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Philippines Autos Report Q3 2010
Market |
Automotive and Parts |
Report Type |
Market Research |
Country |
Philippines |
Published |
7 July 2010 |
Number of Pages |
46 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
File Format |
- |
Just how keen Philippines is on becoming a major force in the ASEAN auto sector is evident from the fact that the countrys Board of Investment (BoI) has now established a committee to address the excise tax changes needed to support the industry. While we currently have a positive outlook for the industry in terms of both sales and production growth over the next five years, we believe that encouraging more investment in domestic production by supporting the supplier segment and fostering the growth of popular vehicles such as Asian Utility Vehicles (AUVs) through an improved tax structure, could prompt further upward revisions to our forecasts.
While the Philippines economy is rebounding reasonably well – GDP growth expected at 4.4% year-onyear (y-o-y), export markets are unlikely to cope so well. As such, although our core scenario envisions beginning of a recovery in production and exports from 2010, we remain cautious of any robust growth this year. We are currently forecasting production to grow by a nearly 8% y-o-y, mainly as exports pick up a growth of 11% y-o-y during 2010. However, risks to our production forecast for 2010 are tilted to the downside, in the event that the global economic downturn persists through that year.
From the point of view of demand, we see the strong 37.4% y-o-y increase in new vehicles sales, to 52,963 units in the first four months of this year, as a sign of improved consumer and businesses confidence. Although we expect the entrance of new players to the Philippines market to make for an interesting year, the overall markets performance this year could be impacted by the new Motor Vehicle Development Program (MVDP) – which could require vehicle assemblers to invest in local parts production in order to qualify for tax incentives. As such, we limit our sales growth forecast to just over 11% y-o-y, to 147,550 units, by the end of this year. Thereafter, we expect vehicle demand to follow the overall economic growth in the country, reaching nearly 201,600 units by the end of 2014.
The Philippines is one of the smallest of the ASEAN markets in output terms and one factor in this is a need to develop the local supplier network. However, Philippines request to retain tariffs on parts especially could have negative implications for the industrys development, if Japanese companies refuse to invest further in local operations. This is largely due to the large Japanese presence in the local industry.
Toyota Motor Philippines (TMP) led the market last year, achieving record sales on the back of its bestselling models. 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. Chinas Great Wall Motor arrived in the market in February and plans to launch six models, which will include the Wingle pick-up and Hover SUV, aimed at the countrys largest vehicle segment.
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