News That Rocked PH Automotive Industry for 2018
The year 2018 was a very challenging yet colorful year for the Philippine automotive industry. The movements, actions and reactions from both the private sector and the government were not the typical bumps and bruises of the business: it is more of bobbing and weaving through the kicks and punches while trying to stay awake amidst the conundrums brought by various changes. Aside from that, this year we have all been witnesses to the countless losses and gains, ups and downs experienced by the shakers, movers, and other contributors of the industry. So, here are some of Carmudi’s top news items that rocked the automotive sector for 2018.
Initial implementation of the TRAIN Law
The year started with the implementation of Republic Act 10963–more commonly known as the Tax Reform for Acceleration and Inclusion (TRAIN) Law–which, among other things, increased the excise tax for vehicles and fuels. With vehicles, those priced up to PHP600,000 are imposed with a four percent excise tax, 10 percent for those over PHP600,000 and up to PHP1 million, 20 percent for vehicles pegged at over PHP1 million to PHP4 million, and 50 percent for those over PHP4 million. On fuel prices, gasoline has been given a PHP7 excise tax, diesel with PHP2.50, kerosene at PHP3, and Auto LPG at PHP2.50. Note that the amount is only for 2018 and that another round of excise tax hike will happen come January 2019. While there has been various moves to oppose the implementation, saying that it has seemingly undermined its impact on inflation, it is still currently being implemented and we have yet to see its full effect. The target for the implementation of the contested law–which is backed by no less than President Rodrigo Duterte himself–is to put up PHP130 billion worth of revenues to fund infrastructure projects and other programs for the current administration.
Grab/Uber merger in PH operations
During the first quarter of the year, ride hailing app Uber sold its operations to Grab, which has erupted into its biggest challenge yet. Also a landmark case for the Philippine Competition Commission (PCC), the Uber-Grab merger investigation resulted with a conditional clearance, subject to quarterly monitoring. Should the company fail to comply or violate its commitment with the PCC, the conditional approval from the anti-trust body could be dissolved. Currently, Grab Philippines is waiting for the PCC decision on its motion for reconsideration over the fine of PHP12 million versus the company and PHP4 million against Uber for allegedly causing undue difficulties to the review, to which they clarified does not affect the conditional approval of PCC.
PH gives more room for EV growth
The country gave the electric vehicle sector more room for growth by holding the 6th Philippine EV Summit sometime during the midyear. Themed ‘Stepping Up Partnerships To Electrify Public and Private Transport,’ the program is keen on collaborating with private and public entities. This move is in line with the government thrust for PUV modernization program. The event was organized by the Electric Vehicle Association of the Philippines (EVAP), Manila Electric Company (MERALCO), Partnership for Clean Air (PCA), in partnership with Department of Transportation (DOTr), Department of Trade and Industry (DTI), Department of Energy (DOE) and vehicle industry titans Mitsubishi Motors Philippines and Nissan Philippines.
PH unveils first ‘landport’
Literally and figuratively, the Duterte administration is trying and creating numerous ways to decongest and rid Metro Manila of provincial buses. With that, the Paranaque Integrated Terminal Exchange (PITX) was built. A multi-modal terminal, public utility buses whose routes are not covered by Department Order 2018-025 (including Batangas and long haul Cavite routes) shall stop at PITX. Recently, the DOTr is ordering MWM terminals to comply with concession agreement and implement the improvements in PITX operations.
Nissan chair Ghosn ousted after being arrested
Global automotive giant Nissan Motor Co. ousted its chairman and director Carlos Ghosn after he was arrested for allegedly committing financial crimes. Ghosn,who is being credited for bringing together Renault with Nissan and Mitsubishi, was nabbed for suspected suspected breach of Japanese financial laws. Ghosn has since been ousted from the chairmanship positions he once held in both Japanese carmakers while Renault is still keeping its faith with him.
Toyota PH chair George Ty passes away
It was in the afternoon of November 23 when the shocking news hits the web: Dr. George S.K. Ty, the 86-year-old chairman of Toyota Motor Philippines (TMP), passed away. The tycoon–who was ranked ninth richest businessman in the country–made the joint venture with Toyota back in 1988. Currently, TMP enjoys a significant lead over its rivals in the local market and has celebrated 30 years of operation on local shores.
Vehicle launches despite declining industry sales
While there have been a lot of negativity hounding the automotive scene, mostly on the massive decline on sales, Philippines welcomed various models that the country’s gearheads and aficionados have long awaited. The models were spearheaded by the Mitsubishi Xpander in March, followed by its closest rival, the Toyota Rush, in May. Also introduced in May was Nissan’s midsize SUV entrant, the Nissan Terra. Ford came out with the high-performance version of its Ranger pickup with the Ford Ranger Raptor in September while Suzuki showed off its highly-anticipated but yet-to-be-sold all-new Suzuki Jimny in October. The passenger car segment also gave room to other competitors such as Volkswagen Philippines‘ five new China-built models in the Santana, Santana GTS, Lamando, Lavida, and Tiguan. Based on the combined report of the Chamber of Automotive Manufacturers of the Philippines Inc and the Truck Manufacturers Association (CAMPI-TMA), the group suffered a 14.4 percent slide in total sales for the first 11 months of 2018, rolling out 325,465 units as opposed to the 380,179 delivered in the same period the previous year.
Kia now under Ayala Group
Early this year, there were rumors about the takeover of the distributorship of Kia, which was then held by Columbian Autocar Corporation (CAC). It was only late this year the agreement was finalized, with AC Automotive, Ayala Corporation’s automobile business company operating under AC Industrials (ACI), assuming the majority share. In 2017, the Alvarez group invited San Miguel Corporation President Ramon Ang to buy a majority share of Asian Carmakers Corporation (ACC), the official distributors of BMW in the country, which led to the purchasing of a 65-percent stake in the newly-formed SMC Asia Car Distributors Corporation with the remaining 35 percent owned by the Alvarez group. From four, the Alvarez group now holds only two car brands in the Philippine market–Mahindra and Peugeot–while Ayala now has two car distributorships–Volkswagen and Kia–along with its shares with other automakers such as Isuzu Philippines Corporation (IPC) and Honda Cars Philippines Inc. (HCPI).