Higher duties pushed for imported vehicles

MANILA, Philippines — Automotive parts makers have renewed their call to government to support local parts manufacturing by implementing safeguard measures on vehicle imports to reduce the entry of vehicles from overseas or completely built-up (CBU) units and prevent small and medium parts makers from closing shop amid the COVID-19 pandemic.

“Our main appeal is to sustain local parts making for the automotive industry, we have to reduce drastically or even eliminate the importation of CBUs. If the local CKD or completely knocked-down assembly cannot be sustained, a lot of small and medium parts makers will close shop,” Philippine Parts Maker Association president Ferdinand Raquelsantos said in a telephone interview.

He said the imposition of safeguard measure on vehicle imports would help parts makers as it would make locally produced vehicles more competitive in terms of price against CBUs.

The Department of Trade and Industry is conducting a preliminary investigation on the possible implementation of safeguard measures or duty on imported vehicles following a petition filed by the Philippine Metalworkers’ Alliance as the group claimed higher vehicle imports have reduced opportunities of the local industry to manufacture cars.

Under Republic Act 8800 or the Safeguard Measures Act, a country can impose safeguard measures or higher duties on imported goods to provide relief to the local industry hurt by an increase in imports of that commodity.

“We are still hoping the process will continue. I know a lot of people have arguments if government can really implement it. It would be a way to reduce importation of CBU,” Raquelsantos said.

As vehicle assemblers had to suspend operations during the lockdown imposed by government to contain the virus and the pandemic has affected demand for automobiles, he said orders for automotive parts from local vehicle manufacturers are down by 50 to 65 percent.

There is not much demand for cars at present as the COVID-19 outbreak has affected the purchasing power of consumers.

While it is not clear when strong demand for four-wheeled vehicles would be seen as the health crisis continues, Raquelsantos said the group is hopeful the situation would be better by December, a time when car purchases usually pick up.

Prior to the COVID-19 crisis, local part makers supplying to Honda Cars Philippines Inc. already took a hit from the firm’s decision to close down its facility in Laguna where the BR-V and Honda City vehicles were being assembled earlier this year.

Vehicle assemblers and dealerships in certain parts of the country also had to temporarily suspend operations in January due to the Taal Volcano’s eruption.

“We have to consider, the volume of CKD has gone down due to market situation and obviously it trickles down to parts makers and they have to produce smaller quantities,” he said.

He said some parts makers may have to close shop in a year if the situation does not improve.