Philippines Auto Finance Market Achieves 7.31% CAGR, Surpassing 430,000 Unit Sales in 2023

The Philippines Auto Finance Market demonstrated remarkable resilience and growth, achieving a compound annual growth rate (CAGR) of 7.31% from 2019 to 2023. Despite facing high inflation and interest rates in 2023, consumer spending on motor vehicles remained robust, with sales reaching a historic high of approximately 430,000 units. This significant uptick underscores a strong recovery and expansion phase for the industry, marked by increased sales of both passenger and commercial vehicles following the COVID-19 pandemic.

For more details check our SAMPLE REPORT:
Philippines Auto Finance Market Size and Forecast (2019-2029) - Analysis by Vehicle Type, Lender Type, Loan Type, Loan Tenure, and Geography
https://www.makreo.com/report/philippines-auto-finance-market-size-and-forecast-2019-2029

► Philippines Auto Finance Market Sees Strong Growth in 2023
In 2023, the Philippines witnessed a notable 22.9% year-over-year growth rate in motor vehicle sales, driven by a 5.6% rise in GDP and heightened demand for vehicles. This robust growth contrasts sharply with negative trends in other ASEAN countries, such as Indonesia. The surge in vehicle sales underscores the country's economic recovery and growing consumer confidence, positioning the Philippines auto finance market for continued expansion.

► The Structure of the Philippine Auto Finance Market
The structure of the Philippine auto finance market is predominantly shaped by banks, particularly Universal and Commercial Banks (UKBs), which provide a comprehensive array of banking services, including deposits, loans, and investment products. The top 10 UKBs dominate the market, holding over 80% of the industry's financial assets, with two of these institutions being state-owned.

► Growth in the Used Car Segment of the Philippines Auto Finance Market
The used car market in the Philippines is expanding rapidly, driven by economic uncertainties and the recovery from the COVID-19 pandemic. Consumers are increasingly turning to more cost-effective alternatives, creating substantial opportunities for the auto financing sector. While volume sales have remained relatively stagnant, the growing revenue in the used car market indicates that consumers are willing to invest more in higher-quality options and favorable financing terms.

► Impact of Government Policies on the Philippines Auto Finance Market
Government support for green vehicles and infrastructure, along with advancements in microfinance and fintech, is driving growth in the Philippines Auto Finance Market. The expanding middle class, urbanization, and a growing used car market also contribute to the sector's positive trajectory. The Tax Reform for Acceleration and Inclusion (TRAIN) law, implemented in 2018, significantly impacted the market by adjusting excise taxes, leading to a surge in vehicle purchases before the law's enactment. Post-TRAIN, the industry faced a slowdown due to increased excise taxes and fuel costs, affecting affordability. However, demand for auto loans remains strong, supported by favorable financing terms and government efforts aimed at economic recovery.

► Technological Advancements and Market Innovations
Technological innovation is playing a crucial role in the Philippine auto finance market. Companies are investing in cutting-edge technologies to enhance financial operations, including digital platforms, personalized services, and automation. These advancements are crucial in meeting the stringent requirements of the auto finance market and adapting to evolving consumer needs.

► Financial Inclusion and Regulatory Reforms in the Philippines Auto Finance Market
The increasing importance of digital financial services is evident, with mobile phone ownership at 74% compared to a 51% banking penetration rate. The Bangko Sentral ng Pilipinas (BSP) is focused on improving financial inclusion through technological advancements and regulatory reforms. These reforms, including raising foreign ownership limits in financial institutions and streamlining banking license processes, aim to stimulate foreign investment and expand financial services access.

► Challenges in the Philippines Auto Finance Market
The Philippines auto finance market faces several key challenges impacting both consumers and lenders:
• High Interest Rates: Elevated interest rates make car loans less affordable, potentially deterring consumers from purchasing vehicles and slowing market growth.
• Limited Financial Access: A significant portion of the population remains unbanked or underbanked, restricting access to traditional financing options and limiting market potential.
• Economic Instability: Fluctuating incomes and economic instability affect borrowers' ability to make loan repayments, increasing default risk and complicating the financial environment.
• Bureaucratic Red Tape: Inefficient credit assessment processes and bureaucratic delays hinder the timely approval of auto loans, creating obstacles for potential borrowers.
• Rising Vehicle Prices: Increasing vehicle costs necessitate larger loans, which can strain borrowers' budgets and heighten risk for lenders.

► Outlook and Future Prospects for the Philippine Auto Finance Market
The Philippine auto finance market is set for substantial growth, fueled by digital finance expansion and supportive government policies. Initiatives like the National Strategy for Financial Inclusion (NSFI) 2022-2028, along with progressive laws such as the Public-Private Partnership Act and the Foreign Investments Act, are expected to attract foreign investments and drive economic growth. Emphasizing sustainability and eco-friendly practices gives companies a competitive edge, while a rising population, increasing income levels, and technological advancements further boost the market. With vehicle sales projected to hit 1 million units by 2025 and population growth to 129 million by 2030, the Philippines auto finance market is well-positioned for continued success and expansion.

► Recent Developments and Market Dynamics
• As of March 1, 2024, Toyota Financial Services Philippines (TFSPH) discontinued the acceptance of post-dated checks from select bank branches.
• In 2023, Toyota Financial Services Philippines achieved a notable financial performance, reporting a Net Income of PHP 1,792 Million, marking a substantial 72.9% increase from the previous year.
• In February 2024, the private equity firm Creador invested PHP 4 Billion (USD 71 million) to acquire an 18% stake in Asialink Finance Corporation in the Philippines.
• In 2024, Metrobank plans to allocate up to P5 Billion for capital expenditures, with an estimated P3 Billion to P5 Billion earmarked. Approximately 70% of this expenditure is expected to be directed towards information technology.
• In 2023, PS Bank achieved significant milestones, reporting a record net income of PHP 4.5 Billion, marking a substantial 23.2% increase from the previous year. PS Bank's enhanced return on equity of 11.7%, up from 10.2% in 2022, underscores its strong financial performance and effective management of assets.

► Scope of the Philippines Auto Finance Market Report
The Philippines Auto Finance Market Report offers an in-depth analysis of the market's historical performance and current state, pinpointing key factors for future growth. It starts by examining the Philippines' economy, policies, geography, and demographics to understand their market impact. The report then delves into the financial system, covering various market aspects and segments. Key market players are profiled, with insights into their financials, recent activities, and the competitive landscape. The report also provides a future market outlook, highlighting challenges and opportunities. It covers market revenue, forecasts, and the influence of economic, political, technological, and demographic factors. Comprehensive segmentation analysis and insights into market dynamics are included, offering stakeholders valuable information on the Philippines' evolving auto finance market.

► Market Segmentation
By Type of Vehicle Financed
• Motor Vehicle
• 2Wheeler

By Lender Type
• Banks
• NBFCs
• Captives

By Type of Loan
• New Car
• Used Car
• Refinancing

By Loan Tenure

By Geographical Locations

► Companies Covered
Toyota Financial Services Philippines Corporation (TFSPH)
AsiaLink Finance Corporation
Metro Bank Philippines
Philippines Savings (PS) Bank
Asia United Bank
Union Bank of the Philippines (UBP)
Bank of Philippines Island (BPI)
BDO Unibank Philippines
Robinsons Bank
Philippines National Bank (PNB Savings Bank)
Security Bank
East West Bank

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Indonesia Auto Finance Market Size and Forecast (2019-2029)
https://www.makreo.com/report/indonesia-auto-finance-market-size-and-forecast-2019-2029

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This release was published on openPR.