‘DON’T BLAME TRAFFIC ON CAR VOLUME’
Isuzu Cebu Inc. general manager Steve Gingco says the country’s motorization rate is still low compared to other countries
Poor infrastructure should be blamed for worsening traffic jams in major cities, not the volume of cars that hit the road, an industry player said.
“It’s not the number of cars that is causing traffic. It is on the infrastructure side. In fact, we still need more cars to go around,” said Steve Gingco, general manager of Isuzu Cebu Inc. (ICI).
According to Gingco, the country still has a low motorization rate versus its 106 million population.
He said the country is still on its way to achieve a modest motorization rate, an indicator that reflects a high level of economic development and quality of life.
“Our motorization rate is still low, which means we still lack number of cars versus the population,” Gingco said.
The motorization rate is defined as the number of passenger cars per 1,000 inhabitants.
Based on the 2015 data from the International Organization of Motor Vehicle Manufacturers, the Philippines’ motorization rate is estimated at 38 vehicles for every 1,000 members of the population.
This figure is miles away from Malaysia’s 439:1,000, Thailand’s 228:1,000, Japan’s 609:1,000, Singapore’s 145:1,000 and Indonesia’s 87:1,000.
Puerto Rico had the highest motorization rate at 901:1,000 followed by the US at 821:1,000.
While the country is still on its way to improve its motorization rate, the government at the start of the year slapped additional taxes on vehicles.
The industry, according to Gingco, noted a slowdown in buying this year, as purchases were made before the implementation of the tax reform.
A drop of 10 percent in sales is projected this year but the industry is expected to rebound with a five-percent growth from 2019 onward, Gingco said.
Due to price considerations, he said buyers’ preferences have shifting toward smaller sedan vehicles, compact sports utility vehicles (SUV) and pick-up models.
Under the Tax Reform for Acvide celeration and Inclusion (Train) Law, electric vehicles and pickup trucks are now exempted from excise tax.
“With the Philippines still experiencing the onset of the motorization stage when per capita income reaches $3,000 starting in 2014, this trend of preference due to price affordability is consistent with the basic mobilization needs of the buyers and a view of value for money in buying SUVs,” said Gingco.
He added that the Philippine auto industry would still be one of the most vibrant in Southeast Asia due to the motorization needs and increasing per capita income of the population.
Current market prices of mini passenger cars range from P542,000 to P790,000 while prices of sub-compact cars range from P650,000 to P1 million.
Compact cars, on the other hand, are priced between P960,000 and P1.5 million while prices of medium-sized SUVs are fromP 1.3 million to P2 million. Pick-up vehicles range from P850,000 to P1.7 million.