Market Intelligence
Automotive Philippines South Asia Market Research

Philippines Automotive Market

The Philippine automotive industry consists of three major markets: motor vehicles, motor vehicle parts, and component manufacturing. There are five passenger car assemblers and 22 commercial vehicle assemblers in the country with a combined capacity of 150,000 units per year.  In 2018, 79,763 units were produced by the industry. In 2017, parts exports accounted for $3.6 billion while imports accounted for $6.6 billion. Sales performance of brand new vehicles in 2019 showed 3.7% minimal growth, with 416,637 units sold. Passenger vehicles accounted for 31% of total vehicle sales for 2019. Commercial vehicles (SUVs, multi-purpose vehicles, pickups, vans, buses and trucks) comprised the remaining 69%.  With the initiation of the Government`s $180 billion “Build Build Build” infrastructure initiative program, need has increased for commercial vehicles.

Japanese brands capture close to 80% market share, followed by Korean brands due to local manufacturing, brand recognition, and parts availability. Chinese brands are slowly grabbing a share of the market through economic options. In the premium car market, patronized by a very small portion of the population, European vehicles are preferred. U.S. automakers capture only about 7-8% of the market with combined sales of 25,420 units in 2019, mostly made and exported from Thailand with the exception of premium lines that are mostly exported from North America/United States. 

Filipinos have preference for an SUV given large family sizes, frequent flooding, and challenging road conditions. Sedans are also best-sellers given price and parking space conditions. Pick-up trucks are also popular and are exempted from excise taxes. Filipinos often buy vehicles because of the unreliable public transportation options.

As the automotive and auto parts manufacturing industries are included in the Government’s Investments Priority Plan, local manufacturers can qualify for financial incentives. Japanese firms  effectively tapped into such incentives to capture market share. Under the Comprehensive Automotive Resurgence Strategy (CARS) (EO 182) $540 million was allocated over 6 years to the production of three vehicle models, two of which were Japanese. The final factor in price difference would be the 0% tariff rate ASEAN countries enjoy in comparison to the 20-30% rate U.S. vehicles are subjected to.  Without a doubt, this is a very challenging market.  U.S. firms interested in the passenger vehicle market would have to aim for a small segment of the population through effective marketing and luxury models with clear brand recognition and status. 

The Public Utility Vehicle Modernization Program, a government-backed initiative, calls for the phase out of 15 year old jeepneys to be replaced with electric vehicles (EVs) or Euro 4 compliant modern jeepneys. This is expected to boost demand for light commercial vehicles within 2019-2028 forecast period and may be an opportunity for U.S. firms. Although the Philippine adopts the UN-ECE automotive standards, it has continued to accept the U.S. FMVSS standards, making U.S. made vehicles acceptable in the market. 

There is a niche market for U.S. automobiles, parts, and automotive aftermarket products. The average vehicle lifespan in the Philippines is 15 years, and often longer. In 2018, there were 4.4 million registered passenger and commercial vehicles, representing a large market for aftermarket products such as chemicals, equipment, accessories, and replacement and maintenance parts. While this market is also very competitive, U.S. vehicles in the country still need repair. This includes U.S. vehicles purchased before the rise of Japan and Korea that need U.S. parts. U.S. firms offering innovative and reasonably priced products do have a chance in this market. 

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