"Philippines Autos Report Q2 2013" Published

Two key themes that we expect to see in the Philippine autos market heading into 2013 are the likely outperformance of sales in the commercial vehicle segment over the passenger car segment (on the back of strong investment activity) and continued strength of private consumption.

The latest surge in January 2013 sales marks a good start to the year and sees our bullish view on Philippines auto sales playing out nicely. BMI has long maintained a bullish outlook on domestic vehicle sales despite our less sanguine outlook on local production in the country, due to a lack of a comprehensive auto policy by the government.

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We are happy to maintain our bullish forecast for Philippines auto sales to grow 10.1% in 2013, to hit 172,000 units. Among the sub-segments, we forecast passenger car sales to grow 8.2%, to hit 52,000 units and CV sales to grow 11%, to hit 120,000 units.

According to the Philippine Automotive Competitiveness Council Inc (PACCI), a nationwide industry strategy will be launched in the next three months to boost vehicle manufacturing in the country. The Board of Investments, an agency of the Department of Trade and Industry, will be crafting the policy known as the National Automotive Industry Strategy (NAMIS). The government support policy will allow carmakers to boost their current 36% plant utilisation rate to 100% in the next two years.

We have taken into account the planned production increases of these automakers and revised up our fiveyear auto production forecast. While we previously forecast an annual average growth of 2.3% in vehicle production over the 2013-2016 period, BMI has now upgraded its forecast to an annual average growth of 12% over the 2013-2017 period, to hit 100,000 units by 2017.

Market leader Toyota Motor Philippines (TMP) retained its lead in the market in 2012, occupying a 41.7% share of market. For the first two months of 2013, the firm continued to lead the market with a share of 39.9% of total auto sales which came in at 26,588 units.

Mitsubishi Motors Philippines (MMPC), in second, lagged the leader by some way with 2012 sales of 34,915 units, giving it a 22.3% market share. In 2013, it is targeting sales of 43,000 units. MMPC had a market share of 24.1% over the first two months of 2013.

The Philippine motorbike sector is experiencing mixed fortunes. Japanese company Suzuki Motor's Philippines subsidiary launched its new motorcycle manufacturing plant in the Carmelray Industrial Park in Laguna in November 2012. However, its compatriot Honda Motor has put on hold plans to expand its motorcycle plant in Batangas, with Generoso Paralisan, assistant vice president for external affairs at Honda Philippines, stating 'the market is not growing as expected'. The firm was hoping to expand production at its motorcycle plant from 400,000 units to 600,000 units annually.

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