Global car sales are likely to slow down this year, but the Philippine automotive industry is expected to buck the trend with more units sold so far this year following the reopening of the economy.
Dutch financial giant ING revised its global car market outlook for the year to a 0.5-percent dip from a growth of 4 percent to 6 percent earlier due to the ongoing supply chain disruptions brought about by Russia’s invasion of Ukraine. Demand is also down as people rethink their purchases amid high inflation.
The Netherlands-based firm’s Philippine office told the Inquirer, however, this would not be the case for the country.
11% sales growth
ING Bank Manila senior economist Nicholas Mapa projects an 11-percent growth in local automotive sales this year should the economy remain open.
“Onshore, road vehicle sales have been able to move away from these global trends due in large part to the reopening of the economy and policy support over the past few years,” he said.
In its latest report, ING said it “had hoped that the current year would deliver a continued recovery in global car sales beginning to bridge the gap with the prepandemic sales levels.” It also cited a global chip shortage, exacerbated by the conflict between Ukraine and Russia, the two largest exporters of krypton used in making chips for the automotive industry, among others.
Mapa said the increasing economic activities in the Philippines had translated to “meaningful incomes to households,” sparking demand for automobiles.
Commercial vehicles
He also noted the previous record low interest rate had helped attract buyers as this translated to cheaper loans.
The key policy interest rate had been kept at 2 percent from February 2021 until early this year before the Monetary Board decided to implement consecutive hikes amid surging inflation. It now stands at 3.25 percent, following a mammoth, off-cycle hike last July 14.
In the first half, car makers saw sales improve by 16.7 percent to 154,874 units from 132,767 units sold in the same period a year ago, according to a joint report by Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) and Truck Manufacturers Association.
These were mostly accounted for by commercial vehicle sales, which rose by 28.2 percent to 115,871 units. Passenger car sales, meanwhile, slipped by 8 percent to 39,003 units during the period.
Higher interest rates now, however, might induce “downside pressure on sales” moving forward, Mapa warned.
Campi president Rommel Gutierrez had said, however, that “the industry is optimistic of sustaining motor vehicle sales in its current prepandemic trendline in the coming months, albeit challenging amid the ongoing headwinds to the economic recovery, which continue to affect consumer confidence and overall employment.”
The industry group aims to increase sales by 17 percent to 336,000 units this year.