New vehicle sales in the Philippines continued to fall in December 2020, by over 18% to 27,596 units from 33,715 in the same month of the previous year, according to member wholesale data released jointly by the Chamber of Automotive Manufacturers of the Philippines Inc (CAMPI) and the Truck Manufacturers Association (TMA).

The Philippines was one of the countries in Asia worst hit by the COVID-19 pandemic, with GDP declining by 11.5% year-on-year in the third quarter following an almost 17% contraction in the second quarter. Economic activity in the fourth quarter had also been hampered by several strong typhoons causing severe flooding in key parts of the country, including metropolitan Manila.

In all of 2020, vehicle sales declined 39.5% to 223,793 units from 369,941 in 2019 with passenger car sales falling by over 36% to 69,638 units while commercial vehicle sales were down by almost 41% at 154,155 units.

This was the lowest level since 2013 and fell far short of the associations' revised forecast of 240,000 units for the year, despite aggressive promotional activity by dealers and low interest rates.

CAMPI president Rommel Gutierrez pointed to the 19% month-on-month sales increase in December as one of the few positive signs for the market, with the annualised decline also much lower than the 33% drop seen in November and the almost 40% fall for the whole of 2020.

In a separate report, the Association of Vehicle Importers and Distributors Inc (AVID) said its members, including Hyundai, Kia, GM and Subaru, also reported a 41% drop in combined sales to 51,719 units last year from 87,169 in 2019.

At the beginning of January, the government introduced a temporary tariff on fully imported vehicles to help protect the struggling local vehicle KD kit assembly industry although industry analysts believe the move will only damage the overall market as leading manufacturers also rely heavily on imports.

Imports' share of sales has increased steadily over the last 15 years following the implementation of the ASEAN free trade agreement, with shipments of completely built up (CBU) vehicles from Thailand and Indonesia surging.

Sales of imported vehicles, including those imported by CAMPI members, now account for around 70% of total vehicle sales in the country compared with 40% in 2006, with brands such as Ford now switching entirely to imports.