Vehicle sales are seen rising by double digits this year as supply comes back by the second quarter of the year, according to Tatsuya Natsume, president and general manager of Honda Cars Philippines Inc. (HCPI) at the sidelines of the launch Tuesday night of the new Honda City.

Other industry sources said the marketing committee of the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) and the Truck Manufacturers Association (TMA) agreed on a consensus of 9-percent growth this year. The forecast is subject for approval by both group’s executive committees (ex-com).

In a separate interview, Frank Nacua, a member of the excom of TMA, said he sees the industry growing 8 to 12 percent.

“The industry is very bullish of a recovery because the supply problems in Japan and Thailand are expected to be resolved. Hopefully, the supply and inventory would be stable by the second quarter. Although there would be a slight drop in the first quarter, a boom would follow,” Nacua said.

Nacua said for now demand is there but the brand and model may not be available.

Nacua said the threat of rising fuel prices may put a dent on the industry’s recovery this year.

He said another challenge is the continued influx of cheap used vehicles in one of the ports, but the good thing is that those which come are high-end vehicles.

According to Nacua, this year’s sales would continue to be fuelled by sport utility vehicles due to the popularity of pick-ups from Thailand and Japan as well as passenger vans of Toyota and Hyundai.

The Asian utility vehicle segment would still continue to grow, he said.

Nacua said passenger cars would have minimal growth.

Assemblers sold 141,616 units in 2011, down 4 percent from 147,488 units in 2010. Figures from the pure traders are yet to be released.

Malaya Business Insight

Tsikot.com Philippines

Car assembler Honda Cars Philippines Inc. wants to get back its top position in the country’s automotive market.

HCPI President Tatsuya Natsume said he has set plans to “reclaim our rightful position in the Philippine automotive industry.” The Philippine unit and its parent company, Honda Motors Japan, have been plagued with adversities and challenges, including several model recalls, earthquake and tsunami in northern Japan and the flooding of the Honda Thailand plant, the auto manufacturer’s main facility in Southeast Asia.

Natsume said, “We are pleased to announce that we are on our way to recovery. We [are now] able to resolve our parts supply problems. And this is really the good news as we are now ready to serve our customers and deliver those much-awaited Honda vehicles to them.”

The company resumed operations this month after it suspended local production on November 3 due to limited parts supply. HCPI assembles the Honda City and Honda Civic variants in its facility in Sta. Rosa, Laguna.

There is a four- to six-month waiting period for Honda car orders as a result of limited stock supply.

The HCPI executive further revealed that the company will import Honda models from Japan, as the Thai facility is still undergoing renovation. Orders of Jazz, Accord and the soon-to-be-launched Civic will temporarily come from Honda’s manufacturing plants in Japan.

The company will also add new models in its current lineup to boost product offerings, although Natsume declined to provide additional details.

HCPI is starting off its fortified game plan with Tuesday’s launch of the 2012 Honda City, one of the company’s best-selling models.

The new City has been given a fresh exterior with a new front grille, redesigned from front and rear bumpers, 15-inch alloy wheels and improved center console. The 1.3 manual-transmission variant is priced at P746,000; 1.3-automatic at P786,000 and the top-of-the-line 1.5-automatic at P836,000.

First launched in the Philippines in 1996, the Honda City originated the subcompact sedan or B-category in the country. It has sold approximately 68,000 units of the third-generation City in the country.

ABS-CBNNews.com

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The local vehicle and parts manufacturing sector has sought government help in crafting a strategic expansion plan that will allow it to achieve economies of scale and capture a significant share in the Association of Southeast Asian Nations (Asean) single market starting 2015.

“Auto and parts manufacturing in the Philippines is both viable and sustainable. An ambitious but realistic strategy can take it to the next level,” Feliciano Torres, chairman of the Philippine Automotive Competitiveness Council Inc. (PACCI), said in a statement.

“To achieve that, we must develop and sustain a public-private partnership (PPP) that creates reforms and public policies that support industry development and encourage investment,” Torres added.

