Luxury Vehicle Sales Decline 30%

Sales in the market of luxury vehicles in the 1st quarter dropped by an unreasonably 30 percent as buyers, mostly upwardly mobile middle class, have become extra careful not to attract the fanatical eyes of the Bureau of Internal Revenue (BIR).

One of the officials of one of the luxury car companies in the country said 3 luxury car brands namely BMW, Mercedes Benz and Lexus only sold 264 units in the January – March period this year or 30 percent lower than the same period last year.

“Because of the heightened campaign of the BIR, buyers are scared, especially that most of our buyers are middle-class businessmen, who can now afford to upgrade their lifestyle,” the source said.

On the other hand, even the corporate clients and legitimate businessmen have cancelled their plans to buy luxury vehicles on the capture that they could face because of the undue inspection from the tax agency.

Among the 3 luxury car brand models, Mercedes Benz, having the biggest decrease with a reduction of 40 percent negative growth.

BMW, a German vehicle brand, posted the highest sales but still had a dropping off about 37 percent, while Lexus’ decline a modest 2 percent decrease.

Lexus sold a total of 75 units and is eyeing to sell a total of at least 300 units this year from 264 units last year.

Lexus Manila is set to introduce major model changes this year including its best selling RX, which is priced for P1.3 million.

Meantime, the hybrid models of Lexus have not really picked up as hybrids still account for a very small portion of total industry sales.

Lexus hybrid models have sold only 50 units so far.

Its hybrid cars are GT 200, GS450H, RX450H, LS600H with GT model accounting for 40 percent of sales being the most affordable at P2.3 million to P2.8 million.

There have been a good number of hybrid vehicle brands in the country but only Toyota has full hybrid models, the others are “mild” hybrid brands.

“We need to educate the market because hybrid is still little percentage of vehicle sales,” an official said.

Aside from the lack of awareness, the price of hybrid vehicles has remained very prohibitive because of the huge tax burden imposed on these imported cars.

The robust sales of hybrid vehicles in the US, Malaysia and Singapore have been largely attributed to the duty-tax treatment and other perks given to these vehicles.

For instance, a Lexus car in the US could sell for $200,000 with all the taxes but ends up only at $100,000 a unit because of the removal of taxes.

In the Philippines, hybrid vehicles are slapped with import duty, excise tax, vat vat and sales tax and 4 percent municipal tax.

Without these taxes, a P2.3-million hybrid could sell at considerably lower price of P1.6 million.

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