Why the auto parts and consumables sector continues to thrive in PH

The auto parts sector in the Philippines is growing rapidly with the country’s ever-expanding automotive industry. Logically, this is due to the continued growth in annual vehicle sales coupled with the inevitably growing demand for automotive aftermarket products and services.

Currently, the Philippines’ auto parts sector has over 250 local enterprises registered to produce and import as many as 330 types of auto parts and components, which in turn are made not only of metals, but also of plastics, rubber and other composite materials. These companies supply products to original equipment manufacturers (OEMs) and the independent aftermarket (IAM), which includes the aftermarket.

Data from the Asia-Pacific Economic Cooperation for 2020 shows that the auto parts sector employs approximately 67,100 workers nationwide. These employees work for car, motorcycle and parts manufacturers as well as direct importers.

Government support

The national government, through the Department of Trade and Industry (DTI), is providing the necessary support to help the auto parts sector grow. In the published report (The first brochure on the automotive parts industry in the Philippine industrial park), the agency said its goal is to strengthen the sector’s position as a significant player in the automotive industry in the medium term and to transform the Philippines into a regional vehicle and parts hub in Asia with a strong domestic supplier base.

However, DTI also notes that local auto parts companies “face competitiveness issues due to lack of economies of scale and weak supply base.” The department is therefore recommending improved policies and temporary grants to support sector activities and growth.

The agency also cites research that highlights the expected growth of the Asian market, driven by particularly strong business activity in China, India and Southeast Asian countries. A place of opportunity is the establishment of the ASEAN Economic Community in 2015 and the subsequent ASEAN+1 Free Trade Agreement, which increases trade and investment opportunities in the country and the region.

Rapid increase in vehicle ownership in PH

The necessary government support comes in the context of the most important factor – the steady and strong growth in vehicle sales in the country. The Philippine auto industry is poised to hit record sales of 500,000 units in 2024, following record new vehicle sales of 429,807 in 2023, according to the Chamber of Automobile Manufacturers of the Philippines, Inc (Campi).

Overall sales volume in 2023 was a milestone for the industry as it exceeded expectations and even record sales before the pandemic. In 2017, the industry recorded record sales of 425,673 units.

Additionally, the Land Transportation Office (LTO) released a report showing that the estimated number of unregistered vehicles in the country is 24.7 million vehicles. This represents a significant 65 percent of all motor vehicles in the country from 2024.

The latest available data shows that in 2022 the total number of registered vehicles across the country was approximately 13.9 million vehicles. This number is expected to grow by around 5 to 7 percent per year (not counting the equally steady increase in the number of unregistered vehicles).

Another promising place for the industry is the country’s growing electric vehicle (EV) sector. Data from the Electric Vehicle Association of the Philippines (EVAP) shows that by the end of 2023, there will be approximately 15,300 electric vehicles in operation across the country, including 354 electric motorcycles and 88 electric buses. EVAP forecasts that the number of electric vehicles in the country will increase to approximately 6.6 million units by 2030.

“Inevitably, an increasing number of the vehicle fleet in the Philippines is also aging. Although the average vehicle lifespan in the country is around 15 years or more, there is a constant demand for auto parts, regardless of whether the cars are new or have been on the road for a long time,” said Rungphech “Rose” Chitanuwat, CEO of Informa Markets in Philippines section, the organizer of the upcoming ones Automotive Parts and Vehicles Exhibition Philippines (APVE).

“That’s why we are organizing the first edition of APVE in the country. It will be a new platform for local, international and regional suppliers of auto parts, accessories, maintenance equipment and tools in the country,” she added.

This event is presented by Auto Parts & Vehicles Expo Philippines (APVE).