When you think of a people carrier that seats 8 or more, the first cars that come to mind would be the Toyota Innova, Hyundai Starex, or maybe the Mazda Biante. Bet you never imagined the Honda CR-V would fit in this category but a 10-seater option was offered in the Philippines nearly 20 years ago.

The tale of how Honda shoved in 5 more seats into the SUV is a tale of cunning genius by Honda Cars Philippines Inc (HCPI). As told by AutoIndustriya, the 10-seater CR-V was scorned by many rivals in the Filipino automotive industry that it was nicknamed the “10-cheater” but it also inadvertently brought a downfall to a unique Filipino automotive culture.

Honda “Jeepney”

A popular mode of transport in the Philippines and one that symbolised the country itself is the jeepney. You might imagine them as those stretched-out Jeeps that can accommodate between 15 to 25 people but modern jeepneys are based on pick-up trucks, vans, and even MPVs.

As such, there is a special class of vehicles in the Philippines that gave favourable tax rebates to owners and carmakers called Asian Utility Vehicles or AUV. AUVs are mostly designed to be as basic as possible and many of the cars that qualified for this category were utilitarian in nature and design.

These include (clockwise from top) the Toyota Tamaraw, Mitsubishi Adventure, and the Isuzu Crosswind. The first two are the progenitors to the Toyota Innova and Mitsubishi Xpander.

In essence, these AUVs are commercial vehicles; not exactly the category you would place the CR-V in. Yet the cunning team at HCPI found some kind of loophole that allowed its then all-new CR-V to qualify as an AUV.

“It’s not an automobile if it has 10 seats”

Here’s how Honda managed to squeeze in 5 more seats into the CR-V. First, Honda “downgraded” the materials and features used on the interior. That included the flimsy-looking third row which didn’t even have seat belts.

Speaking of rows, Honda reconfigured the CR-V’s seating arrangement to a 3-4-3 set-up. While other markets had a pair of captain seats in front with a large folding tray in the middle, the Filipino CR-V had the front passenger seat replaced with a bench-style seat.

This type of arrangement is similar to the one in the Perodua Alza but unlike the Alza, the middle seat of the Pinoy CR-V has a lap belt.

Then we come to the 4-seater middle row. Though from first appearance it looked like a standard middle row, Honda fitted a pair of lap belts for the two middle seats. Standard 3-point seatbelts were used for the ones sitting beside the doors.

Finally, there’s the third-row bench seat which can fold and tumble forwards if unoccupied. In order to fit this, Honda had to remove the rear differential, so the 10-seater CR-V was only available with front-wheel drive (FWD).

Also read: 25 years of the Honda CR-V - All you need for a family car

Yet, the CR-V qualified for the AUV status. According to regulations by the country’s Bureau of Internal Revenue, the 10-seater CR-V was classified as a "mass transport van" as it has more than 10 seats. Hence, it is exempted from the standard automobile tax regulations.

Modern Pinoy Pride

However, fitting 10 seats wasn’t enough for the CR-V to qualify as an AUV. In order to meet the requirement, the car must have significant local content aside from being locally-produced (CKD) under Memorandum Order 346 of the Philippines’ Official Gazette.

The CR-V was assembled at HCPI’s Santa Rosa plant in Laguna and the big H invested PHP 1 billion (~RM 8.2 million) for a brand-new transmission plant to boost the local content. Honda claimed that the second-gen CR-V had about 63.1% local content while its predecessor had only 47.3% local content.

When the 10-seater CR-V was launched in 2002, prices for it started from PHP 899,000 (~RM 74,000) for the base 2.0L 5-MT. Had the vehicle not qualify as an AUV, it would start from PHP 1 million (~RM 82,000) instead. The previous-gen was priced from PHP 1.4 million (~RM 115,000).

The 10-seater CR-V was powered by a 2.0-litre K20A4 engine that produced 158 PS and 190 Nm. Power was only fed to the front wheels through a 5-speed manual transmission or a 4-speed automatic gearbox. The 4WD variants of the CR-V did not qualify as an AUV and were significantly more expensive.

The AUV is the Filipino people’s car, so the CR-V was essentially a modern incarnation and was a major success for Honda. Sales for the 10-seater CR-V skyrocketed from about 1,800 units a year for the previous-gen to nearly 8,000 units in 2002.

Also read: Perodua Kancil vs Proton Saga – Which is the original Malaysian people’s car?

Though it is an AUV according to regulations, buyers saw a modern SUV with an insanely affordable price. It was HCPI’s golden goose but the party didn’t last long.

The Filipino government catches up

Obviously, competitors weren’t too happy with the “10-cheater” but when they saw Honda boldly going through legal loopholes, those rivals copied too.

Some 4WD models had the rear differentials removed to qualify for more affordable taxes while some larger imported vehicles, like the Chevrolet Suburban had extra seats installed to get around excise tax rules.

In 2004, the Filipino government saw these companies attempting to run around the tax loopholes and decided to put a stop to this. Simply put, every vehicle sold to the public, regardless of size or classification from then on had excise tax.

As a result, prices of vehicles including the 10-seater CR-V shot up. Sales went from a peak of 9,532 units in 2003 to just 2,342 units in 2004.

During its 4-year production run, the second-gen CR-V sold 20,886 units in the Philippines. The third-gen CR-V that followed was imported overseas and production at Honda’s Filipino plant declined steadily in the coming years.

In February 2020, Honda made the decision to shut down the Santa Rosa plant due to low production volume. By then, only the BR-V and the City were locally-assembled there and in 2019 only 8,000 units were produced even though the facility had the capacity to build 15,000 units annually.

Honda sought to create a cleverly-packaged SUV in order to offer an affordable but modern car for Filipinos. However, that ingenuity – whether it’s seen as clever or just plain dastardly – would sadly lead to a rise in car prices in the Philippines and the eventual stagnation in the country’s once unique auto industry.