Auto industry downplays rise in car ownership as cause of traffic woes

A few days after the Filipino motoring public swarmed to the just-concluded 6th Philippine International Motor Show at the World Trade Center like bees to their hives, it wouldn’t be hard for the ordinary observer to conclude that: 1) motorized vehicles, in all their varieties and price categories, are much easier to be purchased nowadays; 2) there’s no stopping more Filipinos from buying more vehicles; and 3) there’s no stopping auto manufacturers from bringing to a car-loving public what it wants—more and more vehicles.

There is a fourth conclusion there, and it dawns upon every PIMS visitor who exits the trade center and joins the millions of motorists and commuters trapped inside motionless cars (during what is ironically called “rush hour”) and stuck in interminable Metro Manila traffic. And this is that “Carmaggedon” can only get worse because of trade promotions like PIMS whetting the public’s appetite some more.

This observation seems to be validated by reliable projections showing car purchases to reach 500,000 units per year starting as early as 2018 (in 2015, the industry exceeded the 300,000-mark), and industry pundits’ warning that traffic woes can only come to those emerging markets  where public transport system and infrastructure improvements do not keep pace with burgeoning public demand.

But can you blame the goose for laying the golden egg?

Lawyer Rommel Gutierrez, president of the 17-member Chamber of Automotive Manufacturers of the Philippines, Inc. which holds the biennial PIMS, told media during the Sept. 2 pre-PIMS press conference: “Automobiles represent freedom and economic growth. If you don’t want the economy to grow, then stop the automotive industry.

“When we achieved GDP per capita of $2,500 in 2012, that’s when motorization started. It has been growing double digits since then.

“We just have to be more than willing to collaborate with the government to find ways to solve the traffic problems.”

Inquirer Motoring reported last year that in Southeast Asia, an average per capita income of $2,600 has triggered a rapid increase in motorization.

Thailand and Indonesia reached this threshold in the last decade. The Philippines achieved it a year ago, and its citizens are now beginning a strong push to motorize.

According to the International Monetary Fund, vehicle ownership accelerates quickly when countries reach an income level of $2,500 per capita. This rapid growth continues until the cap of about $10,000 per capita is reached.

Gutierrez added: “We are in coordination with the government on how to come up with solutions on the traffic problems.

“Campi, being a socially responsible organization, is willing to help the government in policies pertaining to traffic, and also on issues pertaining to anything that is automotive related. We want to continue a long partnership with the government in nation building.”

BAIC president and CEO George Chua remarked during the press con: “To put things in the proper perspective, Thailand, for example, has a population of only 67 million, and we are in excess of 100 million. The total (auto) manufacturing output of Thailand is on the range of 2 million, that’s why they are now known as the Detroit of Asia.

“In  comparison, the total production output of the Philippines, being at about 300,000, doesn’t seem to be too much.”

He added: “In response to the growth requirements of any growing country like the Philippines, of paramount importance is the transportation of goods and cargo and passengers.

“Every time I hear people say that we are selling too many cars, I can feel our Asean neighbors snickering that we’re shooting ourselves in the foot because we are limiting our own growth potential.

“The situation should be taken in its entire perspective, which the Duterte administration is trying to resolve via significant infrastructure, expenditures, and at the same time looking at the mass transport system particularly in the case of the railroad networks not just in Luzon but primarily including other areas like Mindanao as well.”

The harsh realities of streets outside the WTC aside, the sixth PIMS showcased during its five-day run the latest vehicles and technologies of the country’s 17 top automotive manufacturers and distributors.

These included Baic’s M20, the all-new BMW 7 Series, Daewoo Bus BS120SN Euro5, Foton Toplander 4×4, McLaren-Honda MP4-30, 2017 Isuzu D-Max, the Jeep Renegade, the all-new Kia Soul 1.6L EX Dual Clutch 7-seater, Lexus GS F, the all-new Mazda CX-3, and the New Mercedes-Benz E-Class.

The Mitsubishi’s Outlander PHEV, the new Nissan GT-R, Peugeot 308, Suzuki Ciaz, and the all-new Toyota Prius and Volkswagen CC were also highlighted.

In 2015, Alberto Suansing, former Land Transportation Office chief and Land Transportation Franchising and Regulatory Board chair, told Inquirer Motoring: “Because of our situation where we don’t have a respectable public transport system in place, Filipinos will purchase their own vehicles right away to move from point A to point B.” Suansing is now the secretary-general of the Philippine Global Road Safety Partnership.

Suansing’s observation was also shared by executives of automotive companies in past interviews. Lexus Manila president Daniel Isla told Inquirer Motoring that the lack of a reliable public transport system would be “a factor that would contribute to the continuous growth of the automotive industry. Owning a car has become a necessity for Pinoys for their convenience and safety.”

Inquirer Motoring also quoted John Philip Orbeta, president of Volkswagen Philippines, in 2015, who said: “The continued unreliability of the mass transport system will fuel the buying public’s desire to have private transport vehicles. Part of the growth of the local automotive industry has been fueled by the response of more affluent households to buy more cars due to the number coding scheme. Some clients have requested for specific plate endings.”

The Asean Automotive Federation last year observed that the Philippines has become 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.

Carmudi said, during a 2015 press conference, that with a healthy, sustained economic growth, coupled with a strong consumer purchasing power, the Philippines is becoming an increasingly attractive prospect for car manufacturers.