Philippines Motorcycles market reported a partial recovery during the Q3, after being the worst performing worldwide in the first half. Total sales in the first three quarters of the 2020 have been near 1.25 million, down a huge 32.2%, projecting the highest annual lost in the history for the market.
Motorcycles Market Trend & Outlook
The start of 2020 have been not bad for the two-wheeler market which probably was running to hit a new all time record, before the effects of Covid19 on local economy.
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 62.5%, ending the first quarter ended with a total of 480.000 sales (-24.3%).
The second quarter was a nightmare for the industry, with no sales reported in April, due to the complete shutdown of commercial activities, and the slow recovery reported in May and June, ending the first half 2020 with 641.478 sales, down 47.8%, one of the worst performance worldwide in this fraction of the year.
In the third quarter the environment improved with sales year on year up from August and total quarter sales at 820.0175 units (-2.2%).
Total sales in the first three quarters of the 2020 have been near 1.25 million, down a huge 32.2%, projecting the highest annual lost in the history for the market.
Market Outlook 2020-2025
In the Beyond Covid19 project, we are revising on monthly basis and sharing with our Clients the 2020-2025 motorcycles market outlook. Demand for a more individual mobility and the increased offer of more performing electric scooter is speeding up the industry trend.
Following June performance, we have further downgraded the 2020 outlook, projecting the full year below the 1.8 million units, losing 22.1%. However a fast recovery is expected in the next year.
The six manufacturers 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 holding over one-third of market share. In second place Yamaha is not far and is ahead of Suzuki, Kawasaki and Kymco.
While Chinese brands have near 30% of the market the Indian Bajaj Auto is the leader in the three wheelers segment. Bajaj operates in The Philippines in a partnership with Kawasaki, which locally produce and distribute under his brand few Bajaj entry level 2-wheelers.
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.
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.