Philippines Auto Finance Market Size and Forecast (2019-2029)

Executive Summary

Philippines auto finance market has recorded a compound annual growth rate (CAGR) of 7.31% from 2019 to 2023. The auto finance market in the Philippines is characterized by significant growth and opportunities. High inflation and interest rates in 2023 did not dampen consumer spending, with motor vehicle sales reaching an all-time high of approximately 430,000 units. The market has shown robust performance, reflecting a strong recovery and growth phase for the industry since the COVID-19 pandemic in 2020. This growth trajectory has been consistent, with annual sales volumes of both passenger and commercial vehicles on the rise.

There was a notable growth seen in 2023, that can be attributed to economic recovery, with GDP increasing by 5.6% in 2023, and a higher demand for motor vehicles in the country. In the Philippines, motor vehicle sales, including passenger and commercial vehicles, grew by 22% in 2023, in contrast to negative growth in other ASEAN countries like Indonesia.

Government initiatives supporting green cars and infrastructure development, along with improvements in internet infrastructure, are expected to further drive market demand. Additionally, initiatives in microfinance, fintech advancement, and government support are enhancing access to financial services, thereby fostering economic growth.

The expanding middle class and urban population, coupled with a burgeoning used car market, are also contributing factors poised to bolster the auto financing sector in the Philippines. Population growth and economic development are pivotal drivers for market expansion, with increased commercial activities further boosting demand for vehicles.

Given the growing emphasis on digital financial technologies, supportive government policies, and rising consumer confidence, the auto finance market in the Philippines is poised for substantial growth. However, retail customers and small businesses often encounter difficulties in accessing capital from commercial banks due to stringent lending requirements. Nevertheless, the situation is improving with the rapid adoption of digital financial technologies and supportive government policies. These developments are expanding business opportunities for banks, enabling them to better serve new consumer segments and meet the growing demand for financial services.

TRAIN Law and its Impacts on the Philippine Auto Finance Market:

The Tax Reform for Acceleration and Inclusion (TRAIN) law, implemented in 2018 in the Philippines, aimed to simplify, make fairer, and improve efficiency in the country's tax system. A key provision involved adjusting excise taxes on automobiles, with higher taxes imposed on vehicles with higher retail prices, while lower-priced vehicles saw reduced taxes or no change. Before the law took effect, there was a surge in vehicle purchases as consumers sought to avoid the impending higher taxes. Post-implementation, the automotive industry experienced a slowdown due to increased excise taxes on automobiles and fuel, affecting consumer affordability. The adjustments in vehicle pricing, particularly on luxury and high-end models, have influenced consumer preferences towards longer loan tenures and competitive financing rates to manage higher costs. However, despite these challenges, the demand for auto loans remains strong as Filipinos continue to aspire for vehicle ownership.

Philippines Financing Structure:

The Philippine financing market is dominated by Universal and Commercial Banks (UKBs), which provide a wide range of banking services and hold over 80% of the industry's financial assets, with two of these being state-owned. Thrift Banks (TBs) focus on retail and small-business borrowers, offering auto, motorcycle, and home loans. Rural and Cooperative Banks (RCBs) support small-scale enterprises in rural areas, particularly in manufacturing and agriculture. The country also has a diverse array of non-bank financial intermediaries (NBFIs), including mutual funds, securities traders, savings associations, credit unions, insurance companies, and retirement funds. A subset of NBFIs, such as microfinance institutions, microfinance NGOs, pawn shops, and cooperatives, primarily serve retail customers and small businesses, often focusing on loans for used automobiles and motorcycles.

Future Outlook of Philippines Auto Finance Market:

The auto finance market in the Philippines is poised for significant growth, driven by the expanding population and rising income levels, which are boosting car sales, particularly among higher-income individuals seeking larger loans for mid to high-range vehicles. The adoption of digital technologies, artificial intelligence, and machine learning in auto financing processes is revolutionizing the industry.

Government initiatives aimed at infrastructure improvement, such as developing electric vehicle charging stations, are expected to bolster car sales, especially for eco-friendly vehicles. This surge in demand is likely to increase the need for auto financing solutions. Additionally, efforts promoting digital banking, increasing internet penetration, and government-led financial inclusion are anticipated to further stimulate market growth.

The Philippines' rapidly growing population, projected to increase from 119 million in 2024 to 129 million by 2030, is driving demand for innovative financial services. A young, tech-savvy consumer base is fuelling the expansion of mobile payment platforms and other technology-driven financial sectors. According to the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI), motor vehicles sales in Philippines are projected 1 million units by 2025, reflecting a strong future outlook for the auto financing market in the Philippines. Overall, the Philippines auto finance market is set for robust expansion, underpinned by demographic growth, rising incomes, technological advancements in digital finance, and supportive government initiatives.

Scope of Philippines Auto Finance Market Report:

The Philippines Auto Finance Market Report analyses the historical performance and current state of the auto finance market in the Philippines while identifying key factors that will influence its future growth. The report begins by examining the country's economy, policies, geography, and demographics to understand their impact on the market. It then offers a comprehensive analysis of the financial system, covering various aspects of the market. The report also provides a detailed exploration of the auto finance market segments in the Philippines.

It profiles key market players, examining their financials, recent business activities, and assessing the overall competitive landscape. Additionally, the report offers a future outlook of the market and evaluate the challenges and opportunities it faces. This analysis aims to provide stakeholders and industry experts with comprehensive insights into the evolving dynamics of India's rapidly growing infrastructure sector.

The report thoroughly examines the Philippines auto finance market, analysing key parameters such as market revenue and forecasts, historical and current market performance by covering several co - related factors, and the influence of economic, political, technological, and demographic factors to the market. It also addresses various challenges and opportunities associated with the market. Additionally, the report conducts a comprehensive segmentation analysis of the market.

Period of Study:

• 2019 - 2023: Past and Present Scenario
• 2023 – Base year of study
• 2024 – 2029: Future Outlook

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

Competitive Landscape

This section details the market comparison and share of key players in the Philippines auto finance market, highlighting recent investments, mergers and acquisitions (M&A), and funding activities. It also includes detailed profiles of selected industry players.

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

Key Questions Answered

1. What is the historical performance of the Philippines auto finance market, and what is the current scenario?

2. How do the economic, political, technological, and demographic scenarios in the Philippines affect the auto finance market?

3. What does the Philippines banking system look like, and how does the financial services sector contribute to the country’s overall economy?

4. What is the amount of motor vehicle loans (auto and motorcycle loans) outstanding for household consumption in the Philippines?

5. What does the borrower profile look like for the Philippines demographic?

6. Who are the key players in the Philippines auto finance market and their level of competition?

7. Which are the various startup companies involved in auto financing in the Philippines?

8. What significant mergers and acquisitions have shaped the history of the Philippines auto finance market? Show more