AUTO INDUSTRY NEWS

CAMPI reports auto sector recovery, forecasts for 2010

CAMPI reports auto sector recovery, forecasts for 2010 image

Text: Jude Morte / Photos: Brent Co | posted December 10, 2009 11:23

Improved, but still much to do

Just when you thought that the motoring industry wouldn't recover from the various calamities that rocked the country (and the occasional oil price hike at the latter part of the year), the Chamber of Automotive Manufacturers of the Philippines (CAMPI) recently delivered much welcome news.

The industry reported year-end positive growth (as of end November 2009), with a surprising 2.3% increase in unit sales and ending this year with more than 127,000 unit sales nationwide. "If you remember, at the start of the year, we were hoping for a flat growth as the worst case scenario. So it looks like we're not only hitting our target, we are going to exceed it," said CAMPI president Elizabeth Lee.

According to the CAMPI president, the fast growth - registered at the latter part of the year was attributed to the following: 1) Replacement vehicle sales, with tropical storm "Ondoy" leaving many motorists' vehicles irreparable; 2) Strong remittances from overseas Filipino workers, which were largely unscathed by news of Dubai's recently unearthed debt woes; and 3) Aggressive promotions by dealers and attractive financial schemes by banks.

The commercial vehicle segment posted a 5.3% sales growth from January-November, logging 77,111 units as compared to 73,230 units in the same period last year. Registering the strongest growth in the segment during the aforementioned time period was the light commercial vehicle or LCV faction (pick-ups, SUVs and vans) at 13.9%, or 47,383 units. In contrast 41,611 LCVs were sold last year, in the same time frame. Passenger car sales likewise improved by one percentage point, reaching 41,737 units in the first 11 months of 2009. On the other hand 41,334 passenger cars were sold from January to November 2008. Going into 2010, Lee said the industry was "upbeat," even forecasting a four percent sales growth (roughly 132,000 units), to be driven by election spending.

However, Lee cautioned that despite the good news, the industry has a long way to go. CAMPI and Lee stated that they want the industry to attain a benchmark (or exceed altogether) of 200,000 units of total new vehicle registrations. "There is no question that the importation of second hand used vehicles stunted the growth of the formal auto industry. At a time when the ban on second-hand imported vehicles (via Executive Order 156 or EO 156) was born in 2002, total registrations were already over 198,000 units. If these were the total sales from the formal industry, we would have bounced back from the crisis as early as eight years ago. Unfortunately, formal auto sales were only 43% of total vehicles being registered. If the ban were fully implemented since 2002 when EO 156 was put in place seven years ago, the auto industry would be in a much better position to compete especially amid a zero tariff regime."

Although CAMPI claims that the share of the formal auto sector has improved - most especially when the Supreme Court ruled on the ban with finality in 2007 - the organization still says that Philippine auto total sales volume is still low, relative to its ASEAN neighbors. Ms. Lee stated in a recent press conference that the ban on used car imports must be strictly and fully implemented in order for much improved total sales positive growth. "There are threefold benefits of the full implementation of the ban - 1) It is immediate. It does not need to go through the lengthy legislative process; 2) It can have a large impact on sales. Imagine if vehicles bought from the informal market could not be registered. This would be a strong deterrent for prospective buyers; and 3) The requirement for a larger / significant domestic market to justify sustaining assembly operations in the country as well as increasing investments can be properly attained, or at least seriously considered."

Lastly, Ms. Lee even made a call to those who see the highest for of public office in the country to include the auto industry as a whole in their plans. She said that the auto industry must be take seriously, as its impact on other businesses is untold. "The economic role and contribution of the auto industry in the Philippine economy is large. How fast the auto industry grows can and will affect the growth of upstream industries as well as downstream industries to include finance, energy, repair services, aftermarket services, among other retail businesses linked to automotive. The sum of total jobs in the Philippine economy that are related to the auto industry, from assembly, manufacture, to include the parts & components industry, to the sale of vehicles down the line is considerable.