Industry Trend Analysis - Hike In Vehicle Excise Taxes To Dampen Sales - FEB 2018
BMI View : Growth in new passenger car sales will slow to 9.0% in 2018, compared to a projected 19.2% in 2017, as higher excise taxes dampen demand.
Having previously anticipated that the Duterte administration's proposed tax reform plan would pose a downside risk to our passenger car forecast for 2017 ( see ' Proposed Tax Reform Threatening Robust Sales Outlook ' , October 14 2016), we now believe that the approval of a revised tax bill by the government will lead to a slowdown in sales in 2018 as taxes on new cars increase. As a result, we forecast new car sales to grow 9.0% in 2018, down from a projected 19.2% in 2017. That being said, growth in new car sales in the Philippines will still outperform the Association of South East Asian Nations (ASEAN) regional average vehicle sales forecast of 7.8% for 2018.
In December 2017, the Philippine Congress approved the first package of the Tax Reform for Acceleration and Inclusion (TRAIN) bill. As part of the new bill, a new four-tier tax scheme for automobiles will be introduced, with several tax rates being implemented from January 1 2018 ( see table below).
|Tax Hikes To Dampen Sales|
|Philippines - Passenger Car Sales, Units|
|f = BMI forecast. Source: CAMPI, BMI|