Philippines Autos Report 2007

Although the 10% growth in Philippines new vehicle sales in 2005 may be out of reach in 2006, a recovery is still on the cards following a poor first half to the year. After a 3% decline in sales, the market rallied to register growth of 1.6% for the year to November 2006, and, according to BMI's recently published Philippines Automotives Report, the upswing is set to continue to ensure full-year growth. The report highlights a revision in BMI's sales forecast to 99,500 units, reflecting marginal growth of 1.95% year-on-year (y-o-y).

The government's export incentive programme is also proving effective, particularly in conjunction with the plans of individual manufacturers such as Toyota. In the parts segment alone, the Japanese company expects export revenues of US$530mn from parts produced in the Philippines, largely on the back of its international innovative multi-purpose vehicle (IMV) project. In terms of completely built units (CBUs), the government's target of between 100,000 and 150,000 units exported seems to be achievable, although BMI expects the full-year total for 2006 to be nearer the lower end of the scale, given that there are still very few manufacturers exporting from the Philippines.

The success of both Toyota's IMV project and its domestic business has secured the company the top spot in the market, with a share of 38.17% from sales of 34,118 units in the year to November 2006. The company should improve further on this in 2007, when it begins production of the high-volume Vios model, in place of the Camry, which will be imported from Thailand. Indeed, the top 10 is dominated by Japanese manufacturers, with Honda in second on 14%, Mitsubishi third on 12.48% and Isuzu fourth on 8.15%. The influence of the Japanese contingent has encouraged the Philippines government to approach its Japanese counterpart for support in implementing its alternative fuel drive.

Despite the presence of so many high-profile manufacturers, however, a decline in the country's CBU output potential over the next five years has slightly lowered the Philippines' composite score in BMI's Business Environment Ranking for the automotive industry in the Asia Pacific region. This has not adversely affected the country's ranking, as the movement of other markets has actually elevated the Philippines from 12th place in Q306 to 11th place for Q4. However, the market is slightly hampered by its relatively high vehicle ownership rate. Some 28.7% of the population own a car in the Philippines - the regional average is 16.45%.