VEHICLE SALES increased by 20% in 2021, but the industry missed its full-year target as lockdowns weakened recovery momentum.

Data from the joint report of the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA) showed that total car sales reached 268,488 units in 2021, a fifth higher than the 223,793 units sold in 2020.

However, the industry missed its full-year sales target of 295,400 by 9%.

CAMPI-TMA members sold 85,260 passenger cars in 2021, rising by 22.4% from the 69,638 units sold in 2020.

Commercial vehicle sales stood at 183,228 units, up by 18.9% from 154,155 units sold in the prior year.

“Looking back at last year’s performance, the automotive industry has remained remarkably resilient with an overall growth of 20% compared with the same performance a year ago — that is no small feat indeed,” CAMPI President Rommel R. Gutierrez said in a statement on Wednesday.

Mr. Gutierrez said December saw the highest monthly sales performance since the pandemic began in March 2020. It was also the fourth straight month of growth.

Mobility curbs were further relaxed in December, with Metro Manila and most parts of the country under the more lenient Alert Level 2.

Vehicle sales inched up by 0.9% to 27,846 in December from 27,596 in the same month of 2020. Month-on-month sales jumped by 5.3%.

Passenger car sales contracted by 3.8% year on year to 8,447 units in December, while sales of commercial vehicles rose by 3.1% to 19,399.

Month on month, the sales of passenger cars and commercial vehicles rose by 2.95% and 6.3%, respectively.

In particular, Asian utility vehicle sales stood at 3,215 in December, 18.4% lower than the same month in 2020 and an 0.8% dip from November.

“The industry remains optimistic for a continued recovery this year from the COVID-19 pandemic downturn as progress on inoculation has provided hopes for a better outlook for the wider economy, but ‘business as usual’ is still unlikely as challenges remain at hand,” Mr. Gutierrez said.

Toyota Motors Philippines Corp. (TMP) still had the largest market share at 48.30%, after selling 129,667 vehicles.

Mitsubishi Motors Corp.’s market share stood at 13.98%, with 37,548 units sold.

Ford Motor Co. ranked third in terms of market share with 7.45%, after selling 20,005.

Ranked fourth and fifth are Nissan Philippines, Inc. and Suzuki Phils., Inc. with market shares of 7.30% and 7.22%, respectively.

The industry outlook may be dimmed by the ongoing surge in coronavirus infections, driven by the more transmissible Omicron variant.

In a note, ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said consumers may have smaller budgets for vehicle purchases in the near term as the Omicron variant is expected to disrupt business activity.

“Road vehicle sales is a key indicator that measures the ability of consumers to invest in durable equipment. Without a meaningful rise in capital goods spending, the overall economy will likely have to rely on already exhausted household consumption and to some extent stingy government spending to push growth to hit 7-9% this year,” Mr. Mapa said. — R.M.D.Ochave

By Revin Mikhael D. Ochave, Reporter

PROLONGED ECONOMIC stagnation is seen as one of the top risks faced by the Philippines in the next two years, according to a survey conducted by the World Economic Forum (WEF).

In its Global Risks Report, WEF said Philippine respondents for its Executive Opinion Survey (EOS) identified the top five risks facing the country: prolonged economic stagnation, digital inequality, extreme weather events, employment and livelihood crises, and failure of public infrastructure.

The EOS was conducted among 12,000 leaders across 124 economies between May and September 2021. Respondents were asked to pick the five risks that will pose a “critical threat to your country in the next two years.”

Economic stagnation means “near-zero or slow growth lasting for many years.” The Philippine economy exited recession in the second quarter of 2021, ending five consecutive quarters of contraction. Economic managers expected the economy to have grown by 5-5.5% in 2021.

The country faced strict lockdowns to curb the coronavirus disease 2019 (COVID-19) outbreak.

Sought for industry comment, British Chamber of Commerce Philippines Executive Director Chris Nelson said the country can avoid stagnation by “further liberalizing the economy” particularly with economic reforms such as amendments to the Retail Trade Liberalization Act, Foreign Investments Act, and Public Service Act.

“I think prolonged economic stagnation can be avoided. Growth can return if the right actions are taken. There’s always a risk but there is also always an opportunity. Everything can be mitigated and managed with the right action,” Mr. Nelson said via mobile phone interview. 

President Rodrigo R. Duterte recently signed Republic Act (RA) No. 11595 that amended RA No. 8762 or the Retail Trade Liberalization Act, which reduced the required paid-up capital for foreign retailers setting up shop in the country.

“The key is if the Philippines continues to take the right actions, certifying these bills, passing legislations, signing to the Regional Comprehensive Economic Partnership (RCEP), it will greatly assist the economy and mitigate these risks,” Mr. Nelson said.

Danilo C. Lachica, president of the Semiconductor and Electronics Industries in the Philippines, Inc., said via mobile phone message that the biggest factor to consider in terms of the risks faced by the country is the results of the May elections.

“The biggest factor to consider is how the elections will turn out. That could be the biggest risk if the wrong person is voted. If an honest and competent president is elected, then economic recovery and regaining global credibility will happen sooner,” Mr. Lachica said.

Philippine Chamber of Commerce and Industry (PCCI) President George T. Barcelon said via mobile phone message that the other risks are already being worked on by the government and the private sector.

“Out of the five risks, natural calamity is beyond our control but resiliency and continuity are human endeavors,” Mr. Barcelon said.

Makati Business Club Executive Director Francisco “Coco” Alcuaz, Jr. said in mobile phone message that the risks identified in the survey can be mitigated by accelerating vaccination and booster shots against COVID-19.

“The risk can be mitigated by speeding up vaccination and boosters, in large part by allowing the vaccination of five to 11 year olds and allowing boosters for 12 to 17 year olds. Also, by keeping people employed or ‘whole’ by giving businesses breaks or wage support to keep paying workers who can’t work,” Mr. Alcuaz said. 

“For the Philippines, we still have a large, young population and our overseas workers, but recovery and catch up will need massive investment, including investment from abroad,” he added. 

Mr. Alcuaz also said the country needs to fix its healthcare system to address COVID-19 surges and other future emergencies.

Meanwhile, WEF’s Global Risks Report showed that 84% of respondents were either concerned or worried about the global outlook amid the pandemic.

“With another spike in COVID-19 cases towards the end of 2021, the pandemic continues to stifle countries’ ability to facilitate a sustained recovery,” WEF said in the report.

Most respondents  also see the next three years to be characterized by either “consistent volatility and multiple surprises or fractured trajectories that will separate relative winners and losers.” 

“Economic challenges flowing from the pandemic persist. The outlook remains weak: at the time of writing, the global economy was expected to be 2.3% smaller by 2024 than it would have been without the pandemic,” WEF said.