Philippines Motorcycles Market was heavily hit by the Covid19 spread which forced plants and dealerships to shutdown from mid March, reversing in negative the growing trend. Q1 sales fell down 14% but the rest of the year will be very hard with activities re-starting in mid May.
Covid19 forced plants and dealerships shutdown since mid March
The start of 2020 have been not bad for the two-wheeler market which probably was running to hit a new all time record. Sales grew up in Jan-Feb by 8% before the Covid19 spread forced the government to impose the shutdown to plants and distributors, with sales in March dropped by over 55%.
The first quarter ended with a total of 540.000 sales, down 14%.
Data for Q2 are expected to be dramatic, with April down over 95% and a slow recover from mid May. Our projection for the entire year is at 1.6 million units, down 0.8 million or 33.7%, with The Philippines resulting the most affected country among ASEAN by COvid19 effects.
In 2019 the two-wheeler market hit the 8th all time record in a row
Despite a slow start of the year, during the 2019 the consumer demand for two wheeler was strong and the year ended with a new – almost sensational – sales record with 2.44 million sales (including rickshaw a commercial tricycles), up 10.9% from the previous year.
It was established the new all-time sales record, the 8th in a row, confirming the crucial rule of the market within the global motorcycles chessboard. In the 2019 the country was the 5th largest in the World and was the fastest growing between 2012 and 2019.
The six 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 0.6 million sales in the 2019 holding over one-third of market share. In second place Yamaha is not far and is ahead of Suzuki, Kawasaki and Kymco.
Chinese brands are estimated at a combined share of 10% while the Indian Bajaj Auto, operating in partnership with Kawasaki, is the leader in the Three Wheeler segment.
KTM, which has established in the country a 7.000 uts/year production plant, is the leader among the premium brands averaging 300 sales per month, while BMW is fast growing and in the 2019 hit the new record outpacing the 1.000 units, first time.
The electric scooter segment is still not existing.
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. Since 2017, KTM is producing in the Laguna plant with 2018 production at 7.000 units, 60% for export.
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.