Assemblers raise woes on smuggled vehicles anew

Local vehicle assemblers expect to end the year with a growth of 2.3 percent in sales to more than 127,000 units, which remains far behind the sales figures of its neighbors as a result of unabated smuggling of used vehicles.

In a year-end forecast and outlook for 2010, Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) president Elizabeth Lee said despite the global economic crisis and other factors that could have affected industry sales, this year’s performance has exceeded this year’s overall expectations of a flat growth.

“Many factors helped boost car sales — one of which is the faster replacement rate for flood damaged cars. OFW remittances continue to be strong, rising 8.6 percent to P12.8 billion in the first nine months of the year — a factor that is a key indicator of consumption, for which a beneficiary is the auto industry. Stable financing environment coupled with aggressive promotions from partner banks help sustain, if not increase auto sales,” she said.

However, in terms of sales volume, “We are dwarfed by our neighbors. Compared to this year’s forecasted 127,000 units, Indonesia sells 3 and 1/2 times more — about 450,000 vehicles, and Malaysia and Thailand each sell 4 times more than us, about 500,000 vehicles. Vietnam — who used to be behind us, is now selling just about the same volume as the Philippines — and it may soon overtake us as well,” Lee said.

According to Lee, there is no question that the importation of used vehicles stunted the growth of the formal auto industry. At a time when the ban on second hand car imports via the Executive Order 156 was born in 2002, total registrations were already over 198,000 units. If these were the total sales from the formal industry, we would have bounced back from the crisis as early as eight years ago. Unfortunately, formal auto sales were only 43 percent of total vehicles being registered.

Despite the ban, Lee added the height of smuggling was seen two years later, in 2004, with the informal sector selling almost 130,000 units versus the formal sector’s 88,000 units. About 60 percent of total new car registrations came from the informal sector. Total new car registrations were already at a high of almost 220,000 cars — this was 5 years ago. –Michaela P. del Callar, Daily Tribune