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Saturday, June 22, 2024

Soaring vehicle ownership = soaring auto parts sector

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If there’s one thing we learned from the first ever Auto Parts and Vehicle Expo (APVE) PH held recently, it’s that the automotive parts and supplies industry is experiencing a robust surge, driven by the country’s rapidly expanding vehicle market. As the number of registered and unregistered vehicles on Philippine roads continues to skyrocket, the demand for aftermarket products and services has grown exponentially.

Currently, the Philippine auto parts sector is home to over 250 local businesses that produce and import a diverse range of components, from metal to plastic and rubber. These enterprises cater to both original equipment manufacturers (OEMs) and the independent aftermarket (IAM), meeting the replacement needs of the country’s burgeoning vehicle fleet.

According to data from the Asia-Pacific Economic Cooperation, the auto parts sector employs around 67,100 workers nationwide, underscoring its significance as a major economic driver.

Recognizing the strategic importance of this industry, the Department of Trade and Industry (DTI) has stepped up its support. In a recent report, the agency outlined its goal of strengthening the sector’s position as a key automotive player in Asia, with plans to position the Philippines as a regional hub for vehicles and parts through a robust domestic supplier base.

However, the DTI also acknowledges the sector’s competitiveness challenges, such as the lack of economies of scale and a weak supply chain. To address these issues, the department recommends policy upgrades and temporary subsidies to bolster the industry’s operations and growth.

The government’s efforts come at a time of remarkable growth in the Philippine vehicle market. The Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) projects the industry to reach a record 500,000 unit sales mark by 2024, following the previous high of 429,807 units sold in 2023. Moreover, the Land Transportation Office (LTO) estimates a staggering 24.7 million unregistered vehicles, accounting for 65% of the country’s total motor vehicle fleet.

As the vehicle population continues to surge, both in registered and unregistered numbers, the demand for auto parts and services is poised to skyrocket. This expanding market, coupled with government support and regional trade agreements, positions the Philippine auto parts sector for sustained growth and long-term success.

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