New excise tax won’t bring down prices of Toyota cars

Prices of Toyota’s passenger cars may not drop significantly even with the implementation of a new value-based excise tax.

Toyota Motor Philippines Corp. senior vice president Serafin Pantaleon said that Toyota is still studying its passenger car price structure due to the recent depreciation of the peso against the dollar.

The new excise tax system, which was signed into law last week by President Arroyo, effectively lowers the tax on passenger cars and removes the tax-exempt status of Asian utility vehicles (AUVs).

"The prices of Toyota’s AUV model, the Revo, is likely to go up," Pantaleon said.

Pantaleon, however, said that Toyota will expand its AUV variants to be able to cater to all segments of the market. "With the excise tax issue finally settled, the local car industry, is now focusing its effort to convince the government to grant export incentives to local car companies that will engage in exports," Pantaleon said.

However, government should grant export incentives not only for the export of completely built-up (CBU) car units but also for automotive components, he said.

At present only one local car company, Ford Motor Philippines Co. is already engaged in the export of CBUs.

Other companies, such as Toyota and Honda Cars Philippines, Inc. are only engaged in automotive components export – specifically transmissions.

Another issue that local car makers are pressing government to address is the extension of the existing Most Favored Nation (MFN) tariff rates on CBUs, which currently stands at 15 percent, 20 percent and 30 percent to the year 2010.

An immediate lowering of the CBU tariff rate would adversely affect the local Philippine automotive industry which is still struggling to improve its growth following the Asian financial crisis.

Lower CBU tariffs would only encourage more imported vehicles which would complete with locally assembled vehicles.