Pandemic to pull down vehicle sales

Vehicle sales are expected to go down this year as consumers now put more priority on essential goods as the end of the pandemic remains uncertain.

Fitch Solutions Country Risk and Industry Research believes that the fear created by COVID-19 will prompt consumers to hold off spending on non-essential goods, such as cars.

In a report, Fitch Solutions expects lower sales for both passenger and commercial vehicles in 2020.

However, it was quick to assure that over a longer time, the market will grow until the end of the decade.

According to the report, passenger vehicle sales will fall one percent in 2020, but will grow by an annual average of 6.8 percent from 2020–2029 as incomes rise and carownership rates rise from a low base.

Next year 2021, on the other hand offers promise of brisker market outlook due to delayed vehicle purchases, and the reopening of vehicle retail operations lead to a resumption of the expected expansion period in (passenger vehicle) sales.

The automotive sector outlook, published by Fitch Solutions, further projected overall new-vehicle sales growth in the Philippines of 0.4 percent to 371,456 units in 2020.

The report indicated that closures of nonessential business activity will negatively impact vehicle sales in first half of 2020, as physical automotive dealership activity grinds to a halt which will prevent consumers from making new purchases.

The modernization program for public utility vehicles that incentivizes the replacement of older jeepneys with environmentally-friendly light commercial vehicles, it said, is expected to face headwinds.

In light of the total ban on all forms of public transport… transport operators will face significant losses in revenue due to a collapse in commuter demand, thus prompting them to hold off on their planned fleet renewals.

But Fitch Solutions expects that the modernization program and the government infrastructure program may later on increase commercial vehicle demand.

Last year, vehicle sales rose 3.5 percent yearon-year to 369,941 units, based data obtained from Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA).

This represented a recovery from the 2018 industry slump, when sales fell 16 percent to 357,410 units.

For 2020, vehicle sales in the Philippines are expected to be flat in 2020 a downgrade of its previous estimate of 7.4 percent growth.