Middle class market growth to drive auto demand, sales

CEBU, Philippines - The growing number of Filipino middle class consumers is seen to drive auto demand in the coming years, translating to good car sales.

For Subir Lohani, managing director of online car dealer Carmudi Philippines, the growing buying power of households joining the middle class and the availability of new car options in the market are fueling the robust sales growth.

“In general, I believe it’s the middle class and GDP (gross domestic product) growth in the Philippines [that are supporting the industry],” he told The FREEMAN in a phone interview.

“There are more variants of vehicles,” he added. “Chinese brands are coming in [which means] more profit in the market.”

In a 2014 survey, global information firm Nielsen stated that although car ownership in most Southeast Asian markets is relatively low, consumers across the region have more inclination to car purchase.

It said 47 percent of Filipino households do not own a car, noting the Philippines was fifth lowest in car ownership globally. The survey, released in mid-2014, also indicated 76 percent of Filipinos intended to have a car in the next two years.

Lohani agreed to the outlook of the country’s auto industry group that total industry demand would increase this year.

In a statement, the Chamber of Automotive Manufacturers of the Philippines Inc and Truck Manufacturers Association released its 2015 sales target of 272,000 and projected a growth rate of at least 16 percent.

CAMPI said the group sold a total of 234,747 units in 2014, posting a 30 percent growth compared to sales a year ago. “This record performance was backed by robust sales in all categories,” it said.

The record sales that car makers posted were mainly attributed to strong demand for both passenger and commercial vehicles.

Effect of sales boom

But the recovery mode of auto sales is not that all good. As car sales boom is often a disturbing consequence of worsening traffic congestion in major Philippine cities like Cebu.

Traffic woes are getting worse as more and more people can now afford to buy a car. Adding to the congestion problem are the lenient enforcement of traffic rules, poorly maintained roads, families owning more than one car, etc.

Thus, the government and the industry must take a closer look on how to effectively regulate the effect of the booming car sales on the traffic situation in urban areas. — (FREEMAN)