The Philippines has observed the maximum growth in the automotive industry in ASEAN, with automotive loans outstanding growing at ~3% CAGR in the last five years (2016 – 2021). The industry is in the growing phase with Universal And Commercial Banking Institutions leading the Market and rising demand for used cars, a more Flexible model of financing driving the growth of the sector.
In the past 5 – 10 years, the Philippines is witnessing a new wave of digital enhancements with several new fin-tech platforms for aggregation. In this segment, we provide an overview of how this digital disruption will completely transform the Auto Finance industry in the Philippines in the next five years.
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Easy access to auto loans and growing income levels leading to a rise in car sales is expected to drive the rise in Auto Outstanding Loans in Philippines.
Demand for 2 wheelers is likely to increase due to lower maintenance and low financing cost compared to other vehicles.
Philippines imports cars and Parts from other countries such as Thailand, Indonesia, South Korea, China, India, and United States, and car assembling takes places in Philippines
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The used cars prices are also expected to remain stable and thus more attractive to potential buyers. With the increasing prices of new vehicles, buyers are finding better value in Used market, thus resulting in higher demand for used vehicles
The Electric Vehicle Association of the Philippines (EVAP) forecasts an annual growth rate of 8-12% that will produce PHP 1.68 Bn (USD 33.6 Mn) revenue from services and sales of 200,000 units by 2024.
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Younger, tech-savvy buyers are gaining market share, who expect to manage their finances remotely on a mobile device or computer. AI is increasingly making the important decision to offer a very different proposition to third-party funders, brokers and banks.
Marketplaces like AutoDeal are offering easy access to Auto loans on their website. Users simply choose their preferred vehicles, loan tenure and preferred banking partner to calculate the loan and finance their purchase.
The captive market players such as Toyota Philippines have been able to capture a big share due to increased tie-ups with major dealerships and investment in in-house set-ups. It is far less complicated and interest rates charged by Captive operators are normally more than what is provided by a bank because of the high risk and low scale of operations involved.
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