There is always hope

A confluence of natural events and government misadventures tampered with 2025

LET THE NEW YEAR begin. Before anything else, though, allow me to take this opportunity to wish everyone a meaningful and hopeful 2026. Though anxieties are running high, I am reasonably optimistic that the year ahead will bring some welcome respite from the body blows that pummeled the Philippine economy in the second half of 2025.

The past year started on a very confident note on the back of supply chain stabilization and rising consumer spending. It turned guarded in the third quarter due to disruptions wrought by natural calamities. And then things turned downright wobbly in the last quarter as significant irregularities in government spending surfaced. While the economic numbers tumbled, the country still fared better than other economies in the ASEAN region. As they say, we got knocked down, but not knocked out. The final numbers are yet to be reported but, in all likelihood, GDP will fall short of 5%, probably closer to Singapore’s higher-than-expected 4.8% growth rate that was buoyed by exports of semiconductors due to exceedingly strong artificial intelligence (AI)-related demand.

The Philippine automotive industry was counting on another banner year in 2025. To be sure, it will get one. Yearend estimates place auto industry sales between 490,000 to 495,000 vehicles, likely beating 2024 sales of 475,000 units, and chalking up a new record high. This includes sales of non-affiliated auto companies of the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI), Truck Manufacturers Association (TMA), and Association of Vehicle Importers and Distributors, Inc. (AVID). Having said that, the industry was looking to break the 500,000 sales level last year. It came within clear reach but will have to wait another day for that milestone to be achieved. To get to 500,000, the total sales volume in December should be 56,000 units, which is not likely.

So as we look ahead to 2026 and beyond, I decided to look back. Interestingly, I found an article from The Philippine STAR dated Dec. 27, 2015. The headline: “Philippines to become major car market by 2020.” It paraphrased Dante Santos, then Mitsubishi Motors Philippines Corp. (MMPC) First Vice-President and Corporate Secretary as saying, “The Philippines… will become an important automotive market growth area in the region as volume of vehicles sold is expected to zoom to 500,000 units by 2020.” At that time, the market had only broken the 300,000-unit mark. To project 67% growth in five years seemed pretty audacious. Yet, by 2017, the industry recorded sales of 473,000 units and was within 5% of that 500,000 mark. And then COVID happened and the figure was scaled back to 240,000 units — a seriously major setback in the country’s trek to motorization.

But the mobility needs of the country would not be denied. It seems that the projection of the MMPC executive to break 500,000 unit sales within five years was just reset to 2020 instead of 2015. Indeed, five years hence, the Philippine automotive market is on the verge of crossing 500,000. Therefore, the prospects for 2026 are tantalizing.

As mentioned, I have a reasonably optimistic outlook for the industry this year. Overall, I think that the first half of the year will be dominated by supply-side growth with the various auto brands resorting to new model introductions, marketing events, and sales promotions to keep units moving off the showroom floor. The second half, on the other hand, will be more demand-led, resulting from a regularization of government spending and a restoration of consumer confidence.

My source of optimism is that the Philippine auto market continues to expand despite the dizzying domestic economic tremors and even as sales in perennial ASEAN large markets — Thailand and Indonesia — continue to languish. To underscore this, I estimate average monthly vehicle sales in Q4 of 2025 to be around 42,000 units, higher than in any of the three quarters before it. Of course, seasonally, the last quarter usually sees the highest volume, but given the extraordinary downward macro pressures, the auto industry seems to have climbed the down staircase, so to speak. This fuels my constructive confidence in the outlook for the new year.

There is good reason to believe that the recent political brouhaha hounding the halls of government will not completely undermine the strong economic fundamentals of the country. Reforms in the bureaucracy are in the making, the 2026 Government Appropriations Act has been signed into law, inflationary pressures have stabilized, interest rates continue to lower, employment remains high and rural development is strong. All this on top of the fact that the business sector is wanting to do business. This is a fairly strong recipe for growth. Indeed, I would be so bold as to venture that the Philippine economy will grow faster this year than last.

Granted, the volume ramp-up for vehicles in the first quarter may be lukewarm versus the high base of 2025. I suspect the second quarter will be more vibrant with auto retailers dialing up their sales deals. In the third quarter, accelerated government spending from the first half will hopefully flow into the economy, leading to a rise in demand for vehicles, though the weather will remain a significant variable. Barring any further political turmoil, 2026 should see a strong sales finish, including the return of capital expenditure spending by corporate fleet accounts.

My only caveat: We will have a more steady social and political environment.

Some would say that the wind has been taken out of our sails; I say the winds of growth remain strong. We just need to reposition our sails so we can catch those winds and sail ahead to better days. This might be the year the Philippine automotive market finally breaks the 500,000 mark. I hope I do not jinx it.