Auto sales in the Philippines rose 17.5% year-on-year (y-o-y) in December 2013, to 17,185 units, as reported by the Chamber of Automotive Manufacturers of the Philippines (CAMPI) and the Truck Manufacturers Association (TMA). This saw 2013 sales hit a new record of 181,283 units, an increase of 15.7%. Our bullish view on the Philippines market continues to play out in line with industry trends, given that we forecast sales to grow 14.5% in 2013.
When including sales of the Association of Vehicle Importers and Distributors, Inc, total industry sales hit 210,000 units, breaching the 200,000 unit mark for the first time.
We remain upbeat on auto sales in 2014. The country's strong economic growth, as well as low interest rates, will continue to propel passenger car sales. While our Country Risk team recently flagged up the possibility of an interest rate hike towards the latter half of 2014, interest rates still remain below historical averages and we do not see a small rise in borrowing costs as a threat to the consumer boom in the country.
Similar to 2013, we expect the passenger car segment to continue outperforming the CV segment. We forecast passenger car sales to grow 11.0% in 2014, to 67,800 units and CV sales to grow 8.0% in 2014, to 129,800 units, bringing total CAMPI and TMA sales to 197,600 units, an increase of 9.0%.
It is noteworthy that despite our expectation for passenger car sales to continue outperforming, we expect a significant deceleration in their growth rate from the impressive 26.4% print recorded in 2013. At the same time, we expect CV sales growth to only slightly slow from the 11.0% rate experienced in 2013.
According to the CAMPI's president, Rommel Gutierrez, growth in passenger car sales in 2013 was largely fuelled by the introduction of several new models in the market as well as the entry of new players. While we expect consumer demand to remain strong from sustained remittance inflows and business process outsourcing revenues, it is...