2019 a ‘better’ year for car distributors

CEBU, Philippines — Weighed down by higher automotive excise taxes, it has so far been a lackluster year for car sales.

Yet not all is lost.

Edward Onglatco, president of Cebu luxury car distributor Global Star Motors Corp., said sales are expected to rebound next year after being “greatly affected” by the rise in car excise taxes that took effect in January as part of the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

Onglatco pointed out the rising interest rates have slowed down buying activity.

Another factor that contributed to the low sales performance for 2018 was tighter credit conditions. The Bangko Sentral ng Pilipinas has raised benchmark interest rates since May this year for a  total of 175 basis points.

Last November 15, the BSP also implemented another 25-basis point hike in a bid  to rein in inflationary pressures.

The goal of these rate hikes is to fight inflation by reducing the amount of cash in the system, which should lower demand and cut prices.

Before the TRAIN Law took effect January this year, car distributors had already noted a “panic buying” situation in the late part of 2017.

 But for Onglatco, there are no signs cars would lose popularity.  “I believe sales will rebound next year.  With all the economic setbacks, people still see purchasing cars as a want,” he said.

Onglatco said Cebu remains to be the biggest car market outside Metro Manila, as its middle class population and economy in general continue to expand.

Ninth Drop

Based on official data from the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) and the Truck Manufacturers Association (TMA), motor vehicle sales in the country fell for the ninth straight month in October.

Total car sales dropped 9.2 percent to 33,150 units in October from 36,511 a year ago, though the latest tally was 6.5 percent more than September’s 31,116.

October brought year-to-date industry sales to 294,207, down 13.3 percent from 339,380 in last year.

Data also showed that Toyota Motors Philippines Corp. still topped the market as of October with 124,329 vehicles sold — accounting for 42.26 percent of the total but down 16.7 percent.

Mitsubishi Motors Philippines Corp. came second with 56,592 units sold, representing 19.24 percent of the total but also down 5.3 percent.

They are followed by Nissan Philippines Inc., Ford Motor Company Philippines Inc., and Honda Cars Philippines Inc. — JMD