In Southeast Asia, the Philippines is an emerging market that has a high demand for cars, and a large section of the population opts to import China-made second-hand vehicles. In order to explore the opportunities available in this field, the Chinese and Philippine traders must know all regulations governing Philippine auto industry. Additionally, this article provides an in-depth examination of the import policies on China used vehicles such as taxation authorizations and import guidelines.

An Overview of the Philippine Automotive Market

With approximately 110 million people and a growing middle class, it can be said that the Philippines automotive industry is among its key economic drivers. Most cars are left-hand driven and the demand for vehicles is keeping rising. Last year (2023) showed a strong market as evidenced by the total automotive sales volume of 430,000.

Import Policies for Used Cars from China

The Philippine government has specific import policies to ensure the quality and safety of used cars entering the market:

•    Only left-hand drive vehicles are allowed.

•    Used cars can be of any age ,however, only used cars that have been registered for six months or more prior to shipping can be imported into the Philippines..

•    Gasoline-fueled vehicles must have a displacement of no more than 2800ml and must not exceed 1500kg.

•    Each imported motor should comply with safety and emission standards as set by Philippine government technical regulations.

•    It has provision for other types which include: private cars under NDI (No Dollar Importation), diplomatic mission cars, trucks used for commercial purposes having Gross Vehicle Weight of two point five tones and above (GVW), buses used for commercial purposes having GVW of six tones and above, SPV (special purpose vehicle) and Motorcycles.

Taxation Policy for Used Car Imports

Taxing policy on imported used cars is aimed at controlling the market as well as increasing State revenue. For example:

•    Both new and used cars attract a uniform tariff rate of 40%.

•    All imported cars are subjected to a value-added tax (VAT) of 10%.

•    An additional ad valorem tax ranging from 15% to 100% is based on the engine displacement and serves as the tax base, determined by reference guides rather than the purchase price.

Documentation Required for Used Car Imports

These are some of the necessary documents that facilitate smooth flow during importation;

•    original sales invoice

•    commercial invoice

•    guarantee deposit certificate

•    templates of chassis and engine numbers

•    Import permit availed by the Department of Trade

•    Registration documents and proof

•    Certificate of arrival

Market Dynamics and the Future Outlook

Various factors including government policies, consumer preferences and economic growth influence the Philippine used car market as well as importation trends into the country. Importantly, this market slowly shifts towards clean energy vehicle (hybrid), with electric vehicle act such as Republic Act 11697 being legislated by the government lately. Occurrences of Change offer a new front for Chinese exporters of electric vehicles.

Summary: The Philippines offers a promising market for used car imports from China, with a clear regulatory framework that ensures the quality and safety of imported vehicles. Chinese exporters can gain access and navigate through this market successfully by understanding the importation policies, documentation requirements as well as tax structure. The market shifts are evolving towards emphasis on new energy vehicles which means that there will be a significant potential for Chinese used car exporters to establish a strong presence in the Philippines.