“The impact of the crisis is on the entry-level vehicles because banks are already starting to implement more stringent rules in car financing,” Froilan Dytianquin, assistant vice president for marketing of Mitsubishi Motors Philippines Corp., told reporters.

Entry-level cars are those with price tags of P600,000 or less apiece.The Mitsubishi official said local banks had become stricter in financing car purchases as the US financial woes stemmed from abuses in the sector, including the granting of loans to individuals who are not credit-worthy.

“Banks have more strenuous rules now. They look at your monthly billings of utilities and check if you pay regularly. They do more background investigation on your credit cards. Banks started implementing stricter measures starting the third quarter of this year when the US financial crisis broke out,” said Dytianquin.

He said about 70 percent of car purchases were financed through bank loans, a big percentage of which were entry-level cars. Buyers of entry-level cars are mostly those who do not have the financial capability to pay in cash.

“While banks do not actually deny loans, there are delays in the processing and buyers get discouraged and so car purchases get postponed,” said Dytianquin.

Mitsubishi has just regained its position as the second best-selling vehicle brand in the Philippines after losing out to Honda Cars Philippines Inc. in the past two years.

It ended the year with a 14-percent market share from 12.6 percent last year. Mitsubishi drew up a sales target of 18,000 units for the whole of 2008. The Japanese car assembler is looking at a flat growth next year, or 18,500 units.

“We cannot really project sales next year if it’s going to be a decline or growth because of the crisis. It would all depend on bank financing,” said Dytianquin.

Mitsubishi, however, remains upbeat with four launchings, including model upgrades on a sedan and a sports utility vehicle planned for next year. Two of the launching are scheduled within the first quarter of 2009.

Its best-selling model remains the Adventure, which is very popular among families of migrant Filipino workers. The L300 van, pickup Strada and the SUV Montero are also selling well.

By Elaine Ramos Alanguilan, Manila Standard Today

Data from the central bank showed that automobile loans (ALs) stood at P79.1 billion as of end-June, 3.3 percent higher than the loans extended for car purchases at the end of the first quarter.Automotive loans ratio to the banking industry’s total loan portfolio dipped to 3.4 percent in June from 3.3 percent in March.

The Bangko Sentral ng Pilipinas (BSP) did not report annual comparative data as it is applying a new package in financial reporting. Auto loans are now classified as car loans to individuals for consumption purposes against an earlier classification which combines car loans to individuals and corporate accounts.

BSP data showed that thrift banks dominated the car loan disbursements as they accounted for 58.1 percent of the auto loans in the second quarter. Universal and commercial banks cornered 40.4 percent of the loans, while non-banking financial institutions carried 1.5 percent of the car loans.

The central bank said soured car loans ratio against the total auto loans fell to 5.1 percent in the second quarter.

“The improvement in the ratio from the last quarter transpired as the 5.2 percent drop in non-performing ALs to P4.0 billion came with the growth of ALs,” the central bank said.

Non-performing car loans against the banking industry’s total non-performing loans portfolio stood at 3.0 percent from the first quarter’s 3.2 percent.

Data from the Chamber of Automotive Manufacturers of the Philippines showed that the local car industry sold 61,654 units as of end-June, a 13.6 percent rise from sales as of the same month in 2007. The domestic automotive industry hopes to sell 125,000 units this year.

GMANews.TV