The Tariff Commission (TC) does not see imports of vehicles as significant and with the pandemic still raging, demand for this product both locally-produced and imported would continue to be soft.
In its staff report on the investigation on the imposition of safeguard measures, the TC said passenger cars and light commercial vehicles (LCV) imported as completely built-up (CBU) during the period of investigation (POI) 2014 to 2020 showed these did not enter the market in increased quantities, both in absolute and relative to domestic production.
The report added the increase in the volume of imports of CBU passenger cars and LCVs during the POI cannot be considered recent, sudden, sharp and of such magnitude that can be deemed significant.
The report also noted only 35 tariff lines — and not 193 as submitted by the Department of Trade and Industry — to be considered imported products under consideration in the investigation.
Data cited by the report showed from 20,177 units in 2014, imports of CBU passenger cars grew in the next three years peaking to 51,618 units in 2017 which was an expected reaction from the market in anticipation of the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law in 2018 which was foreseen to increase prices of motor vehicles, including passenger cars, and stricter implementation of the Euro 4 emission standards.
‘However, with the implementation of the TRAIN law that imposed additional excise tax on motor vehicles, demand for said product decreased resulting to significant decline of 25 percent in import volumes of CBU passenger cars in 2018,” the report added.
TC said the downturn in imports continued until 2020 due to the adverse economic effect of the new coronavirus disease 2019 (COVID-19) resulting to further decline in import volumes from 51,618 units in 2018 to 21,763 units in 2020.
But TC said even excluding the effect of the pandemic, the effect of the TRAIN law on thedemand for motor vehicles cannot be dismissed as seen in the sharp decrease of import volumes by traders during the normal years in 2018 and 2019.
For CBU LCVs, the report noted there was on an increasing trend from 2014 (8,884 units) to 2018 (20,193 units) buthis trend was also not sustained as import levels began to decline in 2019 (15,134 units) and further decreased in 2020 (11,456 units) due to the adverse effects of the COVID-19 pandemic.
The Philippine Competition Commission in a position paper said the challenges faced by the local automotive industry do not appear to be primarily caused by the increased share of imports but by other factors.
“Rather, and apart from the aforementioned higher costs of doing business, the limited availability of local parts supply, lower production volume, and the limited capacity to produce higher value-added components are concrete hurdles which constrain the local manufacturers’ ability to scale up production,” the PCC said. – Irma Isip
