A crystal ball look-see for the automotive industry in 2023

Philippine four-wheeled motoring, 2022 brought a lot of attention to Chinese-sourced vehicles and wheels that ran on a fuel other than petroleum.

The Manila International Auto Show (MIAS) in the summer was more of a China car showcase. Brands like Changan, Chery, Foton, GAC, Geely, JAC, and MG were more or less at the forefront of MIAS’ World Trade Center venue, with brands like Nissan, Peugeot, Chevrolet, Volvo, and Subaru more or less taking second fiddle. 

On the other hand, the September iteration of the Philippine International Motor Show (PIMS) focused more on electric vehicles (EVs) and hybrid cars, showing something beyond the usual gasoline- and diesel-fed land mobility. Kia’s EV6 and Hyundai’s IONIQ 5 all-electric crossover sport-utes were most talked-about at PIMS, along with Nissan’s Kicks and BMW’s iX xDrive40 all-electric utility runners, and hybrid versions of the Mazda 3 compact car and Suzuki Ertiga people carrier.

The year also showed the auto industry's struggles to get an upward sales curve early, but by the end of the third quarter, sales nearly reached pre-pandemic levels. January 2022 started with negative growth, with 20,765 units sold, compared to 23,380 four-wheelers bought in January 2021. That negative growth also branched out to February (24,304 units compared to 26,230 in February 2021), but come November, four-wheeler sales were broaching 35,000-odd sales per month compared to the 26,400-plus vehicles purchased in November 2021. 

Global issues also affected the Philippine automotive scene. The ongoing pandemic and its purported source in mainland China peeved off automakers doing business there, with some quietly departing that country to look for company elsewhere. The pandemic also hit the semiconductor business in China and Taiwan, which created delays in the arrival of several vehicles to Philippine shores.

That said, the year is about to end, and AutoFun PH has a proverbial crystal ball to look at the trends for the Philippines in the auto industry. Just a disclaimer – we are not Hanz Cua, that predicted 2020 would be an excellent year for many. Instead, we are just doing a little intuition extrapolation based on the overall yearlong performance of Philippine motoring. Hence, our predictions below…

First-quarter sales will be okay, but beyond March will be a rollercoaster ride

Suppose one is to base the news that inflation shot up to eight percent in November and that the abovementioned trend of 2022 auto sales was on an upward curve. In that case, the first half (or even the first quarter) of 2023 could take its cues from the last two months of the previous year. After all, people still got their respective Christmas bonuses and 13th-month paychecks and kept Christmas spending to a minimum somewhat. Hence, customers will have money stashed away until after Holy Week (2-8 April 2023).

However, the proverbial elephant in the country’s economic boom is definitely the inflation scenario. The monthly upward trend of the economic phenomenon will poke a bigger hole in the purchasing aspirations of many. It’s easy to say that once the abovementioned bonuses and 13th-month pay run out, spending will be limited to the bare necessities and barely some. Even if the TRAIN law claims that withholding taxes were reduced for more take-home salary, the limited local currency purchasing power means no money to buy a new car.

There will be a boom for secondhand cars

This is related to the prediction mentioned above because the earmarking of money for essential goods and the difficulty in securing car loans, likely due to inflation and the rise of essential goods prices, will make buying brand-new cars a stretch for some.  This will make the acquisition of a pre-loved unit a more viable option for a sizable chunk of the car market. 

Already, car companies are positioning themselves as pre-owned car dealers as well with special certification services and limited warranties now being offered for used cars by dealerships. This not only pushes the brand-new cars out through trade-in offers to new-car buyers but also lets the financially-challenged segment of the car market purchase a used car with a semblance of peace of mind. 

More introductions of electric and hybrid vehicles at car shows, EV infrastructure will take sometime

Suppose the PIMS 2022 displays and the launches of the abovementioned EV6 and IONIQ 5 will commence within the first two months of 2023. In that case, other manufacturers will likely follow suit and bring in more plug-in hybrid and all-electric vehicles at MIAS 2023. 

The biggest stumbling block here is that the infrastructure needed to charge those EVs and plug-in hybrids is scarce. Like the availability of Adidas-Ultraboosts-in-sizes-10-and up-scarce, especially when you head out of the metro, where only a handful of mall-based EV chargers and destination chargers currently exist. Not enough to support the mass adoption of Battery EVs by any means.

However, the good news is that some companies (such as the Ayala conglomerate and SM Malls) are committed to installing EV charging stations around and outside Metro Manila at their shopping centers. Most, however, are self-serving and bordering on lip service as their availability depends on mall hours or the locations of their establishments, not on actual travel and trip needs.     

Niche segments will be further filled

To remain content with minor changes and updated brand iterations is to be left behind in a market with 23-odd players. 

One way to keep competitive is to fill out niches and launch runners in differing segments. 

Already we have seen the proliferation of subcompact crossovers and MPV people carriers in 2022. Expect more brands to have their say in this segment, and other potential crossover iterations, as they carve a piece of the market for their own. 

More passenger car nameplates will go extinct, and the utility vehicle segment will expand

As observed in the past two to three years, the passenger car (PC) segment has been losing players. Gone are the likes of the Honda Jazz, Honda Accord, Ford Fiesta, Hyundai Reina, Hyundai Veloster, and Suzuki Ciaz. Instead, the likes of the Honda BR-V and Hyundai Stargazer made rousing debuts in the market during 2022, reinforcing the notion that the auto industry is more tilted towards light commercial vehicles (LCVs) than PCs.

Also, the projection of the construction industry to have a boom next year (due to the needed infrastructure upgrades in and around the country) will likely require top brass of construction companies to use LCVs for movement to and from construction sites.   

This poster reiterates that the predictions regarding the Philippine auto industry are based on market behavior over the past year and on this writer's viewpoint. Whether or not you take these prognoses lightly or seriously is up to you, dear reader.