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The Hybrid Momentum

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Car sales in the Philippines are through the roof. According to data released by the Chamber of Automotive Manufacturers of the Philippines Inc.

(Campi) the first seven months of 2013 saw an 18% rise in sales—equivalent to 102,913 units sold—compared to the 87,374 sold during the same period last year.

For this reason, Toyota Motor Philippines Corp. raised its sales projection by 75,000 units for the remaining half of 2013. The revised figure is higher than last year’s record- breaking 65,000 units sold.

Perhaps the great state of the car business can be explained by a prospering Philippine economy.

According to a report by Metrobank research analyst Mabellene Reynaldo, the country has shown “faster spending momentum brought by OFW (overseas Filipino worker) remittances and favorable lending conditions.”

Or maybe upwardly mobile Filipinos just love their cars.

It is quite striking to note, however, that hybrid cars have not yet caught on in the Philippines.

In the lcoal market, only Toyota is selling an alternative fuel vehicle, the Prius. While hybrid cars are experiencing high sales worldwide, less than 100 units of the Prius have been sold in the Philippines since it came out in 2009—that is a rate of, at most, two per month.

It is for this reason that hybrid cars like the Prius are still head-turners on Philippine roads.

Tomorrow is Here
Running on gas and electric batteries, hybrids fall under the umbrella of electric cars, pioneered by Ferdinand Porsche in 1901. But it was only in 1997 that it became commercially available when Toyota released its Prius. This was followed by Honda’s Insight in 1999.

These hybrid cars use regenerative braking technology, wherein the heat caused by the friction of braking is recycled into electrical energy. This conserves fuel.

The Prius is the third highest selling car worldwide, thanks to volatile oil prices and eco-conscious drivers.

Test drives in the Philippines have shown that the Prius has a fuel consumption of 24–27km/liter. In Japan it was said to go as high as 35km/ liter—a far cry from Toyota Vios’ 20km/liter for country driving.

Electric cars, on the other hand, stagnated with the introduction of ICE, which made the cars faster and more powerful. [Internal combustion engines were combined with the electric propulsion system to create a hybrid— Ed.] But the unrelenting hikes in the price of oil necessitated the rebirth of the full-fledged electric vehicle or EV.

Evolving from the simple mechanics of the golf cart, electric cars have recently developed more sass, style, power, and convenience making it a popular alternative choice for car owners. In the US alone, 40,000 units of electric cars were sold during the first half of 2013.

The Chevrolet Volt, the Nissan Leaf, and the Ford C-Max Energi are among the top choices for electric cars in the US$40,000 category and below. But the Tesla is the Rolls Royce of EVs.

The Tesla is the most lavish (particularly the 2013 Model S) among all electric cars, boasting an all- aluminum, five-passenger carriage and a powerful battery system.

Right now, hybrid and electric cars are being developed to contain smaller combustion engines. They are also being manufactured with lighter materials to boost aerodynamics. Other than green consciousness and fuel economy, another big contributing factor to the rising popularity of alternative-fuel vehicles are the tax breaks given by governments.

In the US, Tesla buyers are given a federal tax credit of US$7,500. Other governments provide free parking, free entry to carpool lanes, and discounted fees at toll gates.

In the Philippines, the Prius was practically ignored because of its very high price tag. When it was first introduced in 2009, the Prius was selling at 2.2 million pesos—twice the price of the Japanese version, which was 1.8 million yen or 900,000 pesos.

The reason for this is that since the Prius was imported straight from Japan, it was taxed heavily as well, with 20% in import duties, 12% value-added tax (VAT), plus excise tax.

AFV Limbo
In 2011, the Philippine Congress approved House Bill No. 5460. When it was bumped up to the Senate, it became Senate Bill No. 2856 or the “Electric, Hybrid and other Alternative Fuel Vehicle Law.”

Car manufacturers and the motoring public have been waiting for the passage of the bill, particularly the tax incentives it will provide eco-friendly cars, drastically pulling down their price.

While it was still in Congress, the bill provided incentives for hybrid vehicles. It emphasized that “importation of hybrid, electric and other alternative-fuel completely built units or CBUs shall be exempt from paying duties and excise taxes for nine years once the bill is enacted into law.”

It also removes VAT on the importation and sale of raw materials, spare parts, components, and capital equipment related to vehicles using alternative fuel, hybrid, and electric technology.

Senators, on the hand, added the following: exemption from the LTO Motor Vehicle User’s Charge, priority registration and issuance of license plate number, “coding” exemption, free parking at new establishments, and approval-priority for alternative-fuel PUV (public utility vehicle) franchises.

Two years have gone by and the bill is stuck in limbo.

One reason given is that the Senate is waiting for the Department of Finance (DOF), which has prioritized the passage of the Fiscal Incentives Act that provides tax grants to local and foreign investors. Because the Fiscal Incentives Act covers all industries, not just the car companies, it is taking a while to iron out the kinks.

Philip Apostol of Green Frog Zero Emissions Transport, which runs the only hybrid bus company in the country, says, “Government should focus on smaller sectors because the DOFs Herculean endeavor to tackle all industries will die from the arguments of everyone.”

The 16th Congress opened last July and the bill was to be reintroduced. There is still no clear sign of its approval.

Bright Future
A car industry insider, who insists on staying off the record, says that there is a “lack of cooperation from the government.” Despite this, more and more alternative fuel vehicles are being introduced into the market.

Last year, Toyota Motor Philippines released the Prius C, an improved and more affordable version of the earlier model. The Prius C has a 1.8-liter engine, a sturdier electric powertrain and, at 1.5 million pesos is in the same price range as the Camry.

Honda, on the other hand, recently launched CR-Z (Compact Renaissance Zero), a hybrid sports car. It was a response to the warm reception shown the CR-Z Mugen concept car displayed during the Fourth Philippine International Motor Show last year.

Honda president Tatsuya Natsume described it as, “brilliantly crafted as the first sporty coupe that demonstrates hybrids are indeed fun to drive.”

Mitsubishi was the first to bring the electric car to Philippine shores; the I-Miev or I-Mitsubishi Innovative Electric Vehicle. Mitsubishi combined forces with Meralco and the Department of Energy to make adjustments and adapt it better to Manila driving conditions.

Enter Meralco
Meralco is coming up with the first charging stations for hybrid and electric cars. Constructed within the premises of the Meralco compound, the Meralco eVehicle Power Station anticipates the expected influx of more electric and hybrid vehicles.

Meralco SVP Alfredo Panlilio says, “Meralco will assist in making electric vehicle charging technology available to interested partner companies and priority sectors like public transport operators. Meralco will be ready when the market for eVehicles becomes ripe and stakeholders start adopting the technology.”

Nissan, on the other hand, is waiting for tax incentives before bringing in its popular Nissan Leaf, while Hyundai is hoping for better infrastructure before bringing in its e-car counterpart.

Suzuki, meanwhile, boasts that its Alto and Celerio consume 22.74 km/ liter and 34.1 km/liter under optimal driving conditions.

Asked what is lacking in the alternative fuel cars currently in the Philippines, Richelle Manalad of Hyundai Asia Resources Inc. believes it is more about context.

“What we think can be improved are the infrastructure to support the current alternative fuel cars and the implementing body that will ensure compliance to required safety standards,” she says.

While hybrids and EVs are still largely stuck in novelty status, fuel- powered cars continue to post high sales figures with manufacturers improving fuel efficiency to match the alternatives.

As Manalad puts it, “It is unlikely that gas-powered vehicles will become obsolete in the near future.”

Until local legislators get their act together, we can consider it a win-win for the motoring world.

Print ed: 10/13

 

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