Olongapo SubicBay BatangGapo Newscenter

Wednesday, February 23, 2005

Sales, jobs loss feared after CA ruling

LOCAL assemblers warned of a sharp drop in auto sales as well as job losses if a recent Court of Appeals decision allowing the unimpeded importation of used motor vehicles is upheld all the way to the Supreme Court.

“It is already impossible for the local automotive industry to achieve its target of 8-percent growth in car sales because of the expected influx of used vehicles into the Philippine market due to CA’s order,” Frank Nacua, chair of the Truck Manufacturers Association, told The Times on Tuesday.

In a 31-page decision, the appellate court declared as unconstitutional a Malacañang-imposed ban on imported used vehicles.

Nacua said the court ruling may force the local motor vehicle industry to scale down its 2005 sales target to “lower than 2004 levels.”

In 2004 automobile sales only reached 88,000 units owing to weak demand for commercial vehicles on account of higher tax rates on the latter.

The expected decline in vehicle sales this year would be due to buyers’ preference for cheaper models, which abound given the unimpeded entry of second-hand cars and sports-utility vehicles.

“Cheap always sells and first-time buyers would prefer something lower of value for their cars,” Nacua said.

He warned that a decline in vehicle sales this time around would be severe since local assemblers are already hard-up given the already high volume of registration of used vehicles.

For every 100 vehicles registered in a year, only 40 percent comprise sales by local assemblers and importers of brand-new units, Nacua said, adding that the remaining 60 percent of the market is cornered by suppliers of second-hand vehicles.

Vicente Mills, president of the Philippine Automotive Federation (PAF), said a slump in the local automotive industry may translate to job losses.

Without providing details, Mills said some assemblers may opt to stop new hires, while others reduce their existing work force altogether.

Worse, existing players may decide to postpone if not forego additional investments given the strong competition posed by imported used vehicles.

“The industry will definitely be discouraged to invest more,” Mills said. “That is why once and for all, something must be done to stop this [importation of used vehicles]. This was what Thailand, Malaysia and other countries have done.”
-MT-Niel V. Mugas


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