The Booming Automotive Industry in Emerging Markets

With healthy and sustainable economic growth, coupled with strong consumer purchasing power, the Philippines is becoming an increasingly attractive prospect for car manufacturers. In 2014, the Philippines grew 6.1 percent  and is expected to reach around seven percent by the end of 2015.  The IMF reports that this growth is attributed to more Filipinos joining the labor force and rising investments.

By mid-2014, according to Internet World Stats, the Philippines had over 44M internet users. Growth was catalyzed, in large part, to improved access to broadband services, extensive smartphone penetration, and widespread use of social media.

During the last four years, internet access grew by 500 percent, the highest rate in Southeast Asia. The Philippines also leads in "Time Spent on the Internet," according to We Are Social’s Digital Report in January, 2015. Compared to a global average of 4.4 hours/day, Filipinos spend an average of 6.3 hours/day online via laptop and 3.3 hours/day via mobile.

Rate of Internet and Mobile Growth in Emerging Markets

The State Of Car Sales in the Philippines

With booming economic expansion and growth of the middle class, the Philippines automobile industry showed a stellar performance throughout last year and early 2015. First quarter of 2015 sales reached 62,882 units, breaking the 60,000 unit record for the first time.

As we reported above, an increased GDP correlates with a strong motorization rate. In Southeast Asia, according to the Philippine Daily Inquirer, an average income of $2,600 triggers a rapid increase in motorization. Thailand and Indonesia reached this threshold in the last decade. The Philippines achieved it a year ago, and is now beginning a strong push to motorize. The Asean Automotive Federation, reporting on the first half of 2014, noted that the Philippines is the fastest-growing automobile market in the region, ahead of Singapore, Malaysia, Indonesia and Vietnam. Higher income, plus easier financing, have contributed to stronger sales, especially in private cars.

GDP vs. Motorization Rate in Emerging Markets

Changes in Car Sales in the Last Year

As reported above, car sales are booming in the Philippines, with 73.3 percent of car dealers surveyed reported seeing an increase in sales in the last year.

Number of Carmudi Listings in the Last Year

Places with the most Carmudi listings

• Quezon City: 15.02%
• Cebu: 13.27%
• Cavite: 12.33%
• Laguna: 7.25%
• Bulacan: 6.20%

Most Searched Cars in the Philippines

• Toyota Innova: 41137
• Toyota Vios: 36046
• Toyota Fortuner: 34901
• Toyota HiAce: 32694
• Toyota Hilux: 27507

What Platforms Play a Significant Role in Influencing Potential Car Buyers?

Based on the Carmudi Car Buyer Survey, we found that the largest influencers on purchasing decisions are online sources, including Manufacturer sites, dealer sites, general internet searches, and online classifieds such as Carmudi. Consumers also report being influenced by offline platforms including Auto expos. Many buying decisions in the Philippines are influenced by a blend of  both online and offline platforms.

Amado L.F.B. Del Rosario, Corporate Affairs Director at PGA Cars, Inc. explained, "Easy access to the world wide web is now a reality with the widespread use of affordable smartphones and data plans from telecom companies.  The internet has made available a whole wealth of information to customers, making them more knowledgeable of the varied choice of brands and options available. Customers are now coming to the showroom with a definite idea of what car they want and their choice of colors, trims, and accessories.

The visit to the showroom is becoming the last stage of the buying cycle.  The showroom visit gives the buyer an opportunity to get more intimate with their choice of car model by sitting inside the car and possibly test driving it. In a way the use of the internet has narrowed down the selection process and has shortened the buying cycle."

Advertising How are Car Dealers Reaching Buyers?

Car dealers in the Philippines have become more digital when it comes to advertising their listings. Our study found that 66.7 percent of car dealers in the country are majorly focused on advertising their listings through the Internet. Online classifieds are also seen as a great way to advertise car listings, with over 46 percent of car dealer survey participants currently advertising their car listings on online classifieds. Car dealers in Philippines are aware of the potential that social media has, with over 33 percent reporting active social media use.

Internet	66.7%
Online Classifieds	46.7%
Social Media	33.3%
Carmudi	13.3%
Blogs	6.7%
Forum	6.7%

What advertising platform is the best way for car dealers to reach buyers?

Facebook, arguably the most popular social media platform is used by over 53 percent of car dealers in the Philippines to advertise their listings. Dealer sites and Instagram are also a preferred option to advertise car listings with over 13 percent, and six percent of Filipino car dealers actively using both. Car dealers have not started using Twitter for advertising purposes to their clients.

Social Media is king in the Philippines with a 33 percent annual growth in number of active mobile social accounts. A report produced by  Tigercub Digital attribute the boost to increased digital engagement, strong economic growth, and favorable (young and dynamic) demographics.

The Future

“While most of the importers of mass volume brands are predicting a growth of at least 10% this year, the premium luxury segment is expected to be flat with no sales growth. To spur the growth of this segment, I would like to see set in place - a business and economic climate that will result in the emergence of a strong middle class and increased buying power of customers, level playing field amongst importers that does not give unfair price advantage to a selected car companies by way of preferential (zero) duty tariff rates, and an end to policies that cause customers to go low profile and shun the purchase of luxury cars.” - Amado L.F.B. Del Rosario (Corporate Affairs Director at PGA Cars, Inc.)