While the country’s automotive industry is yet to fully recover from the effects of the tax reform law, industry experts are saying that the Philippine automotive sector is over the hump.
From negative sales of 16 percent in 2018 to 357,410 units compared from 425,673 vehicles sold in 2017, sales in 2019 slowly inched up starting in May.
Based on the joint report of the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) and Truck Manufacturers Association (TMA), May 2019 sales surged 20.2 percent to 39,998 units from 25,799 units in April 2018, driven by the strong sales of commercial vehicles and the rebound of passenger cars.
“Indeed, we welcome this positive growth as this is a good indicator of the increasing and widening demand for vehicles that has been the trademark of our industry. We are optimistic that the industry is well-positioned and prepared to progressively get back on track towards strong positive growth in the coming months,” said CAMPI president Rommel Gutierrez.
Sales took a stronger showing in the last two second semesters since 2018, the year when the tax hike was imposed, except for the traditional ghost months of July and August.
Car manufacturers noticed that this was the time of the year when Filipinos car purchase decision-making was heavily influenced by economic factors such as rising oil prices, unstable inflation rate and the application of excise tax on vehicles.
However, there was a turnaround in August to September, and in the month of October 2019, sales showed an 8.1 percent month-on-month incremental output to 34,397 from 31,820 units sold in September 2018.
Both automotive groups recognized the month of October as recording the highest monthly sales for the industry in the current year.
Gutierrez highlighted the industry players’ common expectation that the recent growth is important for the industry to hit the overall sales target this year.
“The auto industry has been recovering since the second half of 2018. We are confident that the continued month-on-month positive sales growth rate during that period will be sustained in 2019,” Gutierrez said.
Passenger car sales went up by 3.72 percent to 10,083 units in October 2019 from 9,721 units in September 2019 while commercial vehicle sales also increased by 10 percent to 24,314 units from 22,099 units, a month ago.
Among the commercial vehicle sub-segments, light and medium trucks category exhibited slower sales by 2.3 and 0.8 percent, to 734 and 385 units from 751 and 388 units, respectively.
Light commercial vehicle sales went up 4.5 percent to 18,271 units from 16,488 units while Asian utility vehicle sales were also up by 43.1 percent to 4,780 from 3,341 units.
Heavy-duty trucks, on the other hand, posted 9.9 incremental sales growth to 144 from 131 units.
Gutierrez said recent sales figures indicated a continuous market demand for vehicles and a clear upward trend for the industry as it begins in the fourth quarter of 2019.
Year-on-year, sales were positive, increasing by 3.8 percent from 33,150 units in October 2018.
Meanwhile, year-to-date sales also rose by 2.53 percent to 301,761 units from January to October 2019 from 294,311 units in 2018.
“We remain positive that our industry target for the end of the year will be achieved as all brands remain committed to provide innovative mobility solutions to the Filipino people,” Gutierrez said.
The groups carefully deliberated the sales forecast for 2019 at 410,000 units, keeping a conservative front instead of getting pressured to achieving a goal that is not congruent to reality.
The forecast was enough to egg on players to continue to protect the industry, raise sales and give consumers a better options.
The Industry is optimistic that despite slow progress, automotive companies will continually improve their performance with a collective growth towards the end of the year.
“The automotive brands’ collective efforts, highlighted by fleet sales, good financing deals, and model updates and upgrades, show that we have learned to adjust and adapt to market conditions thus helping consumers acquire new vehicles with fewer hurdles,” Gutierrez said.
The groups noted that the current market demand for vehicles along with creative and aggressive sales promotion efforts gave a positive outlook as the industry strived to sustain the growth trend for the remaining months of the year.
CAMPI noted that the continuing good performance of the Philippine economy will have a lasting positive effect on the local automotive industry.
It is hoping that whereas GDP per capita is on a high level, more new vehicle models to be introduced and a strong economy.
“At the start of the year, we saw a big gap in sales versus last year. As we move forward, we can see positive signs of recovery. With stable economic trends, we are optimistic to end the year with market growth,” Gutierrez said.
“CAMPI will continue to push for sustainable sales efforts to headline our recovery from last year’s numbers. Our target of 410,000 units remains to be a highly achievable goal for the industry and we expect the road to recovery to continue until the end of the year,” he added.
CAMPI has expected the recovery coming into the last quarter of the year.
With the continuing demand for commercial and passenger vehicle sales propping up the industry, CAMPI remains bullish that the automotive sector will post continuous positive growth until the end of the year.