Increased sales over the last three years, and a shifting landscape favoring EVs fuel optimism
If there’s one fearless forecast that the local automotive industry would want to come true this year, it’s that the pandemic that wreaked havoc worldwide in the past three years would just become a fading image in our collective rear view mirrors.
Then, and only then, would the stage be set for what the industry calls a “grand rebound”.
The year just passed, 2022, gave us a taste of a post-pandemic society. The virus was still amongst us, still highly transmissible but markedly less intense in its attack. This gave us the confidence to go out more often and mingle, travel, and spend more, breathing more life into the business sectors that were almost dead in the water due to the series of lockdowns and community quarantines in 2020 and 2021.
Thus, 2023 is seen as a year when the “new normal” really gets going on all cylinders. But what would this new normal look like, at least in the first half of the year? I asked a few automotive industry leaders how they pictured the coming six months.
Ma. Fe Perez Agudo, chair and president of the Association of Vehicle Importers and Distributors (Avid), said: “Avid looks forward to breaching the pre-pandemic sales level, or an equivalent of 20-percent growth from the total output in 2022.”
She added: “We expect the local industry to carve a stable path to recovery that is much dependent on how quickly it adapts to the macroeconomic pressures, such as inflation, high interest rates, and global supply chain shocks. 2023 is seen as a tipping point for the industry moving toward new, sustainable, and more technology-driven mobility. As always, it will be a highly competitive year that only bodes well for the Filipino car-buying market.”
Lawyer Rommel Gutierrez, president of Chamber of Automotive Manufacturers of the Philippines Inc (Campi), said: “2023 may be a year of full recovery for the auto industry. Last year’s sales performance was impressive and indicative that pre-pandemic sales level could be achieved this year. The supply level appears to stabilize, and this gives us reason to be optimistic about meeting the demands of the growing customers.”
The increasing sales figures for 2020, 2021, and 2022 submitted jointly by Campi and the Truck Manufacturers Association (TMA) fuel Gutierrez’s optimism: 223,793 unit sales in 2020; 268,488 in 2021, and 315,337 for January to November 2022.
Philippine (Auto) Parts Maker Association president Ferdinand Raquelsantos, who is also the Electric Vehicle Association of the Philippines (Evap) emeritus chair, said: “I see the transition of the market from ICEs (internal combustion engines) to EVs (electric vehicles), with new developments on the application of EVs in public transport, logistics, and fleet services. Prices of batteries will continue to go down with new technologies. More and more people will be informed of the practicality and efficiency of EVs. As the volume of CKD (completely knocked down) assembly is going down, we hope to see new models of EVs to be locally assembled.”
I asked TMA president lawyer Imelda Abadilla Brown her forecast for the truck industry. She replied: “The TMA is still in the process of finalizing its forecast together with Campi. The official statement will be released through Campi as the data is consolidated.”
For his part, Evap president Edmund Araga said: “We’re just waiting for the signed executive order of President Bongbong Marcos as to the tariffs, (to have) sufficient basis on our projections.”
Araga is referring to the EO that would implement the tariff modifications on certain EVs and their parts and components. In November last year, Socioeconomic Planning Secretary Arsenio Balisacan announced that the President had agreed to temporarily remove the tariff on imported EVs and lower the tax rate on their parts and components to promote their use and help reduce the country’s dependence on imported fuel.
In its first meeting under the Marcos administration, the Neda Board endorsed the EO modifying tariff rates on certain EVs such as passenger cars, buses, mini-buses, vans, trucks, motorcycles, tricycles, scooters, and bicycles, among others, including EV parts and components. In particular, the EO would temporarily reduce the most favored nation (MFN) tariff rates to zero percent for five years on completely built up (CBU) units of certain EVs, except for hybrid-type EVs. It will also modify the tariffs on certain parts and components of EVs from five to one percent for five years. The Neda Board also indicated that the tariff modification would be reviewed a year after being implemented, to assess its impact on the development of the EV industry ecosystem.
According to Neda, the EO aims to expand market sources and encourage consumers to consider acquiring EVs, improve energy security by reducing dependence on imported fuel, and promote the growth of the domestic EV industry ecosystem.
In November, Araga said: “It is a great opportunity for the industry to flood the market with more types and models of CBU EVs to help promote the industry. We at Evap already made a bold statement that switching to EVs will be beneficial, not only to our environment and our health, but this would also help us save on fuel imports.”
He added, “more and more EV charging stations are now ready for use, in malls, gas stations and hotels.”
Rommel T. Juan, Evap chair, said: “For the EV industry, I’m very optimistic for 2023. With the passing of the Electric Vehicle Industry Development Act (Evida, or Republic Act 11697) last year, the market and public interest have definitely increased. This was evidenced by the tremendous positive response that we received during our annual EV Summit. And now that we have almost 14,000 EVs on the roads, 17 passenger EV cars now available with 278 charging stations, there is no doubt that 2023 will be a phenomenal year for EVs in the Philippines.”
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