Vehicle sales jump 15% in January

New vehicle sales jumped by an annual 15.5% in January amid the launch of new models and the expansion of electric vehicles (EVs) in the Philippines, an industry report showed.

A joint report by the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA) showed vehicle sales increased to 34,060 units in January from 29,499 units in the same month a year ago.

Month on month, vehicle sales declined by 13% from 39,153 units sold in December when demand is typically higher.

“We are starting 2024 with positive business and consumer confidence outlook. We see new model introductions and the expansion of electrified vehicle lineup especially in the hybrid electric vehicle segment, and more brands coming into the market,”  CAMPI President Rommel R. Gutierrez said in a statement.

He noted the introduction of new models and expansion of EVs reflect a “strong and vibrant” auto market.

However, Mr. Gutierrez said the outlook remains positive despite “inflation risks and imminent taxation of double cab pickup.”

The Philippine central bank sees inflation averaging 3.6% this year, amid upside risks linked to higher prices of transport, oil, food and power rates.

The Finance department is pushing for the removal of the excise tax exemption of double cab pickup trucks as part of the proposed Passive Income Financial Intermediary Taxation Act. Pickup trucks were exempted from excise tax under the Tax Reform for Acceleration and Inclusion law.

In January, commercial vehicle sales climbed by 16.5% to 25,614 from 21,993 in the same month a year ago. This accounted for 75.2% of the industry’s total sales.

Month on month, sales of commercial vehicles declined by 13.3% from 29,554 units sold in December.

Broken down, light commercial vehicle sales went up by 13.2% to 18,965, while Asian utility vehicle (AUV) sales rose by 28.4% to 5,892. Sales of light commercial vehicles and AUVs declined on a month-on-month basis by 14.2% and 10.2%, respectively.

Sales of light trucks increased by an annual 11.4% to 412 in January, but dropped by 25.6% month on month. Medium truck sales were up 20% year on year to 282, but 1.4% down from December.

Sales of heavy trucks surged by 43.2% year on year to 63 in January, and by 16.7% month on month.

Meanwhile, passenger car sales rose by an annual 12.5% to 8,446 units in January from 7,506 units a year ago. Month on month, sales of passenger cars fell by 12% from 9,599 units in December.

Sought for comment, ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said the vehicle sales growth in January reflected steady consumer demand.

“Growth was evident for both passenger cars and commercial vehicles as consumer demand proved resilient… Pent-up demand for vehicles after a more than 2-year period of hiatus helped drive demand for yet another month,” Mr. Mapa said in a Viber message.

However, he said bank data did not show a similar pickup in car loans “suggesting buyers are purchasing with cash or via other forms of financing.”

Mr. Mapa said the demand for vehicles are seen to remain “vibrant as economic growth remains robust.”

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the double-digit sales growth to the continued recovery in the local economy.

“[Sales growth] was more than twice faster than the country’s economic or GDP growth, which has been among the fastest growing in ASEAN (Association of Southeast Asian Nations) in recent years,” Mr. Ricafort said.

The Philippine economy grew by 5.6% in 2023, this was faster than the 5.2% in China, 5% in Vietnam, and 3.7% in Malaysia.

“Consistently, Philippine vehicle sales and production are among the fastest growing in ASEAN in recent months,” Mr. Ricafort added.

Data from the ASEAN Automotive Federation showed that the Philippines had the fastest sales growth among ASEAN countries as motor vehicle sales grew by 21.9% year on year to 429,807 in 2023.

The country also registered the fastest growth in motor vehicle production, as it expanded by 19.7% to 110,350 units last year.

Both analysts said that the month-on-month decline can be attributed to seasonal demand, as December numbers typically outpace January figures.

CAMPI gave a conservative sales forecast of 468,300 units for 2024, 9% up from the 429,807 units sold in 2023.

However, the 9^th Philippine International Motor Show (PIMS), which is scheduled to be held in the second half of the year, is expected to drive sales higher. “This means 2024 performance could well exceed CAMPI’s initial forecast and reach 500,000 units as motor shows generally boost sales,” the industry group said.

Mr. Ricafort said lower borrowing costs could spur greater demand for vehicles later this year.

“Further recovery of the economy would support further growth in vehicle sales, especially as possible Fed rate cuts later this year could be matched locally and lead to lower borrowing costs, which include vehicle loans, that could help spur greater demand,” he said.

In January, Toyota Motor Philippines Corp. remained the market leader with a 46.54% share as its sales rose by 19.8% to 16,093 units.

Mitsubishi Motors Philippines Corp. came in second with a 21% increase in sales to 6,085 units in January.

In third spot is Ford Motor Co. Phils., Inc. as sales jumped by 17% to 2,466 units.

Rounding out the top five were Nissan Philippines, Inc., which saw a 31.2% increase in sales to 2,463 units, and Suzuki Phils., Inc. whose sales inched up by 0.6% to 1,485 units. — By Justine Irish D. Tabile, Reporter