The Philippine vehicle market expanded by just over 10% in 2005 to 97,063 units, according to data compiled by the Chamber of Automotive Manufacturers of the Philippines (CAMPI).
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Consumer confidence remained strong throughout the year, despite rising inflation resulting from high oil prices. The industry remains upbeat about the market’s prospects for 2006, with new products likely to continue to stimulate buying activity.
The economy grew by an average of around 5% last year, peaking at 6.6% in the third quarter before dropping back to an estimated 5% in the final quarter of the year. Most sectors of the economy performed strongly, underpinned by a return to growth in agricultural output. The service sector continued to be one of the best-performing sectors, and industrial output benefited from strong domestic demand and a pickup in export growth.
An anticipated rise in the value added tax (EVAT) rate in early 2006 from 10% to 12% also helped lift vehicle sales in the final months of 2005, as consumers brought purchases forward in anticipation of higher prices. The tax increase, which the government desperately needs as a revenue-raising exercise to balance its 2006 budget, is now widely expected to be made as early February – pending procedural formalities.
The market last year was driven higher by Toyota in particular and its newly launched range of IMV products. The company sold 18,534 Thai-made pickups and its derivatives, including the Fortuner SUV and Innova MPV. Combined, these models accounted for close to 19% of total new vehicle sales in the country. The locally-assembled Innova fared particularly well with 12,534 units sold during the year.
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By GlobalDataWith overall sales of 35,513 units, Toyota’s overall market share was 36.6% in 2005. Its market position was strongest in the passenger car segment, despite the success of its IMV range. Here, its market share was an enviable 40%, thanks in large part to the Vios and Corolla models.
But compared with last year, Toyota’s share of the car market has fallen significantly, reflecting its lack of B segment product to compete with the Honda Jazz and the Hyundai Getz models, both of which have proved popular since their launch in the early part of 2005. The expected launch of the Yaris this year will help address this hole in its product range.
Mitsubishi Motors was the second largest car company in the Philippines, though the gap with Toyota continues to widen. It sold 12,984 units last year, with the Adventure utility vehicle and the L300 van by far its two best-selling models. But the Adventure is expected to be phased out this year and the company’s market position is expected to come under significant pressure as a result. Toyota’s IMV-based models are expected to benefit most from the withdrawal of the Adventure.
Honda market share also slipped, mainly because of weaker demand for the Civic – which is due a major revision in the early part of this year. The company’s market share was just above 10%, with 9,797 units sold.
CAMPI president Elisabeth Lee said the industry is expecting further year of growth in 2006, with overall volumes expected to be in the region of 102,000 units. This would represent a growth rate of 5% compared with 2005. She added that stronger growth would be curtailed by the increase in the VAT rate.
Lee said passenger car sales will likely dip slightly this year to 34,500 units, from 35,631 units in 2005. The commercial vehicle segment is forecast to do better, with sales of 67,500 compared with last year’s 61,432 units. The economy is expected to continue to grow at a reasonably strong rate, although domestic consumption will be dampened by the VAT increase, ongoing high oil prices and high inflation.
GDP growth is widely forecast to be around 5% this year. ING Bank’s chief investment officer Paul Joseph Garcia backs this assessment, and adds that interest rates will likely remain at around current levels and that the peso is forecast to remain relatively stable throughout the year. The inflation outlook is expected to improve in the second half of 2006, once last year’s price rises are worked through and the impact of the VAT increases begins to fade.
Tony Pugliese
