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Philippine Investment Board Originally Rejected Honda CR-V as AUV

Originally not an AUV, according to the Board of Investments (BOI). However, the ruling was reversed when Honda decided to open a huge transmission plant in the country.

MANILA - An evaluation department of the Board of Investments (BOI) had rejected the transfer of the registration of Honda Car Phils. CR-V from the light commercial vehicle (Category I) because it could not comply with the configurations of an AUV and more so because of the projected huge government revenue loss.

This was the recommendation of the BOI Engineering Industries department to the BOI management committee on November 14, 2001 upon its review of the application of HCPI for CR-V's reclassification.

"Resolved that the request of HCPI for the registration of the following basic model (CR-V) under Category I of the CVDP as it hereby denied for the reason per existing guidelines of the program, it does not match the configuration of an AUV and be instead approved as a new basic model under Category 2 of the CVDP," the Engineering Industries department of the BOI said in a memorandum to the BOI management committee.

In denying the HCPI's application, the BOI department said that the new CR-V as a registered AUV participant was expected to contribute P1.831 billion to the government coffers. However, the government stands to gain P2.386 billion in additional tax revenue if it will be registered as an LCV.

The huge revenue discrepancy is due to the fact that AUVs are exempted from excise tax while LCVs with engine size of 2,000 c (CR-V is 2,000 cc) and up are levied at 35 percent. Also, its imported completely knocked down packs have been granted a three percent duty.

Last year, the company sold a total of 7,125 units of CR-V under the new category as AUV.

In addition, the BOI department said that based on Memorandum Order No. 157, AUV is defined as an "originally Philippine-designed or similarly designed low cost LCV with a higher local content than a LCV and gross vehicle weight of up to three tons" and can accommodate 10 passengers.

On the other hand, an LCV is defined as a "vehicle other than AUV that may be classified as a light truck."

HCPI, however, said the new CR-V would be reconfigured to comply with the 10-seat capacity ruling that would be rebuilt to become both a personal and commercial vehicle for entrepreneurial purposes and would be sold at lower prices because of its exemption from the excise tax payments.

The BOI engineering industries department further noted that the configuration of the CR-V conforms to the standards of a sports utility vehicles since the second row capacity is four whereas the present registered AUV's second row is only three.

Despite the claim of HCPI that the new CR-V is a 10 seater AUV, it is known as an SUV globally. The prototype submitted by HCPI to the Board clearly shows that it matches the configurations of the new CR-V trumpeted by the Honda Cars Japan as a "global SUV", the review department said.

To qualify for the AUV category, HCPI also dangled its huge investment for transmission manufacturing facility.

BOI managing head Gregory L. Domingo, however, defended the CR-V saying the huge revenue loss would be offset by the expected increased sales of units because the exemption from excise tax would trigger higher sales of CR-V and more employment.

When the CR-V was finally approved as an AUV, it committed to invest P1-billion for a transmission facility. The company's investment announced during President Gloria Macapagal-Arroyo's state visit in Japan.

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