Philippine auto industry breaches the 100,000th unit mark, posting its best figures in a decade
VEHICLE sales in the first 11 months of 2007 went up by almost a fifth compared to the same period in 2006, further boosting optimism that 2007 is the “best sales performance in a decade.”
A joint report of the Chamber of Automotive Manufacturers of the Phils. Inc. (Campi) and the Truck Manufacturers Association said car sales by the end of November is 18.3 percent higher than 2006 figures as local assemblers sold a total of 105,774.
Total 2006 sales stood at only 89,391 units. The 2007 performance is the first time automotive sales breached the 100,000 mark since sales plummeted in 1998 onward as a result of the Asian financial crisis in 1997.
The original sales target for 2007 was only 103,000 units and was revised to 105,000 units to 108,000 units until end-December.
“The industry will surpass its own target of 108,000 units for 2007 with only 2,226 units remaining to hit the target for December,” said Campi President Elizabeth Lee in a statement she issued in mid-December.
Moreover, monthly sales in 2007 averaged 9,615 units, reflecting a 17-percent growth. Lee was optimistic in mid-December that the industry will end the year with sales of over 110,000 units.
“This is the best sales performance in a decade,” Lee said.
Philippine auto industry sales rallied to 162,000 units in 1997 when the Asian financial crisis struck. Sales since then had declined and failed to reach the 100,000 mark.
Based on end-November figures, Toyota Motor Phils. Corp. continued to dominate the market with 39,843 units sold, followed by Honda Cars Phils. Inc. with 16,139 units sold. Third-placer Mitsubishi Motors Phils. Corp. sold 13,366 units, followed by Isuzu Phils. Corp. with 8,728 units. Hyundai Asia Resources Inc. sold 7,432 units, and Ford Group Phils. (including Mazda) posted 6,808 units.
Commercial vehicles accounted for the bulk of the industry’s sales with 68,401 units sold by end-November while passenger car sales hit 37,373 units during the period.
Lee, who is also the senior vice-president of the Universal Motors Corp., a Philippine assembler and distributor of Nissan vehicles, attributed the strong growth to several factors, including the strong peso, relatively stable market and a strong economy—which grew 7.1 percent in the first nine months.
“The largest lineup of model introductions and the final Supreme Court ruling that banned the sale of used imported vehicles also helped boost sales this year,” Lee said.
However, sales declined by 10.6 percent in November (selling only 3,686 units) against October. But overall, the passenger car segment sold a total of 37,373 units at end-November equivalent to 7.5-percent increase in the first 11 months.
Car assembly investments
Total investments in the local car assembly subsector in the country is likely to hit P100 billion as long as the market expansion program (MEP) is carried out, Lee said. In three years’ time, she said, the total value of the car assembly industry is set to reach P100 billion from the current P91 billion.
“The MEP aims to expand the completely knocked-down (CKD) facilities here, once the government has implemented it we expect a faster and healthier growth,” Lee said.
To date, CKD investment stood at P30 billion.
The MEP is expected to bring in more CKD investment facilities by lowering the manufacturing cost through lower electricity rates and labor cost, while lower excise tax is yet to be discussed.
“It doesn’t take too much to add to what we already have, since we already have plenty of CKD assemblers. Enticing the foreign car manufacturers to expand their facilities in the country is the key,” she said.
Lee explained that abroad cars have reached end of production (EOP) status when a model is discontinued to be replaced by a newer line. Foreign car manufacturers can send to the Philippines, for example, the production equipment for EOP models from Thailand. Those models can then still be manufactured here—and maybe even exported from the Philippines to countries with low-end car markets.
Lee added that, “Car makers would always say that Philippines has a small market base. However, if we are able to bring down the price of cars then we could tap a wider market, which include the middle class and the small and medium enterprises.”
But an industry source said that local assemblers have varied proposals to the government on how to make the auto industry grow. Lee said that if the country does not move forward now, Vietnam could surpass the Philippines in car manufacturing.
Lee also reported that since 2006, new car registration has been 60 percent higher than used-car registration.–Katrina Mennen A. Valdez, Manila Times
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