Apart from generating new jobs and providing substantial export revenues to support public spending, he said these policies can also eliminate uncertainty associated with regional supply chain disruptions.

Torres cited as an example the ill-effects of the flooding in Thailand, a major auto production hub in the region. As a result of the flooding, parts manufacturers have been forced to slow down or entirely suspend production, including parts for auto manufacturers in the Philippines.

“We need to act quickly because there is a huge opportunity to grow the domestic vehicle and parts sectors and create jobs,” Torres said.

In a 2010 study by Cid Terosa of the school of economics of the University of Asia and the Pacific, results showed that a “P1 increase in consumption or investment spending for motor vehicles will result in P3.67 worth of additional output in the economy.”

More notably, a whopping P100 billion worth of investments in the domestic automotive manufacturing industry could generate at least 169,061 new jobs.

The study further revealed that the output multiplier of Philippine automotive manufacturing industry was greater than that of all the investment priority industries of the Department of Trade and Industry, namely tourism, business process outsourcing and information technology services, electronics, mining, housingand agribusiness.

“With renewed and strong government support, we are committed to do our part to invest in the Philippines and create tens of thousands of new jobs,” Torres said.

PACCI was established in 2009 to support the domestic auto and auto parts manufacturing industries and increase their overall future competitiveness. Its members include Ford Motor Co. Philippines, Honda Cars Philippines Inc., Isuzu Philippines Corp., Mitsubishi Motors Philippines Corp., Toyota Motor Philippines Corp., and parts maker Motor Vehicle Parts Manufacturing Association of the Philippines (MVMAP).

By Amy R. Remo, Philippine Daily Inquirer

Tsikot.com Philippines

Local vehicle importers expect sales to grow further next year on the back of strong consumer sentiment that will be sustained by faster economic growth.

The outlook, issued by the Association of Vehicle Importers and Distributors, Inc. (AVID), came as sales of foreign-built vehicles have fared better than their locally assembled counterparts.

“AVID is still firming up its forecast [for 2012] but it is optimistic to beat its 2011 market share,” it said in a statement.

“Against a backdrop of global and domestic economic challenges, [AVID is] confident that consumer sentiment will remain favorable while affirming its members’ brand resiliency and affinity with their customers… [through] a strong portfolio of products and services…,” it continued.

The group’s sales were up 4% to 23,012 units as of November. This compared to a 1.9% decline reported by the Chamber of Automotive Manufacturers of the Philippines, Inc.

“Our positive outlook is based on a stable and growing economy driven by sustained [migrant worker] remittances, managed inflation, and external stability,” the statement read.

AVID, which claims a market share of 15%, is a private non-stock, non-profit business association organized in the Philippines in July 2010, is composed of ten members which include British United Automobiles, Inc, CATS Motors, Inc., Focus Ventures, Inc, Foton Motor Phils, Hyundai Asia Resources, Inc, Jaguar Cars, Inc., Motor Image Pilipinas, Inc., PGA Cars, Inc., Scandinavian Motors Corporation, and The Covenant Car Company, Inc.

Business World Online

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Sales of foreign-built vehicles have fared better than their locally assembled counterparts as the , Inc. (AVID) reported on Monday the slight growth in the last 11 months thanks to a pickup in holiday spending.

Aggregate sales last month grew 4% to 23,012 units from 22,187 for the same period a year ago on improved business and consumer sentiment and better branding activities by member companies. In November alone, AVID’s six members posted a combined 43% growth of 2,672 units from 1,872 last year.

The Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI), on the other hand, reported earlier a 1.9% decline in 11-month sales amid another supply setback caused by the floods in Thailand that lasted from October until last month. Earlier, CAMPI members also suffered from similar disruptions caused by the earthquake and tsunami that struck Japan in March.

AVID has thus maintained its 15% market share against larger car companies mostly belonging to the chamber.

Passenger cars led AVID’s growth with a 79% rise in sales, while light commercial vehicles grew by 3%.

AVID did not provide a breakdown for the two market segments.

“Creative and steady brand building activities by AVID member companies contributed heavily to the better-than-industry November sales performance,” the statement read.

