Philippine auto industry seen sustaining double-digit growth beyond 2020

MANILA, Philippines - The Philippine automotive industry is seen sustaining its double-digit expansion even beyond 2020 when motor vehicle sales are expected to reach 500,000 units annually.

Federation of Automotive Industries of the Philippines president Vicente Mills Jr. told The STAR the country could still be among the fastest growing automotive markets in Southeast Asia after 2020 with annual sales capable of growing at least 10 percent.

Automotive markets in Southeast Asia selling more than 500,000 units annually are currently experiencing a slowdown in sales on saturation concerns.

“We’re talking about 500,000 units per year by 2020. So at that level we’re okay already and our automotive market will be very competitive,” he said.

“After that, maybe it will slow down but it will still grow double digit because as our economy improves, so does buying power. And with Euro 4 fuels, some of these vehicles will have to be scrapped and that will add to volume. So it’s not only fleet expansion but fleet replacement as well,” Mills added.

The Philippines is currently the third fastest-growing automotive market in Southeast Asia, according to the Asean Automotive Federation.

Data from the regional automotive group showed Philippine vehicle sales for 2015 rose 23 percent, while that of Singapore accelerated the fastest at 66 percent, followed by Vietnam at 57 percent.

Major automotive markets in the region in terms of volume such as Indonesia, Thailand and Malaysia, however, are currently experiencing a downtrend in terms of vehicles sales.

These markets are already selling one million, 800,000, and 600,000 units annually, respectively.

The Philippines, for its part, sold over 300,000 units last year and targets at least 350,000 units for 2016.

By 2020, the country is eyeing to become a major automotive market in the region as domestic sales are expected to continue posting stellar growth while local production is seen ramping up with the government’s Comprehensive Automotive Resurgence Strategy program.

“The reason why we’re growing is because our vehicle density is very low compared to the rest of Asean. As borrowing costs are going down, availability of credit is going

up, banks are getting more competitive so it’s easier to loan. Down payments are also starting to go down. As the buying power goes up, the automotive market will continue to grow and that is necessary for the economy to grow,” Mills said.

“I think we’re in the right track, but we are just hoping the economic growth of the whole country becomes more balanced and more inclusive so that buying power can spread out,” he added.

Mills said the country’s lack of an efficient mass transport system would also fuel the continued growth of the local automotive industry in the years to come.

“No matter what you do, you cannot stop people from buying cars. After the house, and for many people, ahead of the house, cars are a top priority because of mobility.  The reason people buy cars is because there is no public transport,” he said.