New car sales this year in the Philippines are likely to sustain the first decline in seven years due largely to newly implemented higher excise taxes on automobiles.
New motor vehicle sales in the first nine months of this year plunged 13.8 percent from a year earlier to 261,057 units, according to data compiled by the Chamber of Automotive Manufacturers of the Philippines Inc. and the Truck Manufacturers Association.
The domestic auto market is unlikely to post a sales increase in the remaining three months of this year because last-minute demand ahead of the tax hike boosted car sales in the October-December period last year.
Filipino consumers have become reluctant to purchase high-priced items due partly to accelerating inflation, said Satoru Suzuki, president of Toyota Motor Philippines Corp. under Toyota Motor Corp., adding car sales will not recover within this year.
Industry sources also attribute the sluggish car sales this year to a limit of 65,000 registered vehicles for ride-sharing services such as Grab imposed by the Land Transportation Franchising and Regulatory Board, weighing on new car sales in the Southeast Asian country.
Toyota, the leading carmaker in the Philippines with a market share of over 40 percent, suffered a 17.6 percent drop in new car sales in the January-September period this year to 109,402 units, the data show.
Among the top 10 automakers operating in the Philippines, seven have experienced drops in sales in the first nine months of this year.
By category, passenger car sales, which accounted for nearly one-third of the total, fell 20.2 percent from a year earlier to 81,078 units and commercial vehicle sales decreased 10.6 percent to 179,979 units, according to the data.
In January, the Philippines government implemented a tax reform law, and the excise tax hike on automobiles and other goods represents the first package of a comprehensive tax reform program pursued by the administration of President Rodrigo Duterte.
The excise tax rose from 2 percent to 4 percent for those priced up to 600,000 pesos ($11,000).
New auto sales in the Philippines had surged in recent years, topping 200,000 units in 2014, 300,000 units in 2016 and 400,000 units last year.