Automotive Aftermarket Parts and Services
Philippines
Overview
(In $ Millions)
2004 2005 2006 (estimated)
Total Market Size 2.04 billion 2.29 billion 2.50 billion
Total Local Production 2.90 billion 3.10 billion 3.30 billion
Total Exports 2.25 billion 2.33 billion 2.40 billion
Total Imports 1.39 billion 1.53 billion 1.60 billion
Imports from the U.S. 53 54 55
Note: 2004 and 2005 Imports and Exports are actual figures taken from National Statistics Office. Local production for 2004 and 2005 are estimates. 2006 figures are based on interviews and industry projections.
*Total Market Size is the sum of total imports and the difference of local production and total exports.
Motor vehicle sales in the Philippines grew by 2.3% in 2006 . 99,541 new motor vehicles units were sold compared to 2005’s 97,063 units. This is the highest sales figure for the industry in five years.
Information released by the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) shows that the commercial vehicle (CV) segment dominates total motor vehicle sales with 61% share. CV sales hit 61,062 units while passenger car sales had 38,479 units. While the Philippine motor vehicle industry is dominated by Japanese brands (Toyota, Honda, Mitsubishi, Nissan, Isuzu); U.S. brands (Ford and General Motors) have shown consistent growth in the market.
Given the decline in oil prices and the stronger peso, industry insiders project 2007 sales to breach the 100,000 mark it enjoyed before the 1997 Asian crisis. Car manufacturers are urging the government for greater enforcement of the ban against used vehicle imports, which, for the past few years, have been eating up a portion of the industry’s sales.
The automotive sector benefited greatly from the ASEAN Industrial Cooperation (AICO) scheme. According to the President of Chamber of Automotive Manufacturers of the Philippines (CAMPI), AICO has been beneficial to them as it allows multinational automotive firms to expand their market and attain economies of scale from the regional distribution of parts and completely knocked-down (CKD) vehicles. On the other hand, the regional integration and the Japan-Philippines Economic Partnership Agreement (JPEPA), which favors Asian auto manufacturers, would pose “challenges” to American firms. Integration among ASEAN member countries and the increasing number of bilateral pacts between the Philippines and other Asian countries translates to more competition. Ford Group Philippines has expressed their concern and said they would craft a long-term strategy that would consider these developments.
Best Products/Services
Average vehicle life in the country ranges from 10 to 15 years, hence the high potential for replacement parts. The market is dominated by low-end buyers (70% of the market), which strongly favor third party rather than OEM products.
The best prospects for U.S. aftermarket manufacturers include:
· Engine Replacement - engines and associated parts including hoses, belts, filters, transmission parts, radiators, etc. to keep aging vehicles on the road.
· Body Parts and Mechanical Replacement such as fenders, axles, clutches (predominantly a manual transmission market), brakes, brake pads, mufflers and exhaust systems.
· Auto Electric - Batteries, light bulbs, air conditioners and compressors.
· Oils and lubricants
· Aftermarket products for Japanese brands
· Demand for service equipment and accessories, such as brake lathes, is growing as inventory ages.
Opportunities
The January 2007 signing of the Biofuels Act (Republic Act 9367) is expected to boost the biofuel industry’s growth and increase actions to reduce environmental pollution. Ford Group Philippines invested $20 million to build a Flexible Fuel engine plant in the Philippines. Ford's Flexible Fuel engines are designed to operate on either conventional gasoline or a combination of gasoline and bio-ethanol fuels. These developments open up opportunities for suppliers of biofuel technology and other environment-friendly products for the automotive industry.
Resources
For additional information on the automotive industry, please refer to the Department of Transportation and Communication (DOTC) - www.dotc.gov.ph, Land Transportation Office (LTO) - www.lto.gov.ph and the Board of Investments (BOI) - www.boi.gov.ph
Aida L. Miranda, Sr. Commercial Specialist
U.S. Commercial Service, Philippines
Email: Aida.Miranda@mail.doc.gov , Manila.Office.Box@mail.doc.gov