By Bernie Cahiles-Magkilat
Toyota Motor Philippines, the country’s largest car player, yesterday said the peso depreciation would translate to more than P1 billion in additional cost this year, which they hope to recover through higher prices of their vehicles to sustain income and prop up profitability.
TMP President Satoru Suzuki revealed this during a press conference following the ceremonial roll-off of the all new Vios, which it starts to produce at its Special Economic Zone in Sta. Rosa, Laguna, with total investments of P5.53 billion.
According to Suzuki, the squeeze on the local currency which started last year, has resulted in significant increases in the cost of imported automotive parts and will initially cause damage in their profit.
When asked for the impact for every peso depreciation on their operation, Suzuki said, “That is confidential so I cannot give concrete answer, but for one year I think it is more than a billion-peso impact in terms of additional cost.”
He said they are currently reviewing their pricing and hinted of additional price adjustments if the peso continues to slide to “sustain income and minimize damage” on the company’s profitability. The local currency, the worst-performing currency in 2017, now hovers more than P53 to a US dollar.
Jose Maria Atienza, TMP executive vice-president, said they have already implemented a price adjustment of 1-2 percent this year. The new Vios, which official prices are going to be announced today (Friday) at the formal launch of the new model, will also reflect the initial impact of the weak peso, Atienza said.
Atienza said they pegged their foreign exchange assumption at below P53 to the US dollar. The old SRP (suggested retail price) range of the old Vios was P629,000 to P1.05 million depending on the grade/variant.
“We will maintain our introductory price for Vios but if the peso continues to depreciate then we have to study to increase the old price to sustain our profit,” said Suzuki.
Compounding the income pressure from the weak peso has been the soft domestic market.
“Other than the challenge of higher prices is how to sustain our sales volume,” Suzuki said.
TMP’s sales in the first half of the year declined by 14.7 percent to 73,136 units from 85,728 units in the same first half last year. Atienza expressed confidence they will achieve a flat growth if not slightly lower than last year’s performance.