2nd-hand car business booms anew

MANILA, Philippines — Car buyers are purchasing second hand units instead of brand new ones due to the higher excise tax slapped under the tax reform law that took effect at the start of the year.

Fitzgerald Chee, head of Buenamano - under the strategic asset management and sales of the Bank of the Philippine Islands (BPI), said there has been an increasing appetite for foreclosed motor vehicles by value-conscious buyers.

“The effect of excise taxes on vehicle costs has highlighted to consumers the merit of buying second-hand cars. As sellers of such assets, we lessen the gap between the need of the consumer and the affordability of that need,” he said.

BPI’s Buenamano, one of the top sellers of foreclosed assets in the country, revealed that sales of its foreclosed vehicles have grown 20 percent annually over the past five years.

Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law took effect on Jan. 1, raising the excise tax for automobiles.

Under the law, a four percent tax would be imposed on brand new vehicles worth up to P600,000, 10 percent for those worth up to P1 million, 20 percent for vehicles worth up to P4 million, and 50 percent for automobiles valued above P4 million.

Based on client surveys and many inquiries received, Chee said a bigger portion of the market has realized the practicality of purchasing a second hand car rather than a brand new one.

With the demand increasing, he added the country’s third largest bank in terms of assets is poised to service this niche of the market.

Chee said the bank’s portfolio has grown over the years, with vehicles of various makes and models available for sale to first-time owners and to dealers of second hand cars.

“All the cars we sell are in good condition and are good value-for-money for our clients,” he assured.

Chee said those looking to buy their first car but have a limited budget could do so without breaking the bank.

He added second-hand cars allow owners to allocate the savings to cover additional expenses that come with owning a car, such as daily maintenance and insurance.

Latest report released by Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) and the Truck Manufacturers Association (TMA) showed that vehicle sales fell 12.5 percent to 171,352 units in the first six months

CAMPI president Rommel Gutierrez said the double-digit decline in sales was due largely to consumers’ decision to prioritize the purchase of basic goods and services as buying big ticket items like motor vehicles is less favorable at this time due to rising inflation.