LTFRB Vs. Grab And Uber: The Hatchback Ban And Vehicle Cap Explained

4 min read By eCompareMo on January 24, 2018

The Land Transportation Franchising and Regulatory Board (LTFRB) and transport network companies (TNC) like Grab and Uber are at odds again. This time over two policies the LTFRB is trying to impose on their fleets:  the prohibition of hatchbacks and the capping of units to a common supply base of 45,700 cars nationwide.

As expected, operators and drivers vehemently disagree with the new government regulations, claiming that it will choke the growth of the industry. While the new rules seem bad, how will the new LTFRB circulars affect the drivers, the commuters, and the traffic situation in the Philippines?

The hatchback of Notre Damned

One of the main grievances of operators and drivers of transport network vehicles (TNV) is the clampdown on hatchbacks.

According to a report on Top Gear Philippines, the ban on hatchbacks as TNVs has long been implemented by LTFRB Memorandum Circular 2015-004 which was later expanded by Memorandum Circular 2017-032 to cover Grab and Uber vehicles as well.

(Read: LTFRB Fines Uber And Grab And People Aren’t Too Happy With It)

According to the 2015 circular, sedans with a rated displacement of 1,200cc (1.2L) that meet the minimum dimensions are the only vehicles allowed to register as transport network vehicles:

• Overall length – 3,990mm
• Overall width – 1,625mm
• Overall height – 1,455mm
• Wheelbase – 2,404mm

In addition to the LTFRB circular, the Department of Transportation also posted its guidelines regarding TNVs. Based on the agency’s Department Order No. 2015-11 released in 2015, only the following vehicles can be registered as TNVs:

• Sedan
• Asian utility vehicle
• Sports utility vehicle
• Van
• “Sport utility vehicle or other similar vehicles”

Based on the said department order, there is no mention of hatchbacks as an accepted vehicle class for TNVs.

With the LTFRB circular taking effect last December 2, non-compliant vehicles should be dropped or substituted with permitted vehicles 90 days after, which is March 2, 2018. This means that hatchback owners, regardless of whether or not their cars are currently mortgaged, are expected to get vehicles that comply with the rules—or they face disenfranchisement.

In a report by ABS-CBN News, Uber and Grab already notified their operators who own hatchbacks or cars with 1.2L engine displacement or below about the order.

So, who are the casualties here? Based on a report by GMA News Online, the drivers who aired their grievances last Sunday at the Quezon City Circle said that around 1,000 drivers are facing a loss of livelihood due to the crackdown on hatchbacks.

In addition to TNV operators and drivers becoming jobless, people who were hoping to become TNV providers who bought hatchbacks through existing car loans are on the verge of losing their cars to the banks. An officer of a hatchback car club in the country said that the LTFRB should “extend the transition period from 90 days to five to seven years hopefully” to allow drivers to pay off their mortgaged cars first.

Why is the LTFRB reinforcing this, other than being a stickler with the rules? Two days before she resigned, former LTFRB spokesperson Aileen Lizada played the convenience card, saying that passengers should expect big trunk space and wide legroom whenever they book vehicles using TNCs.

With the LTFRB rules now in place, expect the likes of the Toyota Wigo, Mitsubishi Mirage, Hyundai Eon, and other hatchback subcompact cars to no longer be available for booking. For cars with both sedan and hatchback variants such as the Mitsubishi Mirage and the Hyundai Accent, the sedan variants will still be allowed to operate as TNVs.

Drowning pool

BusinessMirror reported that less than 20,000 TNV operators are currently registered with the LTFRB. This “small” number comes about because of the ban that happened last year when the agency asked the TNCs to freeze all processing of new partners. Just recently, the LTFRB finally lifted the ban but imposed a ceiling on the number of operators allowed to join Uber or Grab.

According to the LTFRB Memorandum Circular 2018-03, the agency set up the common supply base for the TNVs allowed to operate in the country. Based on the “conservative approach” by the LTFRB, they came up with 45,700 slots which will be divided into the following territories:

• Metro Manila – 45,000 units
• Metro Cebu – 500 units
• Pampanga – 200 units

Keep in mind that partners currently holding certificate of public convenience permits issued by the LTFRB to allow drivers to operate a TNV, are also included in the 45,700 slots allowed by the agency.

According to the transport agency, one of the main reasons they came up with the said cap is because of the so-called “dual citizen” practice of some operators. Based on the LTFRB’s database, there are around 125,000 TNVs in the country—77,000 for Grab and 55,000 for Uber—but up to 55 percent of the total number of operators in the country are registered to both Grab and Uber.

(Read: Uber Vs. Grab: Which Serves As A Better Part-Time Job)

Aside from up to more than half of the TNV drivers here potentially registered to both TNCs, the LTFRB also said not everyone in the 125,000 operators they have is active. LTFRB Chairman Martin Delgra said in a statement that a lot of factors were also in play with them arriving at such a ceiling number.

“The ceiling of 45,000 units was determined from the relevant data given by the leading TNCs taking into consideration churning rate, the percentage of full-time and part-time TNVs, peak and off-peak hours, and average daily bookings, among others,” Delgra said.

Although the government already set the maximum number of units for TNVs, the circular said that the numbers will change every three months. TNCs will convene with the LTFRB every three months to discuss as to whether the numbers should move due to the fact that “the demand varies from time to time.”

The LTFRB circular is expected to be in full swing on February 3.

Other Sources: DOTR, LTFRB, GMA Network