“Growth from the country’s sound macroeconomic fundamentals, robust overseas Filipino remittances, strong investment inflows, and higher consumer spending with the onset of the Christmas season are the key factors to an optimistic business outlook in the next six to 12 months,” it added.

Hyundai Asia Resources, Inc., led the pack with 18,922 vehicles sold for the 11-month period.

The Covenant Car Company, Inc., importer of American automotive brand Chevrolet, came in a distant second with 2,434 units, followed by CATS Motors, Inc., importer of the German Mercedes Benz, with 892 cars.

“Strong sales of AVID in November bode well for promising prospects in 2012 with expectations of global and domestic economic improvements, positive consumer outlook and sustained resiliency of AVID brands,” AVID President and Hyundai Motor Co.’s local division Chief Executive Officer Maria Fe Perez-Agudo said in a statement.

Eliza J. Diaz, Business World

Tsikot.com Philippines

For a car company that pays 30 per cent tariff on passenger vehicles but gets from the mother company subsidy in South Korea, Hyundai Asia Resources surprises competitors by slowly increasing its share of the market from 12 per cent when it started in 2001 to 20 per cent last year.

Maria Fe Perez-Agudo, who was in real estate before she joined Hyundai Asia Resources and rose steadily to become president and chief executive officer, admits that the firm does not make that much of a profit.

She told a press gathering that Hyundai has slowly risen to become the No. 3 largest auto company in the Philippines although it is the latest participant in the domestic market.

Hyundai is now the No. 3 carmaker in the world after Toyota and Ford of the United States.

Obviously, the company is able to subsidize the Philippine market since it makes so much from the worldwide operations, although Agudo said there are a few other countries which get price subsidy.

The strategy is to become No. 1 in the Philippines after the 30 percent tariff is completely hauled down to zero under the Asean-Korea free trade area.

The deceleration of tariff from 30 to 20 and zero by 2016 is a function of a trade agreement between the Philippines and South Korea, according to Agudo.

The company hardly uses domestic content in the 12 models used in the Philippines. It is basically a direct importer. Agudo estimates that only about 1 percent local content is used. The local parts are used in interiors.

Asked why it prefers to import in the face of a stiff tariff, Ms. Agudo explained that the Philippines, the automotive technology in the Philippines is still low by the standards of the mother company.

Importation also cuts costs as the company has a labor force of only 150. If it had engaged in assembly in the Philippines, payroll costs would have more than doubled.

The payroll savings may not be enough to cover the costs of subsidy and the amounts paid in tariff. In the long run, however, the company aims to be the tough and top automotive company in the Philippines without necessarily continuing the subsidy.

In the mind of Agudo, if Hyundai Asia can survive the 30 per cent tariff through subsidies, it can fight better if the tariff wall is hauled down to zero. The company will be in the same footing as the rest of the car makers in the Asean region.

Thereafter, the competition will be more intense. Agudo pointed out that the prices of Hyundai are competitive, in spite of the stiff tariff of 30 per cent. That could be a result of subsidy from the mother company.

The company is No. 1 in the one-liter market. There is a huge potential demand for the category coming from overseas workers and retiring Filipinos who come home to roost.

Hyundai is in intense competition in design for all the 12 models.

For example, she said, its Sonata, Hyundai’s top of the line in the Philippine market, is actively fighting with the Camry brand of Toyota. Both brands are in the 1.2 liter category. Hyundai’s Starex model is in direct competition with Toyota’s Hi-Ace.

Agudo sees temporary advantages over Toyota. She pointed out that the tsunami that devastated Japan and the floods that left Bangkok under water for a long time, will result in a shortage of supply.

On the other hand, South Korea has not been hit by a damaging natural any calamity. The preoccupation with improvement of technology is an additional advantage. Another is the proximity of the Philippines to South Korea. It takes three days to ship completely built-up units from South Korea to the Philippines. It takes a day or two longer to ship from Bangkok.

She does not find the other imported automobiles –Chevy of the United States, and Subaru of Japan, a threat. The two importers have a small share of two per cent each of the Philippine market.

