The Philippines could surpass Thailand’s motorcycle sales this year, despite the difficulties being encountered by the local motorcycle industry, according to the Motorcycle Development Program Participants Association (MDPPA).
MDPPA President Armando B. Reyes said his group has a more sanguine outlook for the motorcycle industry this year, after sales in the first semester grew 13 percent to 614,896 units. Reyes said total sales could hit 1.8 million units this year, 12 percent higher than the 1.6 million sold in 2016.
“Among Asean countries, we were sixth in terms of sales last year. In fifth place is Thailand. We think we can overtake Thailand,” the MDPPA chief told the BusinessMirror.
Based on MDPPA data, Philippine motorcycle sales in the January-to-May period amounted to 504,931 units versus Thailand’s tally of 773,748 units.
“[Sales] growth has been continuous. If the motorcycle boom really hits its peak, I don’t know how it will be handled,” Reyes said.
MDPPA remain optimistic despite the numerous problems besetting the local motorcycle industry, such as the policy of the Land Transportation Office (LTO) concerning the registration of motorcycles.
Reyes said some 100,000 motorcycles have yet to be registered with the LTO. This figure could rise in the coming months due to the cumbersome registration process of the agency.
“Buyers of motorcycles are individuals who commute and who want to use their units immediately. But the problem is the delay in the registration process,” he said.
Reyes added the MDPPA is already in talks with the LTO to determine the best way to reduce, or eliminate altogether, the registration backlog.
He said the delay could stunt the growth of the industry that has entered the so-called golden age because it has been experiencing rapid growth.
The MDPPA noted that motorcycle demand has been picking up since 2008 and would continue to grow until 2025.
“Motorcycle sales could reach 2 million units by 2025,” Reyes said.
The e-commerce boom in the Philippines in recent years can be partly credit for this surge in sales, according to the MDPPA. Microentrepreneurs selling products online usually purchase motorbikes to ensure same-day delivery of orders.
Data from the MDPPA showed that automatic motorcycles accounted for the bulk of sales, or 40 percent, of sales in the first half of the year. This was followed by “business motorcyles”, which recorded an 18-percent share.
Reyes added another factor driving motorcycle sales is the increase in the purchasing power of Filipino consumers. Just like car buyers, he said motorcycle enthusiasts now prefer pricier models.
“Buyers are upgrading; A lot of riders are shifting to models with a higher cc and a lot are into big bikes too,” he said.
In terms of production, MDPPA members appear to have a lot of room to grow as the production capacities of Honda, Yamaha, Suzuki and Kawasaki have facilities that are suited to a larger market.
Honda Philippines Inc., where Reyes is vice-president, has an installed capacity of 1 million units but utilization has not even reached half.
The key to attaining full-capacity utilization, he said, is the provision of fiscal incentives to manufacturers.
“If we’re reaching 2 million units, of course we’ll be expanding the facilities. That’ll mean manufacturers will be investing and I don’t know if there will be incentives from the Board of Incentives [BOI] for that,” Reyes said.
The Motorcycle Development Program of the BOI, under the broader Motor Vehicle Development Program (MVDP), already extends preferential treatment to completely knocked down parts and components that are either imported or produced for assembly.
Each motorcycle participant in the MVDP is required to invest $2 million in the manufacture of motor-vehicle parts in its first year.