Philippines Motorcycles Market keeps struggling in the 2021. During the Q3 market conditions did not improved, with countries activities still limited by virus spread and sales declined both in July and August in double digit. Year to date August figures were 1.27 million, up 29.4% vs 2020, but down 22.0% vs the 2019.
Motorcycles Market Crisis is not over
Following the deep lost reported in the 2020, breaking a spectacular yearly boom, in the 2021 the domestic motorcycles industry struggles to recover, due to the still high covid 19 impact on local production and distribution, with a consumer goods demand still well below the pre-covid level.
Comparing actual data with the previous awful year, figures are obviously positive, but the year is projected to land near the 2 million, back at the 2017 level.
Indeed, in the first half total sales (including local manufactures associated to MDPPA, not associated and imported) have been 965.447, up 51.3% vs the 2020, but down 21.0% vs the pre-covid 2019 line.
During the Q3 market conditions did not improved, with countries activities still limited by virus spread and sales declined both in July and August in double digit. Year to date August figures were 1.27 million, up 29.4% vs 2020, but down 22.0% vs the 2019.
Looking at the top manufacturers, the market leader Honda increased 49.6%, while Yamaha 31.4% and the third, the local brand Rusi, 5.4%.
To be mentioned the growth of electric vehicles segment, still at marginal level, while boosted by the growth of Chinese brands, led by Tailg.
In 2020, the motorcycles sales dropped 30% after 7 booming years
In the last decade the rapid development of automotive industry, both in the car and motorcycles sectors, has been a key driver of economic expansion and The Philippines reported one of the highest GDP increase worldwide.
The motorcycles industry increased over 300% between 2012 and 2019, which was an impressive trend for a market already relevant (over 800k in the 2012).
The growth was clearly driven by need for individual mobility, GDP growth, traffic congestion suggesting small devices but even by a fast growing competition. In fact traditionally the market was dominated by the Japanese Big 4, all producing locally, while several local manufacturers expanded their capability and line ups range thanks to supply agreements with Chinese manufacturers and a “low cost” segment grew up very fast, totally dominated by underbone and commuter vehicles, for the most done by local brands.
Premium brands are here as well, with KTM producing locally and all other taking their share of market.
While the basic positive outlook is still on place for the middle term, in the 2020 the market went in front of a wall and sales collapsed, due to covid19 counteract measures.
Sales dropped down 30%, one of the deepest lost in the World, landing at 1.68 million units.
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.