According to Agudo, the market for cars could very well be flat next year. However, she sees an average growth of 15 per cent a year for five years probably as a result of what is seen as a final solution to the eurozone financial debacle.

Agudo pointed out that design is a key factor in fighting for a larger share of the domestic market. She said that the designs of the 12 models Hyundai sells in the Philippines are acceptable to the consumers as shown by increasing sales in spite of the 30 per cent tariff, tempered somewhat with subsidy.

Malaya Business Insight

Tsikot.com Philippines

The Association of Vehicle Importers and Distributors (AVID) has galvanized the automotive industry for a coherent and competition policy at the 2nd Thought Leadership Forum (TLF), “Advancing Competition Policy for Business Sustainability” at the Mandarin Oriental Manila.

“We believe in creating an environment of innovation as a platform for the sustainability of the automotive industry,” said Maria Fe Perez-Agudo, president of AVID.

“As we move towards a globalized world economy, barriers to competition must be taken down and not reinforced. The potential to grow in an open and competitive market environment should be encouraged. We cannot rely on the government alone. We must do our part to ensure that the automotive industry is constantly moving forward. The focus should be on market-based innovations, including manufacturing efficiency, productivity, product design, and engineering, after-sales service, and total customer experience,” Agudo said.

At the forum, experts shared their views on the topic:

Tomas V. Apacible, vice Chairman of the committee on trade and industry of the House of Representatives; Zenaida Maglaya, undersecretary of the Department of Trade and Industry; Dr. Rafaelita Aldaba, senior research fellow at the Philippine Institute for Development Studies (PIDS); Rodolfo Salalima, vice chairman of the International Telecommunication Union (ITU) Council Working Group for the Amendment of the ITU Constitution and Convention; and Lai-Lynn Barcenas, associate director of the Asian Institute of Management Policy Center.

“We are committed to create a level playing field of competition for all our members,” said Agudo. “Last year, we opened the discussion on competitiveness by supporting government initiatives aimed at open trade and liberalization. This year, we continue our efforts by educating the Filipino on the importance of a comprehensive competition policy. We cannot overstress how important this will be, not just to the automotive sector, but also to the whole Philippine industry. By being a champion of fair competition, the Philippines accepts the challenge to innovate and become a force on the international arena.”

The forum also addressed the following questions:

Are we ready for a comprehensive competition law in the Philippines?

What are the benefits of a competition law and policy to businesses and to consumers?

Will the proposed competition legislations respond to our goal of increased international competitiveness?

The general consensus showed that a coherent and comprehensive competition law and policy must be put in place in order to bring about:

Technical efficiency by producing more with less;

allocative efficiency, where producers and investors receive correct market signals that move them to invest in sectors that yield the highest returns;

Dynamic efficiency where firms strive to maintain their competitiveness by investing in Research and Development (R&D), marketing, and management to keep abreast with changes in technology, preferences and products;

Increased consumer welfare, as consumers can avail of the widest possible choices of better quality products at lower prices;

Market regulation, inducing production and consumption at optimal levels and at least cost;

Dynamic gains from innovation and flexibility, enabling the economy to better cope with the ever-changing business landscape; and

Equity, as reducing the economic power of certain sectors and providing the best products at the best prices intrinsically advances equity objectives.

AVID is a private non-stock, non-profit business association organized in the Philippines in July 2010, is composed of ten members which include British United Automobiles, Inc, CATS Motors, Inc., Focus Ventures, Inc, Foton Motor Phils, Hyundai Asia Resources, Inc, Jaguar Cars, Inc., Motor Image Pilipinas, Inc., PGA Cars, Inc., Scandinavian Motors Corporation, and The Covenant Car Company, Inc. AVID’s core mission is to help advance the automotive industry and the country’s overall economic growth through four areas of engagement:

1) Strategic Policy Thinking. AVID deliberately provides its thoughts and inputs to policy developments and directions that affect business and the economy.

2) Communications and Advocacy. AVID disseminates its position on economic, industry, and legislative issues and changes that impact on the automotive industry and the economy.

