Lexus’ happy problem

A TIMELY refresh for the LX570

Dealers of luxury vehicles in the Philippines are currently struggling with a problem. It’s not exactly a crisis—at least, not yet—but it is testing the mettle and abilities of their local managers just the same.

That’s because the local market for high-end automobiles and sport utility vehicles has experienced a surge in demand from Filipino buyers, especially in recent months after the Department of Finance’s plan to raise excise taxes on vehicles started to crystallize.

In other words, buyers from across the country’s economic strata have been rushing to buy their cars and SUVs (pickup trucks are exempted) before the government slaps more taxes on them.

This “happy problem” has been especially challenging (in a good way) for Lexus Manila, the local dealer of Toyota’s premium marque.

Lexus officials tell Biz Buzz that they, like other vendors of luxury vehicles, have seen a sharp spike in purchases in recent weeks, and the rise continues. That’s because the progressive nature of the proposed tax hike will mean that more expensive vehicles will be slapped with higher tax rates.

For Lexus’ entire range of highly coveted cars and SUVs, that would translate to an increase in excise taxes of between 60 percent for “entry level vehicles” (you could call a P2.7-million IS350 sedan “entry level”) to 120 percent for top end LX570 SUVs which come at almost P8 million.

Buyers want to buy whether they can afford the IS sedan or the LX SUV (or the equally pricey LS limousines).

“We are currently experiencing increased demand for Lexus vehicles across the entire model range,” said Lexus Manila’s marketing chief Spencer Yu, explaining that this phenomenon was an offshoot of the looming tax increases.

The problem now is that the distributor’s inventory has been nearly wiped out by buyers.

Not to worry. The Philippines being relatively close to Lexus’ Japan manufacturing facilities means waiting time for any buyer stands at “only” around three weeks, compared to possibly months for some high-end European brands.

The real problem for the luxury car industry will come once the tax hikes take effect. For now, however, it’s a happy problem to have—the sort people tend to “humble-brag” about. —DAXIM L. LUCAS