Last weekend I wrote about the jump in auto supply loan growth
Finally, auto loan growth bounced back strongly this October to 32.58% from 24.47% a month ago which correspondingly reflected on the 17.3% jump in unit auto sales
Auto sales have been another curiosity, with the imminent passage of the DoF’s tax reform program, which will significantly increase taxes, demand for autos should have ramped up (temporarily). Perhaps, such frontloaded demand will occur at the end of this year. If not, this would amplify the auto industry’s vulnerability.
The Filipino Consumer’s Paradox: Highly Optimistic But Uncannily Frugal! Lessons From China’s Stock Market National Team December 10, 2017
Well, the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) reported the November sales performance ahead of its usual announcement date.
Interestingly, increases in asset prices have been by media as the Midas Touch.
The corresponding headlines says it all (articles below dated December 13, 2017)
Autoindustriya.com, Philippine auto sales up anew in November 2017 with 40,799 units
Interaksyon.com, Car sales breaches 40K-mark in November ’17
What has been seen and reported by media has been the record high monthly sales.
But there have been lots of unseen factors.
In sales lingo, the frontloading of demand is known as “selling a price increase”.
Yet, November 2017’s 23.7% jump has only been slightly higher than last year’s 22.19% and even lower than 2015’s 25.94%. In that context, the month’s gains have been unimpressive.
Even more, because this month’s ramp had been mediocre, it did little to boost year to date gains. 2017’s 11-month growth rate of 16.81% remains significantly lower compared to the previous two years: 2016’s 24.26% and 2015’s 25.94%
Two days ago, an article reported the industry’s expectations. [Philstar Car firms brace for impact of auto excise tax December 11, 2017]
Car companies are bracing for the impact of the proposed excise tax on automotive vehicles on their sales next year, saying they expect a significant drop as soon as its implementation starts.
The industry, however, is hoping to make one big run this December, a month before the higher prices take effect.
“The last month before the excise tax implementation, we’re hoping that there would be a significant spike and then we expect a big drop in January,” Isuzu Philippines Corp. marketing head Joseph Bautista said.
Bautista said the entire Philippine automotive industry is on track to meeting its yearend target sales of 450,000 units.
So perhaps TRAIN’s grand boost sales would come in December
Falling sales have hardly been an anomaly. Ever since the peak of July 2016, the rate of growth has turned south.
To add, in the face of historic fiscal and monetary stimulus, auto sales have sputtered.
Motor vehicle sales have virtually been indifferent to record credit expansion, as evidenced by the recent M3 breakout (upper window)
The disruption or volatility caused by TRAIN will eventually be discounted. However, unless the underlying economic factors responsible for “peak auto sales” have been addressed or resolved, the current trend will be reinforced.
Moreover, significant increases in auto prices will impact demand.
If the government’s manufacturing numbers have been accurate, then the negative output in auto production for the month of October could highlight the industry’s sales expectations for the coming months. Auto production has virtually crashed in the last seven months. It registered a high of 55% in March and was -4.7% in October.
The industry may be responding to a glut in inventories and or expectations of a sharp downturn in sales.
No comments:
Post a Comment