Auto importers feel pinch of tax reform
As the market adjusts to the impact of higher auto excise taxes due to the implementation of the Tax Reform for Acceleration and Inclusion Law, AVID sales declined by 2% from 23,317 units sold in the first quarter of 2017 to 22,758 units this year.
The association’s first quarter performance gave an indication of the industry’s stability amid the transitional or short-term effects of TRAIN on consumer sentiment and purchase behavior.
The Passenger Car (PC) segment, which appeared to be less volatile among the two segments, experienced a slight slowdown--from 9,247 units sold in 2017 to 9,189 units sold in Q1 of 2018.
Hyundai continued to rally for the segment as it posted a 4% growth while accounting for 68% of total PC sales.
On the other hand, Light Commercial Vehicles (LCV) totaled 13,569 units sold— 4% less against the 14,070 units sold in the first quarter of 2018. Ford leads the segment, recording the highest sales of 6,273 units in Q1 2018.
Sales and Economic Outlook
Anchored on the ‘Build, Build, Build’ program, the government is confident that it will achieve its target of 7-8% GDP growth in 2018. Infrastructure spending and private consumption is expected to sustain positive growth due to TRAIN. The lowering of personal income tax has translated to higher purchasing power while the foregone projected revenues will be offset by higher excise levies on petroleum and automobiles, among others.
The spike in prices of goods and services resulted in 4.3% inflation as of March 2018, possibly dampening consumers’ auto-buying intentions. Despite this, AVID maintains a rosy outlook behind the steady and strong demand for the excellent products that each member company offers. Expect AVID to capitalize on these trends as it catapults itself to greater heights in 2018.
“AVID capped off the first quarter with 22,758 units sold. Despite given market challenges, we remain resolute that the stabilizing market condition and the influx of new products and services will serve as ample boost as we wind-up for a stronger 2018”
—Ma. Fe Perez-Agudo
President, Association of Vehicle Importers and Distributors, Inc.