Boston, MA -- (SBWIRE) -- 11/25/2013 -- Despite August usually being a slow month for the Philippines car market, the Chamber of Automotive Manufacturers of the Philippines (CAMPI) and the Truck Manufacturers Association (TMA), reported 20.8% year-on-year (y-o-y) growth in vehicle sales, to 13,704 units, in the month. The latest figures demonstrate the resilience of the Philippines economy amidst the slowdown in most other Asian markets and it has been our view that the country's auto market will be a regional outperformer (see 'Philippines On Course To Be Asia's Top Performer', July 22).

Consumer Story Remains Key Driver

Towards the end of 2012 and for most of 2013, sales growth rates in the passenger car segment have outstripped those of the commercial vehicle (CV) segment. Low interest rates have spurred growth in consumer loans and passenger car sales have benefited as a result. We believe consumer demand will remain strong and we will see car sales continuing to outperform on the back of the country's strong economic growth outlook. Indeed, our Country Risk team recently upgraded its 2013 and 2014 GDP forecast for the Philippines (see 'Domestic Boom Shrugs Off FM, External Volatility', August 29).

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Passenger car sales for the first eight months of 2013 grew 28.8% y-o-y, to 38,220 units. The unusually strong growth of 46.7% y-o-y in August has prompted us to upgrade our 2013 sales growth forecast to 16.5%, to 56,000 units, from 13.0% previously.

Slow PPP Progress To Weigh On CV Segment

One factor, which could be responsible for the underperformance of CV sales, is the slow progress of the government's highly touted public-private partnership (PPP) programme (see 'PPP Programme Unlikely To Be Completed In Full', September 4). As our Infrastructure team notes, a number of projects under the PPP programme are unlikely to be awarded in the next few years, which then dovetails with our long-term CV sales growth forecast. We forecast CV sales to grow 6.8% over the 2013-2017 period, underperforming the passenger car segment, which we expect to grow 9.8% over the same period.

Nonetheless, CV sales were still up an impressive 13.5% y-o-y, to 78,392 units, in the first eight months of 2013 and we are maintaining our 2013 CV sales growth forecast of 11.0%, to 120,000 units.

The upward revision in our 2013 passenger car sales forecast will upgrade our total vehicle sales growth forecast to 12.7%, to 176,000 units.

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