Although the sale of replacement vehicles following two typhoons has impacted growth in the Philippines, data show that the market is outperforming its ASEAN neighbours with sales up by 29.5% in November. Other factors in the sales growth, according to the Chamber of Automotive Manufacturers of the Philippines (CAMPI), were dealer promotions and the timely arrival of stocks and support from banks, which have continued to provide vehicle financing at low rates. As a result, carmakers believe they can easily achieve, if not surpass, the industry sales target of 125,000 units this year, which would be comparable with last years sales. For the 11 months to November, sales were up 3.7% at 118,848 units. The industrys growth and its potential for further growth based on our forecast for average growth of at least 3% over the next five years, has prompted investment from major carmakers. Toyota Motor plans to increase production at its Philippines facility by 25% in 2010, which would see the plant reach its full capacity. According to Toyota Motor Philippines (TMP) vice president, Rommel Gutierrez, the plant is currently operating at 75% of its installed capacity, taking production for this year to around 22,000 units of the Versa and Innova models combined. For some suppliers, however, this is too little too late as Goodyear Philippines has closed its plant, which was proving unprofitable. The closure came at the cost of 500 jobs and 2mn units of output, while production for the country will be moved to other plants in the Asia Pacific region with lower operating costs.

The mixed outlook is reflected in the Philippines mid-table ranking in our Business Environment Ratings for the automotive industry in Asia Pacific. The Philippines ranks eighth on 54.6 from a possible 100, offering only average sales and production growth potential based on our five-year forecast. Although the market is dominated by Japanese brands, the competitive landscape is still far from saturated by carmakers and could still provide opportunities for new entrants, while the country also scores well for its regulatory environment. In terms of country risk, solid scores for long-term economic and political risk should assure investors.

Newcomers will be faced with the dominance of Toyota, however. Following record sales in 2008, including the countrys four best-selling models, the company retains a market share of 36.7% for the 11 months to November 2009. The real competition is for second place between Mitsubishi Motor Philippines (MMP), which climbed from third in 2008 to take the second spot and Honda Motor Philippines, which was knocked down to third. Over the 11-month period, the positions have stayed the same. Despite achieving growth of 16.8%, Honda was kept down by MMP, which saw its sales rise by 30.2%.