Auto firms up 2006 sales forecast

By BERNIE CAHILES–MAGKILAT
Manila Bulletin

Local automotive assemblers have adjusted upward its sales target for the year to 8 percent from the original target of 5 percent as the market has shown steady signs of a recovery.


Elizabeth H. Lee, president of the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI), told reporters the industry is keeping its target to breach the 100,000 unit sales mark this year.

Under its original growth forecast of five percent the industry is expected to post sales of 102,000 units this year from 97,063 units sold in 2005, which was 10.3 percent higher than its 2004 sales.

Industry players are just awaiting the result of the motion for clarification on Executive Order 156 or the Motor Vehicle Development Program, which bans the importation of used cars.

The issue of used motor vehicle importation through Subic is a constant factor affecting the growth of the industry.

"Barring anything that is going to happen, we still want to hit our target of over 100,000 units," Lee said.

Another crucial factor to sustain the improving car sales in the past months is the repeal of the 70 percent cap on input VAT, which the industry said is affecting dealers and assemblers inventories.

With the 70 percent cap, dealers are controlling their inventories to avoid being capped thus resulting limiting the dealers to aggressively market.

"Because of the cap, dealers only pull out from the manufacturing plants what they can sell meaning if there are orders and that is limiting sales," Lee said.

On top of the EVAT are the issues of increases in oil prices and the adjustment of the corporate income tax to 35 percent from 32 percent.

These factors are expected to force car assemblers to also adjust upward their prices this year.

In the first half of the year, CAMPI reported total sales of 46,236 units or 2.9 percent lower 47,624 units sold in the same period last year.

Lee said the minimal decrease was largely due to a decrease in sales of Asian Utility Vehicles’ gas models, stock unavailability and completion of fleet deliveries in May.

Of the total sales, the passenger car segment posted only a 1.8 percent increase to 17,980 units from 17,664 units in the same first half last year. Sales in June, however, managed to register a 4 percent improvement to 3,624 units from 3,461 units in May.

On the other hand, sales of commercial vehicles was down 5.7 percent in the first half to 28,256 units as against 29,960 units in the first six months last year.

In 1996, domestic motor sales reached 141,000 units and reached its peak in 1997 with 162,000 units.

The motor vehicle industry plummeted in the following year with the impact of the Asian financial crisis that hit middle of 1997.

While the domestic motor vehicle industries of other Asian countries have already recovered past their 1997 pre-crisis level, the Philippine industry has remained in the dark. (BCM)