MANILA – Fitch Solutions forecasted the country’s automotive industry to grow by 0.4 percent this year to 371,345 units, lower from its previous projection of 7.4 percent, due to negative impacts of the coronavirus disease (COVID-19) pandemic.
As the government placed Luzon under enhanced community quarantine due to the rising number of virus cases, vehicle sales face severe downside risks this year, Fitch Solutions said in a report dated Mar. 23.
It said the temporary closure of non-essential establishments like dealership networks during the quarantine period will impact the automakers’ sales for the first half of the year.
“This will result in a significant drop in new vehicle sales as an inability to make vehicle purchases while the stringent measures to stop the spread of COVID-19 remain in place,” the report added.
Fitch Solutions said consumers outside the red zone will likely hold off spending on non-essential goods like cars amid the COVID-19 pandemic, affecting the sales on passenger car segments.
It expected passenger car segment sales to contract by one percent in 2020.
Moreover, the crisis now also delays the rollout of the government’s Public Utility Vehicle (PUV) Modernization Program, which aims to replace aging PUVs with more environment-friendly Euro 4-compliant light commercial vehicles.
“In light of the total ban on all forms of public transport in the province, as part of the enhance quarantine measure in the province of Luzon, transport operators will face significant losses in revenue due to a collapse in commuter demand, thus prompting them to hold off on their planned fleet renewals,” the report said.
Sales of light commercial vehicles this year will grow by one percent from Fitch Solutions’ previous forecast of 7.7 percent.
But over the long-term, higher incomes and pent-up demand will drive vehicle sales, Fitch Solutions said.
The report forecasted sales of passenger cars to expand an average of 6.8 percent to reach annual volume sales of 210,062 units over 2020 to 2029.
Higher sales volume is also expected for the light commercial vehicle segment between 2021 and 2029.
“Moreover, the government’s ambitious ‘Build, Build, Build’ infrastructure development program, which involves numerous infrastructure projects in the power and transport sectors, will lend further support for commercial vehicle demand well within our forecast period,” Fitch Solutions said.
In 2019, local car assemblers reported 3.5-percent growth in sales reaching to 369,941 units while car importers’ sales slipped by 0.5 percent to 87,984 units. (PNA)
