Imported vehicles expected to get price hike according to DTI’s plan

Updated Jan 05, 2021 | Same topic: Automotive Industry Updates

The move comes in a bid to protect the local automotive assembly.

Imported vehicles have been making waves among Filipino customers, and while this can be chalked up to a free market, there are concerns that the trend is having an adverse effect on models assembled locally.   

Mazda CX-9

Models sourced overseas such as the Mazda CX-9 could be looking at higher prices as safeguard tariffs are imposed

The Department of Trade and Industry (DTI) is making its move, announcing its plan to impose safeguard tariffs on all passenger cars and light commercial vehicles brought in from overseas. This will be made in the form of a cash bond of Php 70,000 for imported passenger cars, and Php 110,000 for imported light commercial vehicles. This includes pickup trucks, which until now have been exempted from additional taxes.

This decision comes as part of the DTI’s action over a petition filed by the Philippine Metalworkers Alliance, a national union of automotive, iron and steel, electronics, and electrical sectors, many of whom work in the automotive industry. The group cites the increased importation of passenger cars and light commercial vehicles as having a negative effect on domestic motor vehicle manufacturing.

After the Commissioner of Customs has issued the relevant order, the provisional safeguards will take effect for 200 days while the case is being formally investigated by the Tariff Commission.

Toyota Hilux

Pickups like the Toyota Hilux could lose their tax exemption status

>>> Related: Understanding taxes and fees when buying a car in the Philippines

Data from the DTI show that there has been a 35 percent increase in imported passenger cars from 2014 to 2018, exceeding locally assembled models by as much as 349 percent. For light commercial vehicles, imported units garnered a 1,364 percent advantage as of 2018, leaving domestic models far behind.

The local automotive industry has been struggling with defending its market share even before the COVID-19 pandemic, with passenger car sales falling to between 22 to 25 percent, even as imports snagged 70 percent of market share. Sales of light commercial vehicles drastically plunged from 18 percent in 2014 to just 7 percent in 2018. Even employment in the motor vehicle manufacturing sector took a hit, contracting by 8 percent in 2018.

According to DTI Secretary Ramon Lopez, the Philippines has one of the most open markets in the ASEAN region, which explains the need to ensure a level playing field for the local industry.

Mitsubishi Mirage G4

Mitsubishi's Mirage G4 is assembled locally under the Comprehensive Automotive Resurgence Strategy (CARS) Program

“Safeguards are imposed to protect local manufacturers and producers and to prevent other companies from leaving the country. If we recall, the discontinuation of the production of the Isuzu D-Max in July 2019 and the assembly plant closure of Honda Motors Philippines in the first quarter of 2020 affected local jobs and the Philippine economy,” he said.

In late 2019, the agency also mulled imposing double taxes on Thailand-made vehicles, in response to the country’s reported discriminatory tariffs on Philippine tobacco exports since 2016. Sec. Lopez said that Thailand’s compensation to the Philippines could run into “millions of US dollars.”

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Joseph Paolo Estabillo

Joseph Paolo Estabillo

Author

Joseph has been a member of various car clubs since he got his driver's license in 2004 – old enough to remember riding in taxicabs with analog meters, but his fascination with cars goes way back. After nearly two decades of working in broadcast media, he shifted gears by coming on board as Philkotse’s first Filipino member and staff writer in 2017.

Apart from his role in Philkotse as Content Team Lead, Joseph has written episodes for Drive, which has been airing on CNN Philippines for five seasons running. He has also delivered content for various car dealerships based in the U.S., spanning multiple brands such as Alfa Romeo, Maserati, Jeep, Dodge, among others.

Keeping his hopes high and his revs low, he dreams about owning a Kei car when he retires. Hates slow parkers.

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