MANILA, Philippines — Reaching a 300,000-unit motor vehicle market by 2015 is highly probable based on the growing per capita income of Filipinos, Trade and Industry Secretary Gregory L. Domingo said.

Domingo was reacting to the new automotive study by the University of Asia & the Pacific (UA&P) that projected local automotive demand to hit 300,000 units by 2015.

“Reaching a 300,000 demand by 2016 is very possible,” Domingo said noting that the per capita income has reached over $2,000.

“Sales of cars have been proven to shoot up if per capita income exceeds $2,500,” he said.

He even said that the 300,000-unit demand level might be hit in two to three years and not in four years.

The domestic automotive market has been growing. Last year, total sales increased by 27 percent over 2009 or more than 160,000 units. This year, however, the domestic industry is likely to post flat because of the impact of the Japan natural calamities in March this year and the recent flooding in Thailand. Both incidents had curtailed vehicle production. The Chamber of Automotive Manufacturers of the Philippines Inc. has already conceded to 145,000 unit sales for the entire year.

“We are working with industry players,” he added.

Based on the new automotive study “Invigorating Philippine Automotive Manufacturing: A Policy Proposal”, the University of Asia and the Pacific (UA&P) stated there is a positive outlook of a 300,000 vehicle market by 2015.

The UA&P study said that the size of the country’s population plus the rising per capita income can further stimulate vehicle ownership.

It cited positive relationship between income and car sales. It noted an earlier automotive study conducted by Deloitte Consulting Inc., which showed that ownership rates grow twice as fast as income when income is within the range of $3,000 to $10,0000 per capital gross national income.

In the Philippines, the study said, per capita income has been steadily growing and is now at $4,060.

Other positive signs are the steady flow of OFW remittances and rising agricultural incomes which boost purchasing capacity. In addition, attractive financing terms have led to higher automotive loan availments especially by entry-level buyers for their business or personal use, the study said.

The study further said that the country’s archipelagic make-up and improved infrastructure can also be a source of growth for vehicle ownership.

“Given the aforementioned growth factors, an increase in the size of Philippine automotive manufacturing can be expected,” the study added.

The study said that the 300,000-market demand level projection in the next four years is a shared view among parts and components makers and most of the automotive manufacturers.

Aside from the domestic market, the study also painted a further expansion of the vehicle demand in the context of the ASEAN market.

The ASEAN region has agreed to attain the ASEAN Economic Community by 2015 wherein the member countries conduct business in a seamless and borderless market.

“The expansion of Philippine automotive manufacturing may yet be realized by tapping nearby foreign markets. At present, only Ford Motor Group Philippines has been able to consistently export completely built-up packs during the last ten years,” the study said.

Exporting to other countries such as ASEAN could significantly add to the limited domestic market size of the local automotive industry from a mere 92 million to 504 million people.

The growth in per capita incomes within ASEAN also points to it as a large market with the capacity to buy.

Given the potential growth of vehicle demand within ASEAN, the study said, it is highly probable that other ASEAN economies such as Indonesia and Thailand will begin to experience constraints in their plant capacities since their production of motor vehicles has almost, if not exceeded, one million units.

The expected growth in demand can be considered a clear opportunity for Philippine automotive manufacturers to fill the gap and utilize the available local capacity, the study said.