Philippines 2018. Honda is leader in a market fast moving up

Philippines Motorcycles

Philippines Motorcycles Market in 2018 kept the growing pace hitting the new record sales with over 1.4 million registrations despite the introduction of euro 3 emission level. Honda is the market leader, while Chinese brands hold near 30% of share and Bajaj Auto is on top of 3-wheeler segment.

Economic Environment

Philippines economic growth fell to a three-year low in 2018. Nevertheless, economic growth came in a notch stronger in Q4 than Q3, driven by improvements in the external sector and higher consumer spending. 

The economy is expected to expand at a solid pace in 2019. Household spending should be buoyed by falling inflation, robust remittances, and a tighter labor market. Moreover, fixed investment and government expenditures, while expected to moderate from 2018, will continue to support growth. Slower growth in China and the region at large, and the ongoing Sino-American trade spat remain the main risks to the outlook.

Motorcycles Market Environment

Compared to other Southeast Asian markets, the Philippine market is not yet saturated, providing many investment opportunities and having space for further development.

The growing Filipino middle class sees motorcycles as efficient and cost-effective for both personal and business needs. With easy access to credit, sales potential in the country is promising. Consumers are able to buy motorcycles at reasonable prices, with many investors specializing in semi-knocked down units. Local companies have also established technical licensing agreements with foreign brands to facilitate localization of inputs and technology transfer.

Actually, Japanese brands such as Honda, Kawasaki, Suzuki, Yamaha and the Taiwanese Kymco have production base not only for domestic sales, while Chinese and Indian brands are looking at the market with growing interest.

In addition, the government has put in place development programs such as the Comprehensive Motor Vehicle Development Program, aiming to promote investments, technology transfer, and industrial upgrading and already 28 local and foreign companies have availed of the incentives in this program through the assistance of BOI.

At the same time, the Philippine Economic Zone Authority (PEZA) also provides fiscal and non-fiscal incentives, including income tax holidays from 4 to 8 years, tax and duty exemptions.

The government is taking care of two-wheeler emission as well and since September 2018 all local motorcycle manufacturers, assemblers and importers must sell only Euro 3-compliant products.

Prior to registration of a motorcycle unit, manufacturers/importers are required to secure a Certificate of Conformity (COC) obtained from the DENR to be able to get a Certificate of Stock Report (CSR) from the Land Transportation Office (LTO). This policy would mean an additional cost for the production of motorcycles because it will need upgrades on the fuel systems and catalytic converters but will benefit the population in terms of emission.

Market Trend

In recent years, the market is growing constantly with a robust pace, doubling volumes from 2012 to 2018. and surging in seventh place in the Global ranking, ahead of Brazil and Taiwan and behind Thailand.

In the 2018 sales grew up 35% with 1.59 million two/three-wheeler sold. 

While the introduction of the new euro 3 standard since September represented a potential risk on sales volume, it seems the producers were able to manage the issue anticipating the introduction of models respecting the standard and the market accelerated in the Q4. 

The outlook for the 2019 is still positive, with a growth foreseen in the range of 6-9 percent.

Competitive Landscape

The five manufacturer having local production have a clear advantage in the domestic market, but they have to fight against an aggressive group of local brands.

Indeed, the leader is the Japanese Honda with over half a million sales in the 2018 and 32% of market share. In second place Yamaha with 289.000 ahead of Suzuki, Kawasaki and Kymco.

Chinese brands are estimated at a combined share of 30% while the Indian Bajaj Auto, operating in partnership with Kawasaki, is the leader in the Three Wheeler segment.






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