Despite having one of the lowest car ownership rates in Southeast Asia, the Philippines is expected to register double-digit growth in car sales over the next three years on improved financing deals, according to the latest report of Business Monitor International (BMI) Research.
“The Philippines new passenger car market is on course for a third consecutive year of record sales, but we believe there is much more to come from a market where car ownership is way below its regional peers.
“Achieving this potential will be supported by increasingly attractive financing options, combined with a growing GDP per capita, which is set to double over the next decade, boosting consumer spending power,” BMI Research, a member of the FitchGroup, noted.
Car ownership, measured as cars per 1,000 people, is 8.4 in the Philippines, compared with 80 in China. The measure is used in more developed emerging markets.
This translates into one of the smallest new car markets in Southeast Asia. Despite having a larger population than many of its neighbors, the Philippines has a new car market of less than 100,000 units, much smaller than other SEA countries.
“We believe this puts the Philippines in a good position for sustained double-digit growth over the next three years. We expect this low base, coupled with supportive financial conditions, to result in 20.0-percent growth in car sales in 2015, followed by 15.0 percent in 2016 and 10.0 percent in 2017, an upgrade from our previous expectations for the next two years.
“Data from the Chamber of Automotive Manufacturers of the Philippines (Campi) shows car sales for the first eight months of the year were some 29.0 percent higher year-on-year, as August sales were the highest of the year so far,” according to BMI Research.
Campi President Rommel Gutierrez said the consistent growth in sales is largely due to attractive and flexible financing options and new models introduced by several brands.
“We believe this demand will remain resilient in 2016 even with a 0.25-percent increase in interest rates forecast by our Country Risk team for that year. While this hike poses a risk to demand for auto loans and financing, we believe the impact will be marginal, given that the current benchmark interest rate of 4.0 percent is still near the 3.5 percent historical low,” Gutierrez said.