As manufacturers scramble to adjust pricing due to the safeguard, it's brought a fair bit of worry to those planning to buy a new car. After all, PHP 70,000 is a hefty amount of cash if you're in the market for a subcompact sedan that isn't a Vios or a Mirage It's worse if you're thinking of buying a pick-up truck that is subject to safeguards; those get slapped with a PHP 110,000 bond.
But if you've noticed, the government is trying to avoid using the term tariff. Instead, the word they're using is bond. And the reason is that we are a signatory to the GATT of 1994, we could legally violate it if the safeguard was called a tariff and not a bond.
It may sound like a minor detail, but it bears a lot of weight for you, the consumer. That's because a bond, by definition, is refundable. Think of it as a security deposit when you're renting out a place. You pay for the cash upfront, and get it back once the term is over provided no money is owed for rent, damages, or other costs.
It's almost the same case of the safeguard bond when it comes to cars. We say almost because it is yet to be known if the bond will be permanent or not. Should the effectivity expire after 200 days since its implementation in January, here's what can happen and why it could be tricky.
Depending on how things play out once the term of the bond is over the importer or distributor or dealer should give you back the bond; the bond itself, after all, will be fully passed on to the customer which is you. Toyota and Isuzu actually came out and stated that they will refund the safeguard bond in the end.
Here's where it gets tricky: this will all depend on whether they get the refund from the government in the first place. The safeguard bond does not go to the car company but as per the Department of Trade and Industry's (DTI) letter to the Bureau of Customs (BOC), the latter will be the agency tasked with collecting the bond. If you have ever tried to get a refund from a government office, you will have an idea how tricky and time-consuming this could all be.
Nevertheless, based on Isuzu and Toyota's statements, their procedure will be to have dealerships issue an acknowledgment receipt (AR) for just the bond. To claim it, you must bring the original AR given by the dealership, along with one government-issued ID such as a driver's license or passport. If you can't claim it in person, you may also appoint a representative. Aside from bringing the AR, they must also have your government-issued ID, their government-issued ID, and a signed authorization letter from you.
But what if the government decides to make the bond into a permanent tariff? Don't fear, as the dealers have two possible courses of action. The first option is to treat the deposit as an additional payment to the vehicle. That means the PHP 70,000 or PHP 110,000 you used as a bond won't be wasted. The dealer can also refund the part of the deposit to the customer depending on the final rate of safeguard duty.
The question now is this: How long do we have to wait for the refund? Do we have to wait for the bond's effectiveness to be over before we get our cashback? According to some manufacturers, that might be the case. But once they can start giving back refunds, it shouldn't take more than a month after certain procedural requirements. Isuzu adds that the refund also includes the 12% VAT on top of the bond. Mitsubishi Motors have also released a statement announcing the same thing.
With the bond still in place, we can't help but think if it changes vehicle purchases for the next couple of months. For those looking forward to buying a car this year, the extra outlay has put a damper on things. If you can't wait any longer and can afford the extra deposit, nothing is stopping you. After all, it's your prerogative. But for others, the bond is just too much to pay for upfront, and consumers might opt to wait for the 200 days to be over before they even think about buying a car again. Of course, the government might turn the bond into a tariff. But at the moment, everything is still uncertain.
If anything, the bond might have slowed down an industry that's doing everything it can to bounce back.