THE Public Utility Vehicle Modernization Program (PUVMP), which is one of the main drivers of demand for commercial vehicles this year, faces “significant risks” of being delayed due to the lockdown on Luzon, Fitch Solutions said.
The automotive sector outlook for Southeast Asian countries published Friday by Fitch Solutions projected that passenger vehicle sales in the Philippines will contract this year “as waning sentiment linked to a deteriorating economic outlook weighs on demand for the segment.”
“As vehicle dealerships remain closed, and public transport services are unable to operate as part of the strict movement restrictions, transport operators will not be able to recoup lost revenue resulting in the country’s PUVMP facing significant risks of being delayed. This is a further risk to sales as the PUVMP was going to be one of the key drivers of commercial vehicle demand in 2020,” Fitch Solutions said.
Restrictions on movement and suspended business operations in Southeast Asia will “severely impact” this year’s vehicle sales, it added.
A separate Fitch Solutions outlook released Monday projected overall new-vehicle sales growth in the Philippines at 371,456 units, up 0.4% in 2020.
In 2019, vehicle sales rose 3.5% year-on-year to 369,941 units, according to the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA). This represented a recovery from the 2018 industry slump, when sales fell 16% to 357,410 units.
The government placed Luzon under a month-long lockdown in a bid to contain the spread of COVID-19, closing most private businesses and banning public transport. Toyota Motor Philippines Corp., which manufactures cars in Laguna, suspended production until mid-April.
Fitch Solutions said passenger vehicle sales will fall 1% in 2020, but will grow by an annual average of 6.8% from 2020-2029 as incomes grow and car-ownership rates rise from a low base.
Commercial vehicle sales are expected to increase by 1% in 2020, but in this segment higher growth is projected up to 2029. — Arjay L. Balinbin