tax increase. Cars with Net Manufacturer’s/Importer’s Selling Price (NMISP) of over P2 million will be slapped with an excise tax of P1.224 million plus 200 percent of the amount in excess of P2.1 million.

What will drive growth?

For cars priced between P1.1 million and P2.1 million, excise tax will be at P224,000 plus 100 percent of the amount in excess of P1.1 million. Meanwhile, excise tax for vehicles sold at P600,000 or less will be at four percent.

“We are confident that we can weather the storm,” Chua told the press. For Subaru alone, the official said the company is steadily growing at a lower double- digit rate, without disclosing the specifics.

With uncertainties in the automotive sector next year, the businessman is banking on the necessity of cars nowadays when mobility is the name of the game. In addition, rapid developments in the provincial markets, to include rising employment and wider business opportunities, will drive car ownership in Southern Philippines.

Aside from Subaru, the Auto Central Group, which has presence in other key provincial markets to include the cities of Iloilo, Bacolod, and Cagayan de Oro City, also carries Ford, Suzuki, Nissan, and JMC.

From January to August this year, vehicle sales in the country accelerated at 16.7 percent, based on a joint report issued by the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) and Truck Manufacturers Association (TMA).

This is equivalent to 268,424 vehicles sold compared to the 229,919 units sold in the same period a year ago. CAMPI said it expects total industry sales to reach 450,000 units by the end of the 2017.