SANTA ROSA, Laguna—Market leader Toyota Motor Philippines Corp. has conceded it will be difficult to achieve its target of selling 165,000 units this year, as pressing economic issues, particularly the worsening traffic in Metro Manila, dampen the demand for vehicles. TMP President Satoru Suzuki is no longer optimistic the firm will hit its sales target by yearend. As much as sales are doing better compared to last year, TMP will still fall short of its objective at the rate that it is going, he projected.
“Beginning of this year, we expected normal inflation. Interest rate is already going down, [and the] economy is growing and is becoming better this year. Unfortunately, market reaction is not good enough compared to what we expected,” Suzuki told reporters on Monday.
TMP reported its sales from January to September improved 4.3 percent to 114,117 units, from 109,402 units during the same period last year. If the vehicle assembler intends to hit its sales target of 165,000 units, it has to sell nearly 17,000 units every month this fourth quarter.
Describing this task as “challenging,” Suzuki is settling for a flat growth of selling up to 155,000 units, from the 153,004 units sold last year.
Suzuki attributed the firm’s slower-than-expected growth rate to various economic issues, such as the worsening traffic condition in Metro Manila, and the protracted trade conflict between the United States and China. He said these factors weigh on the decision of buyers to purchase big-ticket items, which include automobiles.
“The traffic situation is giving some negative sentiment to the customers. Also, [there] may be some negative anticipations about the war on trade, like the China-US situation. Maybe the future of economy is becoming not so good to us, it slows down, [and consumers] stopped the purchasing of high-priced items, like cars,” the TMP chief explained.
“[These issues] may not be big issues, but small issues and they are combined. They are giving us some market growth slowdown,” he added.
Last year TMP’s sales slumped nearly 17 percent to 153,004 units, from 183,908 units in 2017, reflecting the industry-wide decline of 16.03 percent brought about by a combination of tax hikes, higher interest rates, record high inflation, unstable fuel prices, among others.
Fighting goals
As such, vehicle assemblers are targeting to recover strong this year. The automotive industry, headed by TMP which owns more or less 40 percent of the market, is eyeing to grow sales by 10 percent on introduction of new models and implementation of value promos.
On the production side, Suzuki admitted TMP is struggling to comply with the output required by the government’s Comprehensive Automotive Resurgence Strategy (CARS) program, under which Toyota New Vios is enrolled, along with Mitsubishi Mirage.
As of September, TMP produced 24,321 units of the New Vios, or 73.02 percent of its target to make 33,304 units this year. Last year the vehicle assembler manufactured just 14,682 units of the CARS-enrolled model, or 72.22 percent of its 20,328 unit objective.
Participants in the CARS program receive fiscal support of up to P9 billion from the government in exchange for domestic production of 200,000 units of their enrolled model, which should be completed in a span of six years—for TMP, it’s up to 2024.
Suzuki said TMP is challenged to comply with the CARS program’s volume requirement because of the taxes imposed by the government on vehicles last year. He said TMP did not expect any changes in the tax landscape when it applied for the CARS program in 2016.
TMP invested a total of P5.38 billion for its participation in the CARS program for the production and parts localization of the New Vios.