3) Knowledge Capital Building. AVID engages experts from Government and private organizations in dialogue and knowledge sharing forums in order to acquire a better understanding of the economic and industry environment and arrive at more informed business decision-making.

4) Partnership Strengthening. AVID commits to strengthening its partnerships with government, business, the academe, and other stakeholders to promote sustainable development and growth of the economy and the automotive industry.

The AVID Thought Leadership Forum aims at promoting a more engaging relationship between AVID and its stakeholders by actively enabling discussions on developments and issues in the automotive industry and the broader economic and investment environment.

It is AVID’s platform to engage the government, the business sector, the international community, and the academe in dialogues on matters that influence industry development and outlook and to expand the spectrum of its value proposition by bolstering knowledge and information capital.

By enabling ideas and engaging partners, AVID concretizes its contribution to the nation’s threshold of progressive and sustainable perspectives, which favor a more thoughtful and future-driven industry culture, and ultimately, economic success.

Malaya Business Insight

Tsikot.com Philippines

The first 11 months of the year coming to an end was not kind for the Philippine auto industry.

A joint report of the Chamber of Automotive Manufacturers of the Philippines (Campi) and the Truck Manufacturers Association (TMA) revealed that car sales fell by 1.9 percent to 131,242 units in the January-November period.

That number was below the 133,739 units sold in the same period last year, a notable drop attributed to the flooding that hit Thailand a few months ago.

Even sales last month went down, with only 12,090 units sold. In the same month in 2010, a total of 13,489 was sold.

According to Campi, the drop in sales was due to market seasonality and the initial impact of the Thailand flooding, which limits the supply of auto parts and some vehicle models.

Passenger car sales fell by 5.6 percent to 41,789 units in the January-November period, from 44,252 units in the same period in 2010.

Commercial car sales, meantime, dipped by 0.04 percent to 89,457 units a year ago.

Not only that, sales of light trucks also went down by 0.7 percent to 1,708 units as of November from 1,720 units in 2010.

“With the supply situation in Japan moving toward normalization, the auto industry is bracing itself for the possible impact of another natural disaster being experienced in Thailand,” the Campi report said.

“Floods have inundated several vehicle and parts manufacturing plants in Thailand, resulting in the shutdown of their operations,” it added.

Meantime, Toyota Motor Philippines Corp., as expected, stayed in top spot in total sales with sales in the first 11 months reaching 50,610 units for a 38.31 share of the market.

In second place was Mitsubishi Motors Philippines, which sold 30,175 units in the same period for a 21.94 percent market share.

Ford Motor Co. Philippines, Honda Cars Philippines Inc. and Isuzu Philippines Corp came in third, fourth and fifth, respectively.

Journal Online

Tsikot.com Philippines

Total motor vehicle sales in the 11-month period this year declined 1.9 percent to 131,242 units in the same period last year largely pulled down by the significant decline in November sales as the flooding in the Thailand took its toll on the local supply, the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) said.

In a report, CAMPI said the Thai flooding has caused a significant 10.4 percent decline in sales in November as sales in both passenger and commercial vehicles slump to 12,090 units from 13,489 units the previous month. Compared to November last year, the November 2011 sales dropped 3.3 percent.

Of the total sales, the passenger car segment suffered the biggest loss of 5.6 percent as sales hit only a total of 41,789 units from 44,252 units in the same 11-month period last year. Sales of passenger cars in November took a beating with 34.1 percent decrease versus November 2010 sales. The same decline was posted versus October 1011 sales.

The commercial vehicle segment also slightly declined 0.04 percent to 89,453 units from 89,487 units.

“The decline can be attributed to the initial effects of the supply problem in Thailand, which limited the availability of some models in the domestic market,” the CAMPI statement stated. Most of the local carplayers import their completely built up units and parts supplies from Thailand, the region’s automotive hub.

Except for light commercial vehicles (LCVs or the compact sports utility vehicles) and trucks and buses, all other vehicle categories suffered a decline in the January-November 2011 reckoning period.

