AMID the impact of the Tax Reform for Acceleration and Inclusion (TRAIN) law on car taxation, tire manufacturer Goodyear remains bullish on registering a “double-digit” growth in terms of sales in the Philippines this year at pace with the robust performance of the entire automotive industry.
“We’ve seen the tire industry growing by 12 percent CAGR [compounded annual growth rate] for the past five years,” Goodyear Philippines Inc. (GPI) Market Director Kenneth Sambajon told reporters during their media briefing in Pasig City on Thursday.
He said the size of the local tire market is at 2.4 million, based on the number of registered vehicles in the Land Transportation Office to date.
“That’s on the consumer segments, excluding trucks, buses and others,” Sambajon said, citing that replacement rate is between three years and five years. “In terms of the segment that is growing, it’s actually the SUVs [sport-utility vehicles].” This vehicle type, which accounts for 30 percent of the total automotive sector, has seen tremendous patronage on the back of a strong demand for bigger four-wheel cars mainly due to road condition and flooding issues.
“Because of this tremendous growth in the automotive industry, it replicates on the tire replacement industry, which we play on that arena,” noted Saul Aurelius Isidore C. Babas, marketing head at GPI.
Goodyear is ranked as the No. 1 brand in Metro Manila and National Capital Region by the GfK, with a 41-percent market share as of August 2018.
“So I’m happy with the results because this is an independent agency, who conducted the audit for the industry,” he said.
Marking its 120 years of operations globally, Goodyear is now gearing up for next year as it celebrates its 100 years in the Philippines.
Continuing its legacy of innovation, GPI recently launched its breakthrough Assurance TripleMax 2 tires, enhanced to deliver better performance specifically in its wet braking, handling, comfort and assistance.
To continue serving its customers, the company is committed toward expansion of its retail footprint nationwide with 100 Goodyear Autocare outlets to date.
It is also focused on improving its after-sales service through continuous certification programs to its technicians, state-of-the-art facilities and an enhanced overall customer experience.
With more activities lined up and products to launch in time for its centennial celebration, GPI remains optimistic on sustaining business growth.
“From three or four years ago, we’ve grown with a 37-percent market share. And now it’s 41 percent. Hopefully, we increase it by at least one percent annually. So we expect our market share in Metro Manila and NCR at 45 percent maybe in the next four years, or 46 percent in the next five years,” Sambajon said.
He is certain that because of the TRAIN Law, more people will be willing to invest in tires than buying or changing cars at present or in the near future.
“The reason of the impact right now of the automotive industry [to the tire replacement sector] is because of the TRAIN Law, there were changes in terms of the taxation,” he said.
This priority measure of the government was signed by President Duterte on December 19, 2017—two decades after the previous one was put in place.
Cuts on the personal income tax of almost eight million employees, who earn up to P250,000 annually, have already commenced since January 1, 2018. Meanwhile, levy on cars, fuel, sugary beverages and tobacco has increased from the beginning of this year.
While for the past three years SUVs are growing, Sambajon said that smaller cars are expected to go back this year because the below P1-million cars are actually the ones least likely hit by the TRAIN Law.
On a personal note, he shared that with this legislation in place, the tire replacement rate will decline after three years.
“The positive thing about it is that more and more people will keep their SUVs or their vehicle for a longer period of time,” he said.
Another effect would be for people who keep their cars and extend them from five years to 10 years will now become more cautious in terms of buying a cheaper tire.
“You will now invest on your tire once again and, then, most likely its gonna be Goodyear,” Sambajon stressed. “That’s my mindset that it’s gonna be better for us because people will extend their vehicles more rather than to change them after five years as what they’ve been practicing before.”