Pickup trucks’ sales help car dealers cope with Train’s hits

Exemptions on some car models under the Tax Reform for Acceleration and Inclusion (Train) law are helping car dealers cope with their sales targets.

While most car models have been slapped with excise taxes ranging from 4 percent to as much as 50 percent starting this year, there are those that are exempted by the law including pickup trucks.

For Ford Philippines, this exemption had been a welcome provision as they continued to post a double digit growth so far this year.

“Definitely, there had been some impact. But since the Ranger is exempted, parang nag-offset. The pickup is exempted (under the law), and the pickup is our top seller,” said EJ Francisco, AVP for Communications of Ford Philippines.

From January to October 2018, Ford Philippines has recorded a 12 percent increase in their sales compared to the same period in 2017.

Francisco credits the continued increase to the demand for their Ranger models of pickup vehicles.

As for their other models including the Everest and Ecosport, sales have been affected as these models are part of those imposed with higher excise taxes starting this year.

Under the Train law, cars worth up to P600,000 are imposed with four percent excise tax; for cars worth over P600,000 to P1 million, it is 10 percent; it is 20 percent for cars worth over P1 million up to P4 million; while for cars worth over P4 million, the excise tax is 50 percent.

Only pickup trucks and pure electric vehicles are exempted from the additional excise taxes.

For hybrid or half petrol or diesel, half electric cars, the excise tax implemented is 50 percent.

According to Francisco, they have noted stronger demand for their pick up models.

“There is demand for the pickup especially in provinces. These are being used for agriculture, construction. The Ranger is the top seller of Ford since the start of the year, all they way to the current,” he said.

This is why despite taking a hit from the additional excise tax on cars, Ford Philippines is hoping that the exemptions under the Train law will be retained, especially in the coming years wherein there could be changes in the provisions of the law.

Francisco said sales have been affected for their other models. For example, a Ford Ecosport which costs P800,000 before now costs P900,000.

In order to cope with the increase in prices for their other models, Ford Philippines has put in place some marketing efforts and promotions in order to continue attracting buyers.

For one, Francisco said they are currently offering employee pricing for their Ford Everest models.

The promotion is until November 30.

With this employee pricing, buyers can save between P100,000 to as much as P153,000 depending on the model they are purchasing.

Despite double figure growths, the entire automobile industry has been affected by the additional excise taxes on cars.

While there are still increases in sales, this is much lesser compared to sales growth posed by car dealers in 2017.

Honda Cars Cebu, Inc. (HCCI) earlier reported a 33 percent growth in sales in 2017 compared to 2016.

On the other hand, Sakura Autoworld Group, which handles Suzuki Auto South Cebu, grew by close to 30 percent compared to 2016.

One of the reasons why there was a big increase in sales in 2017 was the fact that some people opted to buy cars already within last year so as not to be affected by the excise taxes under Train law which took effect last January 1, 2018.

Both Cebu based car dealers project an increase of between 15 to 18 percent in sales for 2018 compared to 2017.

TAGS: Car, dealers, Hits, sales, train, trucks