Vehicle sales slip in July as rains dampen demand

New vehicle sales declined in July, as bad weather disrupted retail operations, a joint report by the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA) showed.

The CAMPI-TMA report showed new vehicle sales fell by 2.6% to 38,295 units in July from 39,331 units in the same month a year ago.

Month on month, car sales also slipped by 5.4% from 40,483 units sold in June.

CAMPI President Rommel R. Gutierrez attributed the decline in sales to weather-related disruptions, which affected retail operations.

In July, passenger car sales slumped by 25.7% to 8,120 from 10,923 units sold in the same month a year ago.

Month on month, sales jumped by 17.31% from 6,922 units sold in June.

On the other hand, sales of commercial vehicles, which accounted for 78.8% of July sales, increased by 6.2% to 30,175 from 28,408 units a year ago. Month on month, sales declined by 10.1% from 33,561 units in June.

Broken down, sales of light commercial vehicle sales grew by 8% year on year to 22,523 units in July, while sales of Asian utility vehicles (AUV) inched up by 0.7% to 6,664.

Month on month, sales of light commercial vehicles and AUVs dropped  11.7% and 7.4%, respectively.

Sales of light-duty trucks and buses went up by 5.6% year on year to 607 units in July, while sales of medium and large trucks increased by 1% and 21.5% to 302 and 79 units, respectively.

Month on month, sales of light, medium, and heavy trucks increased by 14.1%, 11.4%, and 36.2%, respectively.

CAMPI and TMA expressed confidence the industry will hit its 500,000 full-year sales target, driven by new model launches, promotional campaigns, and improving consumer sentiment.

“The industry’s continued growth, particularly in commercial segments, reflects strong market fundamentals and the agility of our members in navigating short-term challenges,” Mr. Gutierrez said.

“We are optimistic that the momentum will carry forward into the second half of the year,” he added.

Mr. Gutierrez said that the sales momentum is being supported by “strong commercial vehicle demand and signs of recovery in the passenger car segment.”

For the January-to-July period, new vehicle sales increased by 1.4% to 269,207 units from 265,610 units a year ago.

Commercial vehicle sales grew by 10.6% to 215,440 units from 194,812 units in the same period a year ago.

This offset the 24.1% decline in passenger car sales to 53,767 in the first seven months from 70,798 in the same period last year.

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said that the increase in commercial vehicle sales reflect the demand shift among customers.

“Businesses and transport operators continue to invest, while consumer purchases are being postponed amid economic uncertainty,” he said in a Viber message.

Mr. Rivera said that the industry’s full-year sales target of 500,000 is achievable, assuming there is continued infrastructure spending and new model launches.

“However, sustained passenger car recovery will require improving affordability, credit terms, and consumer confidence,” he added.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said that July car sales show that automobiles are no longer at the forefront of consumers’ discretionary spending despite stronger consumption trends.

“While the 500,000-unit target is still within reach, but we still consider various factors, including the potential impact of holiday spending,” he said in a Viber message.

“Notably, despite the uptick in overall consumption compared to last year paired with election spending, vehicle sales have shown a quite muted response,” he added.

Rizal Commercial Banking Corp.  Chief Economist Michael L. Ricafort said that the latest sales report reflected buyers’ preference for sport utility vehicles and vehicles with higher elevation or clearance in view of the rainy season.

He also said that the July data may have reflected “some frontloading of purchases for pickup trucks before higher tax rates take effect.”

Pickup trucks were previously given special tax treatment under the Tax Reform for Acceleration and Inclusion law.

President Ferdinand R. Marcos, Jr. earlier this year signed into law the Capital Markets Efficiency Promotion Act, which in part reimposes the excise tax on pickup trucks.

Meanwhile, Mr. Ricafort said that electrified vehicles (EVs), including hybrid vehicles, have become an additional source of demand.

“These become more responsive to customer ever-changing requirements and preferences… with better terms and prices,” he added.

According to the report, the industry sold 2,707 EV units in July, down by 11.4% from the 3,057 units sold in June.

For the first seven months, EV sales stood at 16,195 units, accounting for 6.02% of the industry’s total sales.

Toyota Motor Philippines Corp. remained the market leader, with sales of 129,334 units in the January-to-July period, up 5.4% from 122,730 units a year ago. It accounted for 48.04% of the market share.

Mitsubishi Motors Philippines Corp. ranked second with a market share of 19.01% after posting a 1.1% increase in sales to 51,167 units in the first seven months from 50,599 units a year ago.

In third spot was Nissan Philippines, Inc., even as sales dropped by 13.8% to 13,629. It had a market share of 5.06%.

Rounding out the top five were Ford Motor Co. Phils., Inc. which saw a 20.8% drop in sales to 13,323, and Suzuki Phils., Inc., which saw a 9.8% increase in sales to 12,622 units. — Justine Irish D. Tabile, Reporter