Uber and Grab continue to buoy Cebu auto sales

CEBU, Philippines - Auto manufacturers bank on the sustained rise of car ownership in Cebu as ride-hailing apps Uber and Grab continue to buoy car sales in the province.

Toyota Talisay general manager Jose Jessaldo Layese said in an interview last week, during the opening of the company’s largest showroom in Talisay, that car sales in Cebu will continue to rise supported by the growing interest among young professionals to own a car.

"About 5.16 percent of entire sales of Toyota Philippines come from Cebu," he said.

"So the Cebu market is very significant," he added.

Layese also noted that on a monthly basis, close to 1,000 cars are sold in Cebu by the Japanese car maker.

Car booking apps Grab and Uber have contributed to the increased car sales, he said.

He cited that Vios, Avanza and Innova are among Toyota's models widely used as Grab and Uber cars nowadays.

Moreover, he also attributed the growing interest to own a car to the traffic problem in the metropolis, thus buying a car becomes a necessity.

"Our transport system is not as good as that of Singapore. That's why people see it necessary to own a vehicle," he said.

The proposed increase in excise tax for cars is also encouraging people to buy cars now before this proposal will be realized.

Presently he said the company is centering its marketing strategy to the BPO sector, which is a growing market considering its income potential.

Toyota Philippines has a target to produce around 60,000 vehicles at its Santa Rosa, Laguna plant this year.

In 2016 the company built 56,906 vehicles composed of 22,986 Toyota Innova and 33,920 Toyota Vios subcompacts. During the same period it sold 158,728 vehicles.

Another Japanese car maker, Nissan Philippines also noted that the entry of car sharing services fueled its high double-digit growth.

Nissan's Almera model in particular is leading the pack as its top line performer due to the participation of more Filipinos in the car sharing network, like Uber and Grab, said general manager Ramesh Narasimhan in an interview during the grand opening of Nissan's flagship showroom, the 5,000 square- meter Nissan Cebu Central operated by Autosynergy Inc., located at the North Reclamation Area.

Nissan recorded an all-time high growth of 98.9 percent in the sales of Almera model alone, disposing a total of 4,500 units.

Narasimhan however, said that while the trajectory growth brought by the entry of car sharing business in the Philippines is deemed temporary, he is banking on the strong economic prospects in the Philippines as the sustaining foundation to hold its promising prospects in the country.

"The Philippine economy is strong and will continue to grow. I don't see that changing in the short term," said Narasimhan explaining further that the car market in the Philippines offers huge space for growth despite the competition.

Compared to Japan and other countries in Asia, the Philippines is still considered at the infancy stage in car ownership ratio. For every one thousand Filipinos, only 37 own a car. Compared to Japan's 515 for every thousand of  Japanese.

Central Visayas is also one of the top performers in Nissan's regional operations. Its compounded sales grew by 124 percent. About eight percent of Nissan's overall sales is contributed by Central Visayas region.

Autosynergy Inc. president Brian Chua also expressed confidence of the long term growth path in car sales in Cebu in particular.

Chua specifically mentioned the robust real estate and construction sectors, as the obvious examples of vibrant economy in Cebu.

"Where there are business activities, this also mean sales growth for us," Chua said.

Last year, industry record revealed that car sales grew 24.6 percent to 359,572 units up from the 288,609 units sold in 2015. The sales total beat the 2016 industry target of 329,300 units by 12.36 percent.

The Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) and the Truck Manufacturers Association (TMA), indicated that vehicle sales surged 23 percent in the first quarter of 2017, delivering 94,026 units from 76,473 units in 2016.

Nissan Philippines, Inc. is a joint venture between Nissan Motor Company, Universal Motors Corporation and Yulon Philippines Investment Co. Ltd. for the import and distribution of Nissan automobiles, multi-purpose vehicles (MPV) and sport utility vehicles (SUV) in the Philippines. It entered the Philippine market in 1969.

Anticipated  slowdown

However, Toyota had expressed the possibility of a demand slowdown in the short-term as excise taxes for cars are proposed to be hiked.

A bill now filed in Congress has softened taxes planned to be imposed on cars.

The measure, proposed to be implemented in two stages – the first to take effect on January 1, 2018 and the next exactly a year after – seeks to levy on the first year as much as a 3 percent tax on vehicles costing P600,000 and below; P18,000 plus 30 percent of value exceeding P600,000 for vehicles costing more than P600,000 up to P1.1 million; P168,000 plus 50 percent of value exceeding P1.1 million for vehicles priced more than P1.1 million up to P2.1 million; P668,000 plus 80 percent of value exceeding P2.1 million for vehicles costing more than P2.1 million up to P3.1 million; and P1.468 million plus 90 percent of value exceeding P3.1 million for vehicles priced more than P3.1 million.

By January 1, 2019, the auto taxes, under the proposed measure, will rise further to 4 percent on vehicles priced P600,000 and below; P24,000 plus 40 percent on any amount over P600,000 on vehicles priced at more than P600,000 up to P1.1 million; P224,000 plus 60 percent on any amount over P1.1 million on vehicles priced at more than P1.1 million up to P2.1 million; P824,000 plus 100 percent of any amount over P2.1 million on vehicles priced at more than P2.1 million to P3.1 million; and P1.824 million plus 120 percent on any amount over P3.1 million on vehicles priced at more than P3.1 million.

Data from CAMPI and TMA showed that Philippine car sales hit 29,038 units in April, up 4.8 percent from a year earlier and down 20.6 percent from March 2017.

The latest tally brought four-month vehicle sales to 123,064 units, up 18.1 percent in same period last year.

CAMPI President Rommel R. Gutierrez earlier said that auto industry sales are expected to hit 440,000 to 450,000 in 2017.

In 2016, car companies sold a total of 359,572 units, surpassing the 370,000-target.

As of April, Toyota Philippines accounted for 43.42 percent of the market in terms of sales. It was followed by automaker Mitsubishi Motors Philippines which accounted for 17.76 percent, while Ford Motor Philippines had a market share at 8.44 percent.

Rounding up the top five in sales are Honda Cars Philippines (7.16 percent) and Isuzu Philippines (6.89 percent). (FREEMAN)