Phl auto market to reach 300T by 2015 - study

MANILA, Philippines - Majority of the players in the auto industry expect the Philippines to become a 300,000-vehicle market by 2015, a study of the University of Asia and the Pacific  (UA&P) on the auto industry showed.

The same view was shared by Trade and Industry Secretary Gregory L. Domingo but he said the 300,000-mark may be hit by 2016 especially since the per capita income of Filipinos is growing.

“Reaching a 300,000-unit market demand by 2016 is very possible,” Domingo said noting that the per capita income has reached over $2,000. “Sales of cars have been proven to shoot up if per capita income exceeds $2,500,” he said.

According to the UA&P study, the size of the country’s population plus rising per capita income can further stimulate vehicle ownership.

Likewise, the study noted that the other positive signs that can push the vehicle sales are the steady inflow of OFW remittances and rising agricultural incomes which boost purchasing capacity. In addition, the study noted attractive financing terms have led to higher automotive on availments especially by entry level buyers for their business or personal use. The country’s archipelagic make-up and improved infrastructure can also be a source of growth for vehicle ownership.

“Given the aforementioned growth factors, an increase in the size of Philippine automotive manufacturing can be expected. In fact, a shared view among parts and components makers and most of the automotive manufacturers is a 300,000 vehicle market by year 2015,” the study noted.

The study has reiterated the importance of incentives in order to make manufacturers more economically competitive. “Solid incentives support from the government will make it possible for locally registered automotive manufacturers to be economically competitive. With incentives, manufacturers can sustain buying from local parts makers that will enable sharing of their research and development efforts, best practices in applying manufacturing know how to local parts makers,” the study stated.

The Department of Trade and Industry (DTI) is gauging the results of the UA&P study to decide whether to continue to implement the Motor Vehicle Development Plan (MVDP) or scrap it.

The study stated that a cost-benefit analysis of the proposed fiscal incentives show that for every peso of fiscal incentives granted to the industry, there is a positive return to the government. For instance, for CBU, exports assuming that the export credit per unit is $700, the benefit-to-cost ratio is 1.82.

The study stated that under a regional market growth, there are four new activities that can be considered as eligible for fiscal incentives.

The first is related to the establishment of local operations destined as a regional manufacturing base for an existing or new automotive model, the second is related to the establishment of local operations to enable the manufacture and assembly of CBU alternate energy using or hybrid vehicle models, third is related to the establishment of local operations leading to the manufacture and or assembly of newly designed vehicles for passenger use, and fourth is related to the manufacture and assembly of parts and components.