New Transportation market report from Business Monitor International: "Philippines Autos Report Q1 2013"

Boston, MA -- (SBWire) -- 03/13/2013 --BMI Industry View

Two key themes that we expect to see in the Philippine autos market heading into 2013 are outperformance of the commercial vehicle segment over the passenger car sector (on the back of strong investment activity) and continued strength of private consumption. As such, we are bullish on vehicle sales in the country, forecasting growth of 10.1% year-on-year (y-o-y), to over 169,000 units, in 2013.

However, we are bearish on local production in Philippines and see very weak growth for 2013. In December 2012, US firm Ford Motor was preparing to close its vehicle assembly plant in the Philippines and consolidate its ASEAN production in Thailand and Malaysia. The plant, which opened in the mid-1990s, is the country's only exporter of new vehicles, shifting a total of 80,000 units to other ASEAN markets between 2002 and 2010.

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A bigger risk to companies looking to increase production or imports to the Philippines lies in the proposed new industry policy, which aims to bring total vehicle output to 67,200 units by 2016. Although the policy in itself seeks to encourage investment in local production rather than imports, there remains considerable uncertainty regarding the future course of the policy. We believe the government needs to adopt a more proactive approach if it is to see the auto production and component industry thrive.

As such, we forecast 2013 vehicle production to grow just 2.2%, to 60,700 units. Furthermore, BMI is forecasting average annual growth in domestic vehicle production of 2.1% over 2013-2017.

Despite the uncertain policy environment, the growth potential in the Philippines is strong enough to create a highly competitive vehicle segment. In 2012, Japanese Toyota Motor is expected to report its highest sales ever in Philippines. In the first 11 months of the year, the carmaker sold 58,890 vehicles, more than the full-year sales in 2011 and the 56,855 units sold in 2010.

In the same 11-month period, Mitsubishi Motors Philippine posted sales of 31,500 units and is targeting 43,000 units in 2013. In order to further heat up competition in the new vehicle market, France-based carmaker Peugeot and US-based General Motors Company (GM) are also each looking to expand their presence in the Philippines.

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