Filipino buyers shift to smaller cars, HEVs as fuel prices soar

(Third of a series)

Some Filipinos continue to buy new cars despite higher fuel costs, data showed, but the skyrocketing prices might eventually drive interest toward a largely untapped segment of the market—hybrid electric vehicles or HEVs.

Rommel Ocampo, president of auto financing and leasing services company Toyota Financial Services Philippines (TFSPH), told the Inquirer that they are now seeing more loan applications for HEVs than before.

“There are a lot of inquiries and [loan] applications. [It’s a] better number of applications than before, back when you would only seldom hear or see people applying [a] hybrid [vehicle],” he said in an interview.

Diesel fuel is no longer as affordable as it used to be, especially in terms of being an alternative to gasoline.

But the increase in prices did not necessarily shift the demand in favor of gasoline-powered engines, said Ocampo, since many alternatives on the market are powered by the now more expensive diesel fuel.

The more notable development, he said, was the growing interest for HEVs, which switch between the use of electric energy and fuel, making it relatively more cost-efficient.

“This is the start [for] people to rethink their choices and consider hybrid engines,” said Ocampo, although hard figures were not immediately available.

The insight from TFSPH, which in 2021 financed five out of every 10 Toyota cars sold, provides a glimpse into a possible new direction for consumer preference in the face of rising fuel costs.

It remains to be seen if this greater interest, driven in part by higher fuel prices, would translate to actual HEV sales.

With other kinds of electric cars considered, only a little more than a thousand units were reportedly sold in the Philippines from 2010 to 2020.

Any impact of higher fuel costs on the demand for new cars is yet to be seen. But so far, sales keep growing.

“The ongoing fuel adjustments have had no effect on our sales. In fact, May was our best month this year,” said Manny Aligada, president of Kia Philippines, noting that the company even outgrew the pace of the industry in the first five months with a 29 percent increase.

Data from January to May this year showed that the industry grew by 14.6 percent, selling a total of 126,273 units as of May from 110,217 units in the same period in 2021, according to a joint report by Chamber of Automotive Manufacturers of the Philippines, Inc. (Campi) and Truck Manufacturers Association.

Campi targets to grow its sales by 17 percent this year to 336,000 units. When asked if fuel prices would affect their outlook, Rommel Gutierrez, president of Campi, told the Inquirer that their “projection remains unchanged.”

Nevertheless, Nicholas Mapa, senior economist at the ING Bank NV, told the Inquirer that the impact of higher fuel costs might be eventually reflected by a shift in demand to smaller cars.

“As for drip in sales due to high fuel, we could see slower demand for bigger SUVs (sports utility vehicles) while consumers switch to small economical sub compact [cars],” Mapa told the Inquirer.

In general, he said sales have still been “robust” despite being slightly lower than their performance prior the pandemic. He said car sales were expected to average 25,000 per month, with some of the demand being driven by pandemic-related reasons such as the need for social distancing. INQ

(To be continued)