Why auto parts and supplies sector continues to thrive in PH?

The Philippines’ auto parts sector is robustly growing along with the country’s thriving automotive industry.

Logically, this is driven by the consistent growth in annual vehicle sales coupled with the inevitably rising demand for automotive aftermarket products and services.

Currently, the Philippine automotive parts sector runs through the operations of over 250 local businesses registered for producing and importing up to 330 types of auto parts and components, made not just of metals but also of plastic, rubber, and other composite materials. Such enterprises supply items for original equipment manufacturers (OEMs) and independent aftermarkets (IAM) — comprising the parts replacement market.

Based on data from the Asia-Pacific Economic Cooperation in 2020, the country’s automotive parts sector employs around 67,100 workers nationwide. Those employees work in manufacturers of automobiles, motorcycles, and parts from direct importers.

Government support

The Department of Trade and Industry (DTI) provides necessary support to boost the auto parts sector. In a published report (The First Philippine Industrial Park Auto Parts Industry Brochure), the agency said it aims to strengthen the sector’s position as a significant automotive player in the medium term and to make the Philippines a regional hub for vehicles and parts in Asia through a strong domestic supplier base.

DTI also points out, however, that local auto parts businesses are “facing competitiveness issues due to the absence of economies of scale and a weak supply base.” Consequently, the department recommends upgraded policies and temporary subsidies to support sectoral operations and growth.

The agency also cites research that emphasizes the expected growth of the Asian market especially fueled by strong business activities in China, India, and the Southeast Asian countries. A spot for opportunities is the creation of the ASEAN Economic Community in 2015 and another ASEAN+1 Free Trade Agreement that bolsters trade and investment opportunities in the country and the region.

The rapid growth of vehicle ownership in PH

The necessary government support comes against the backdrop of the most important factor—the steady and strong growth of vehicle sales in the country. According to the Chamber of Automotive Manufacturers of the Philippines, Inc. (Campi), the Philippine vehicle industry could hit a record 500,000-unit sales mark in 2024, following the record new vehicle sales of 429,807 in 2023.

The 2023 overall sales figure was a milestone for the industry as it outpaced expectations and even the record sales pre-pandemic. In 2017, the industry posted a then-record sales of 425,673 units.

Moreover, the Land Transportation Office (LTO) has released a report that indicates an estimated total of unregistered vehicles in the country of 24.7 million vehicles. That accounts for a significant growth of 65 percent of all motor vehicles in the country as of 2024.

Based on the latest available data, the total number of registered vehicles nationwide was about 13.9 million in 2022. That number is estimated to grow by about 5 percent to 7 percent annually (not including the equally steady growth in volume of unregistered vehicles).

Another promising spot for industry is the rising electric vehicle (EV) sector in the country. Data from the Electric Vehicle Association of the Philippines (EVAP) show that about 15,300 EVs are running nationwide, including 354 electric motorcycles and 88 electric buses, as of the end of 2023. EVAP forecasts the volume of EVs in the country to grow to about 6.6 million units by 2030.

“Inevitably, a rising number of the Philippines’ vehicle fleet is also aging. Though the average vehicle lifespan in the country is about 15 years or more, there is a constant need for automotive parts whether cars are newly purchased or are running for quite some time,” said Rungphech ‘Rose’ Chitanuwat, Informa Markets General Manager in the Philippines, the organizer of the 2024 Auto Parts & Vehicles Expo Philippines (APVE) open shops today, June 5 at the World Trade Center in Pasay City.

“This is one of the reasons we are organizing the first edition of APVE in the country. It will be a new platform for local, international, and regional suppliers of automotive parts, accessories, maintenance equipment, and tools in the country,” she added.

The first Auto Parts & Vehicles Expo Philippines will open from June 5 to 7, 2024 at the World Trade Center Metro Manila in Pasay City. For inquiries, visit www.apvexpo.com or contact Belle Tamayo (email: [email protected]: landline: +63 2 8581 1932). For exhibition and sponsorship, contact Yves Caisip (email: [email protected]; landline: +63 2 8581 1919; mobile: +63 923 824 8477).