PEOPLE are complaining daily and even cursing traffic on Philippine roads, especially in the capital region. Blame it on the country’s robust economy, some would say, for progress has its price.
According to the Chamber of Automotive Manufacturers of the Philippines, Inc. (Campi) and the Truck Manufacturers Association (TMA), the local auto industry is upbeat that 2016 will be another banner year, as sales growth doubled in the second quarter. In May alone, vehicle sales rose to 30,317 units from 27,697 units a year ago.
Pointed as the “culprits” are the sustained low financing packages offered by banks and financing firms, along with the significant growth in middle-class income.
In its report last year, car trading website Carmudi Philippines revealed that 76 percent of Filipinos were planning to purchase a car in the next two years compared with 65 percent in other developing markets.
“Car financing has always been an option that consumers in the Philippines look at when buying a car,” said Subir Lohani, managing director of Carmudi Philippines, also noting that the demand for auto loans in the country just keeps on growing.
The online car agent said in the first quarter of 2015 alone, the growth in consumer loans was driven by a 26-percent rise in auto loans, which amounted to P244.61 billion.
“With the growing economy and increase in demand for passenger cars, we believe that more of our Filipino customers will seek assistance about financing options,” Lohani said. “As more banks and financial institutions offer attractive loan programs and require low down payments, we expect auto purchases through financing will continue to flourish in the country.”
In terms of consumer behavior, the Philippines has the highest level of vehicle upgrade, with 96 percent planning to upgrade their cars when they reach a more financial and stable condition, the Carmudi survey revealed.
With such a burgeoning market, local banks are racing to come up with different strategies, Carmudi noted, such as lower interest rates, attractive product offerings, and freebies to take a bigger bite of the market.
As more banks invest in consumer loans, consumer credit is also expected to increase and become more widely accessible to more Filipinos, Carmudi reported.
According to the Asean Automotive Federation, the Philippines is currently the third fastest-growing automotive market in Southeast Asia—next to Singapore, where car sales grew fastest at 66 percent in 2015, and Vietnam, with an automotive market acceleration of 57 percent.
Data from the regional automotive group showed Philippine vehicle sales for 2015 rose 23 percent.
But there’s a hitch, though. Some car industry executives admit that the country’s lack of efficient mass transport system is also fueling the continued growth of the local automotive industry.
They say people buy cars partly because there is no public transport. Oh well.