LCVs managed to post a very modest 0.1 percent improvement to 53,752 units over 53,672 units in the January-November period this year. The LCVs already account for a hefty 59.98 percent of the total domestic vehicle market.

Sales of Asian utility vehicles (AUVs) declined 0.4 percent to 33,036 units from 33,180 units in the same 11 months last year. The LCVs account for 37.08 percent of the total domestic vehicle market. In November, however, LCV sales posted a hefty 21.7 percent increase to 5,741 units versus 4,718 units in November 2010 but it declined a negative 2 percent versus October 2011 sales.

The light trucks category posted a negative 0.7 percent in the January-November period as sales hit only 1,708 units from 1,720 units in the first 11 months of the year. This category also posted a 15.6 percent decrease compared to November 2010 sales of 160 units as November 2011 sales hit only 142 units.

Sales of trucks and buses registered a positive 4.7 percent increase to 958 units sold in the January-November period versus 915 units in the same period last year.

However, sales for this category in the November 2011 posted a sharp decline of 52.3 percent as the sector only sold 61 units versus 136 units in November 2011. It also posted a higher decline of 55.1 percent compared to October 2011 sales of 136 units.

In terms of ranking, Toyota Motor Philippines Corp. posted a 1.2 percent cline in sales for the first 11 months this year with sales of 50,610 units over 51,232 units in the same period last year. For the November month alone, TMPC sold 5,294 units reflecting a 15.1 percent improvement versus the previous month sales performance of 5,896 units.

Manila Bulletin Online

Tsikot.com Philippines

Bulk of the people from the auto industry expect the Philippines to be a 300,000-vehicle market by 2015, a review from the University of Asia as well as the Pacific (UA&P) on the auto trade showed.

The same view was shared by Trade and Trade Secretary Gregory L. Domingo but he said the 300,000-mark may be hit by 2016 especially since the per capita income of Filipinos is growing.

“Reaching a 300,000-unit sector demand by 2016 is very possible,” Domingo said noting that the per capita income has reached over $2,000. “Sales of cars have been proven to shoot up if per capita income exceeds $2,500,” he said.

According to the UA&P examine, the size in the country’s population plus rising per capita income can further stimulate car ownership.

Likewise, the examine noted that the other positive signs that can push the auto sales are the steady inflow of OFW remittances and rising agricultural incomes which boost purchasing capacity. In addition, the research noted attractive financing terms have led to higher automotive on availments especially by entry level buyers for their business or personal use. The country’s archipelagic make-up and improved infrastructure can also be a source of growth for auto ownership.

“Given the aforementioned growth factors, an increase while in the size of Philippine automotive manufacturing can be expected. In fact, a shared view among parts and components makers and most with the automotive manufacturers is a 300,000 car sector by year 2015,” the review noted.

The research has reiterated the importance of incentives in order to make manufacturers more economically competitive. “Solid incentives support from the government will make it possible for locally registered automotive manufacturers to be economically competitive. With incentives, manufacturers can sustain buying from local parts makers that will enable sharing of their research and development efforts, best practices in applying manufacturing know how to local parts makers,” the study stated.

The Department of Trade and Marketplace (DTI) is gauging the results of your UA&P review to decide whether to continue to implement the Motor Motor vehicle Development Plan (MVDP) or scrap it.

The analyze stated that a cost-benefit analysis from the proposed fiscal incentives show that for every peso of fiscal incentives granted to the industry, there is a positive return to the government. For instance, for CBU, exports assuming that the export credit per unit is $700, the benefit-to-cost ratio is 1.82.

The examine stated that under a regional sector growth, there are four new activities that can be considered as eligible for fiscal incentives.

The first is related to the establishment of local operations destined as a regional manufacturing base for an existing or new automotive model, the second is related to the establishment of local operations to enable the manufacture and assembly of CBU alternate energy using or hybrid car models, third is related to the establishment of local operations leading to the manufacture and or assembly of newly designed vehicles for passenger use, and fourth is related to the manufacture and assembly of parts and components.

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