Expected significant growth and exciting positive developments in vehicle manufacturing in the Philippines is in sync with the impending contraction of auto assembly in Australia, with the Philippines itself with 93 million population a large market in its own right.
This summarises the presentation made by Philippine Commercial Consul for Australia and New Zealand Mr Emmanuel Ang last May in Melbourne during a conference of Australian automobile parts manufacturers organised by the Australian Automotive Aftermarket Association (AAAA).
Consul Ang noted the Philippines was the fastest growing country last year in GDP terms in South East Asia.
With the theme of “shifting gears”, the Conference discussed issues related to the impending cessation of Australian automobile assembly by 2017.
With the local market for OEM parts manufacturers about to disappear by 2017, the conference organizers invited Mr Ang to give a presentation and sit in a panel discussion on opportunities in the Philippines.
Australia’s current three (3) vehicle assemblers Toyota, GM Holden, and Ford, all announced within the space of a few months that they will cease assembly by 2017, and will instead be importing cars from overseas.
The Australian auto parts industry largely did not expect this change to come so soon, and now the industry is interested in options for the coming years. These options include forecast growth for the aftermarket segment, supplying to other industries, specializing in certain parts which benefit from being locally manufactured, and also exporting to and expanding in other countries.
Mr Ang said,”Right now, the Philippines exports around US$3.5B worth of auto parts to various countries such as Japan, Germany, USA, Thailand, and Australia, among others. This amount is roughly the same as what Australia manufactures (total manufacturing, and not just export) in auto parts annually. “
Mr Ang observed: “Thus Australian companies will be familiar with the scale of the industry in the Philippines. What differs significantly, however, are the prospects moving forward, with the Philippines set to enter the “motorization” stage of its economic development, wherein vehicle ownership growth will accelerate at almost double the rate of per capita GDP growth. Thus this is the right time for Australia to look at the Philippines.”
Mr Ang said, “The potential for upside is enormous. The World Bank shows that as of 2010, the Philippines only had 30 vehicles per 1000 people. This is compared to China at 58, Indonesia at 66, Singapore at 149, Thailand at 160, etc. Thus there is so much demand to fill in the coming years, and this rapid rate of motorization will continue and growth will only slow down when it gets to around 600-800 vehicles per 1000 people, which is where countries like USA, Australia, and Japan were during 2010.
“This can already be seen in actual vehicle sales – last June 2014 Philippine vehicle sales zoomed up 38% compared to the similar period last year, and was recorded the fastest growth of motor vehicle sales in the whole of Southeast Asia for the first quarter of 2014. This strong performance has led the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI), to raise its forecast for the country’s total vehicle sales for 2014.”
“With this strong demand and strong GDP growth, along with excellent logistical and trade linkages with Asia, a large pool of skilled workers, and a stable and conducive business environment, the Philippines is an excellent destination for Australian auto parts manufacturers looking to establish an overseas foothold in Asia. Already, a number of Australian auto parts manufacturers are looking to invest and expand in production in the Philippines – to sell to our domestic market, to export back to Australia, and also to export to the rest of the world.”