By Bernie Cahiles-Magkilat
Growth in sales of imported motor vehicles in the country dramatically slowed down to 14 percent in 2017 compared to the record 60 percent increase in 2016, a report by the Association of Vehicle Importers and Distributors (AVID) showed.
AVID, which comprises of 11 all car-importing companies, said they were able to sell 106,268 units in 2017 or 14 percent from 93,192 units sold the previous year. Though AVID’s growth was still good, it was substantially lower than the record 2016 growth, which was 60 percent higher than the 58,256 units sold in 2015.
Nonetheless, AVID sales brought the country’s total car market to all-time high of 531,941 units, exceeding the 450,000 sales target by the industry for 2017. The overall industry growth was driven by the strong sales from the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) and the Truck Manufacturers Association, which is composed of both importers and local manufacturers. CAMPI and TMA reported total sales of 425,673 units in 2017 or 18.4 percent higher than the 359,572 units the groups sold in 2016.
For AVID, the all-importers group attributed the strong consumer appetite ahead of the implementation of higher excise tax on cars starting January 1 this year.
AVID noted of the strong appetite in 2017 as consumers frontloaded purchases of cars ahead of the implementation of the higher taxes of cars with the implementation of the TRAIN Law effective January 1, 2018.
The last quarter of 2017 alone was a big contributor with 24 percent growth to 30,336 units sold as against 24,438 units sold in the same quarter in 2016.
For the entire year, AVID said the passenger car segment grew a significant 11 percent to 39,722 units from 35,782 units sold logged in 2016. The segment likewise posted a 12 percent increase to 10,455 units sold in Q4 2017 versus the 9,344 units sold in the same quarter last year.
Hyundai Asia Resources Inc. (HARI), the largest importer of among HARI members, remained as the top-volume nameplate in this segment as it ended 2017 with 25,529 units sold.
But sales from the light commercial vehicle (LCV) segment was more robust at 16 percent growth year-to-date, bringing its 2017 total to 66,564 units sold from the 57,410 units sold a year earlier.
Notably, AVID said that sales in the last quarter of 2017 for the LCV segment saw a dramatic 32 percent growth to 19,881 units sold. At the forefront of this segment was Ford Motors for its posted 35,654 unit sales in this segment alone.
AVID President Ma. Fe Perez-Agudo attributed the growth to the robust domestic economy citing the continuing GDP growth of between 6.5 to 7.5 percent on the back of the sustained recovery of external demand due to the improvement in global economy. Private and public investment is also seen as major economic contributor.
For this year, Agudo was optimistic that the 7-8 percent economic growth target that the government set is doable as the TRAIN law takes effect, further fueling the country’s ‘Build, Build, Build’ program.
Higher tax savings are also expected as a result of lower personal income taxes under TRAIN. To offset foregone revenues, higher levies will be imposed on commodities including cars and oil which makes car ownership more expensive.
Despite higher taxes on automobiles, AVID remained upbeat as it expects the automotive market to make the necessary adjustments with the new landscape.
“For the year ahead, we remain optimistic as we expect short-run market adjustments resulting from the TRAIN,” said Agudo.
The importers expect the new automotive landscape to open waves of opportunities for the luxury, e-vehicles and hybrid vehicles market.
“Thus, AVID will continue supporting efforts to sustain inclusive growth and build a positive environment for business,” said Agudo.