Philippines 2018 new auto sales mark 1st drop in 7 years as inflation surges
MANILA, NNA – New automobile sales in the Philippines posted the first drop in seven years in 2018 as consumers were hit by a spike in inflation to a 10-year high amid rice supply shortages and higher fuel prices.
Total new vehicle sales fell 16 percent to 357,410 units in 2018, down from 425,673 units in 2017, data from the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA) released Monday showed.
Of the five automakers in the country with the highest numbers of units sold, only Nissan Motor Co. posted an increase in sales in 2018, up 40 percent.
The data also showed that Japanese firms continued to dominate, with Toyota Motor Corp. leading in terms of market share. The company had the highest number of units sold at 153,004, but that was down 17 percent from the previous year. Toyota’s market share was 42.8 percent in December 2018.
It was followed by Mitsubishi Motor Philippines Corp., which sold 67,512 units, down by 8 percent, with a market share of nearly 19 percent last month.
Nissan came third with 34,952 units sold, with a share of 9.7 percent, followed by Ford Motor Company Philippines, Inc. and Honda Cars Philippines, Inc. with 23,571 with and 23,294 units sold, respectively.
While month-on-month sales of light commercial vehicles posted a slight growth of 2.1% with 17,963 units, up from 17,594 units, light trucks sales dropped by 9.6% with 681 units, down from 753 units.
George Chua, president of Bayan Automotive Industries Corporation (BAIC), a subsidiary of Chinese automobile firm Beijing Automotive Industry Holding Co. Ltd., said high inflation, which prompted the central bank to raise interest rates by 175 basis points, dampened car sales in the country.
“Higher inflation [means] higher loan rates, making auto loans more expensive and less affordable,” Chua told NNA.
Chua, whose company saw a 3-percent drop in sales last year, noted the imposition of higher excise taxes on “most vehicles” contributed to a decline in sales. Higher taxes were imposed on more expensive cars, while lower-priced vehicles continue to be taxed at lower rates under the Philippines’ new taxation system called the Tax Reform for Acceleration and Inclusion (TRAIN) law.
The law also imposed additional taxes on fuels which led to an increase in prices of petroleum products, thus affecting people’s financial capacity to buy new cars, Chua added.
For December 2018, the industry data showed a month-on-month growth of 2.2 percent to 31,945 units sold, up from 31,258 units the previous month. Despite the decline in 2018, CAMPI remains confident car sales this year will rebound.
“The auto industry has been recovering since the second half of 2018. We are confident that the continued month-on-month positive sales growth rate during that period will be sustained in 2019,” Atty. Rommel Gutierrez, president of CAMPI, said in a statement. “With GDP per capita on a high level, more new vehicle models to be introduced and a strong economy, we welcome the new year with great excitement.”
While some Japanese automakers see positive growth for this year, some express concern about the impact of the high inflation on the auto industry.
Toyota Motor Corp. president Satoru Suzuki said he expects a single-digit growth in car sales this year while Mitsubishi Motors Corp. sees the auto industry sustaining or increasing its sales in 2019.
On the other hand, Honda Philippines president Noriyuki Takakura said the current inflation rate and decline in consumer confidence may affect car sales this year.
In terms of vehicle sales, the Philippines lagged behind other Southeast Asian economies as of November 2018. Data from the ASEAN Automotive Federation showed the Philippines ranked fourth with 324,465 units sold year-to-date, with Indonesia posting the highest sales at more than one million, followed by Thailand and Malaysia with 928,158 units and 550,526 units sold, respectively.