Stricter policy against used car importation has emerged as the least contentious component in the six-point framework of the planned new Motor Vehicle Development Program (MVDP) as they are unanimous in saying it is a key to the growth of the domestic industry.

The other components that appeared contentious are hardcore assembly operations, exports program, parts and components development, review of the excise tax on vehicles, standards, and creation of an automotive “authority”.

While participants are mum about their inputs in the focused group discussions that they submitted to the Board of Investments (BOI), they were unanimous on their opinion against importation of used motor vehicles.

This component is included in the current MVDP and is being carried on in the planned new MVDP.

“If we can fix just that one single problem we could have bounced back as early as 2000. By strictly implementing our policy against used car importation, we could have a significant market and investors would have come,” said Elizabeth H. Lee, president of the Chamber of Automotive Manufacturers of the Philippines Inc.

Lee cited an industry data showing that the share of the industry to the 242,067 new motor vehicle registration with the Land Transportation Office in 1996 was at its highest of 66.96 percent or 162,095 units while the informal (imported used vehicles) sector was limited to 79,972 units only. The 1996 sales figure was the industry’s all time-high record.

When the industry started to decelerate in 1997 due to the Asian financial crisis, the share of the industry of total LTO registration also went down to 60.24 percent or 144,968 units while the informal sector moved up to 95,694 units.

The situation continued to worsen with the industry’s sales contributed being limited to 49.25 percent only in 1998 with sales reaching 74,434 units only as against 81,493 units of imported used vehicles.

With more used car imports coming in, the industry’s share of the market continued to decelerate in 1999 to 48.73 percent with sales of only 74,434 units, its worst since the Asian financial crisis, while the informal sector continued to outpace the formal sector with 78,246 units.

“Had we controlled the entry of imported used motor vehicles, we could have recovered already in 2000,” Lee said.

Data showed that the share of the informal sector continued to rise in 2000 with 88,004 units while the formal sector continued its steady decline with 83,994 units.

The informal sector breached the 100,000 unit mark with 113,287 units in 2002 as against 85,594 unit sales of the local industry.

The new Motor Vehicle Development Program under Executive Order 156 which took effect in December 2002 and containing a provision banning the importation of used cars was not able to uplift the industry as traders managed to get the court to issue an injunction against EO 156.

The industry took its hardest beating in 2004 as its share to total LTO registration plummeted to 40.48 percent having sold 88,075 only units versus 129,425 units sold by the informal sector.

The industry, however, managed to improve in 2005 as the court already acted favorably on their side.

On that year, the industry managed to reverse the situation by selling 97,067 units and clipping the informal sector’s sales to 75,167 units.

The situation continued to improve when the court ruled with finality in 2007 on the validity of EO 156. On that year, sales of the domestic industry went up to 117,903 units while the informal sector declined to 68,208 units.

Last year, the imported used vehicles were down to 59,548 units while the industry sold 124,449 units or accounting for 67.64 percent of the total LTO registration of 183,997 units.

The improved situation has led Lee to be optimistic of meeting its flat growth target this year of about 125,000 units.