Toyota says planned excise taxes on luxury cars too high

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MANILA – Toyota Motor Philippines said it is hoping that lawmakers will reconsider the planned increase in excise taxes on cars under the government’s tax reform package. 

Satoru Suzuki, president of Toyota Motor Philippines, said the proposed hike in excise taxes on vehicles was higher than what the industry asked for.

“Of course that is still higher than our industry’s request so we cannot say that it’s acceptable. But it is a matter of the government’s decision so we have to follow,” Suzuki said in an interview with ANC’s Market Edge with Cathy Yang.

Suzuki said sales of high end vehicles would be particularly affected under the new excise tax rates being planned. He expects sales of Toyota’s high end Lexus vehicles to fall by 30 to 40 percent next year with the higher excise taxes. 

Suzuki added that automakers were amenable to a 90 percent increase in excise taxes for luxury vehicles, but under the scheme passed by the House of Representatives excise taxes would rise by up to 120 percent. 

The Toyota Philippines chief said that to avoid the impending increase in taxes, a lot of customers are deciding to buy luxury cars now. Suzuki noted that recent sales of Lexus vehicles have gone up by 60 to 70 percent. 

COMMITTED TO BOOSTING LOCAL PRODUCTION

Despite the looming increase in taxes on vehicles, Toyota remains committed to the government’s program to boost car manufacturing in the country. 

Suzuki said Toyota’s participation in CARS or Comprehensive Automotive Resurgence Strategy (CARS) program will continue. 

The government’s CARS program is providing fiscal incentives to three car manufacturers to produce 600,000 units of one model unit in a span of six years from 2016 to 2021.

According to Suzuki, Toyota plans to produce 230,000 Vios units in six years, which is well above the 200,000 units required under CARS. 

The Toyota chief however said that local parts suppliers also need to ramp up their production. 

Suzuki said they have an initial 30 local parts suppliers for its CARS program, but only four can produce the volumes Toyota needs. 

Ha added that the Philippines can become a production base for sub-compacts, but the country must first become cost competitive, and this requires local suppliers to become more cost-effective. 



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