Why the Auto Parts and Supplies Sector Continues to Thrive in PH

The auto parts industry in the Philippines is thriving due to the continuous growth of the automotive sector in the country. This growth is primarily fueled by the increasing annual vehicle sales and the rising demand for aftermarket automotive products and services.

At present, there are more than 250 local businesses in the Philippines engaged in producing and importing up to 330 different types of auto parts and components. These parts are not limited to metals but also include plastic, rubber, and other composite materials. These businesses cater to both original equipment manufacturers (OEMs) and the independent aftermarket (IAM) sector, which focuses on parts replacement.

According to the Asia-Pacific Economic Cooperation data from 2020, the automotive parts industry in the Philippines provides employment to approximately 67,100 workers across the nation. These employees are involved in the manufacturing of automobiles, motorcycles, parts, and direct importation.

Government support

The Department of Trade and Industry (DTI) is actively backing the auto parts sector to enhance its standing as a key player in the automotive industry. According to a report by the agency, the goal is to establish the Philippines as a regional hub for vehicles and parts in Asia by strengthening the local supplier base in the medium term.

DTI acknowledges the challenges faced by local auto parts businesses, such as lack of economies of scale and a fragile supply base. To address these issues, the department suggests implementing improved policies and providing temporary subsidies to support the growth and operations of the sector.

Furthermore, research highlighted by DTI underscores the projected growth of the Asian market, particularly driven by robust business activities in China, India, and Southeast Asian nations. The upcoming ASEAN Economic Community in 2015 and the ASEAN+1 Free Trade Agreement are seen as opportunities to boost trade and investment prospects in the region.

Rapid growth of vehicle ownership in PH

The government’s crucial backing is due to the key factor of the consistent and robust increase in vehicle sales within the nation. As per Campi, the Philippine vehicle sector is projected to reach a groundbreaking 500,000-unit sales milestone in 2024, following the remarkable new vehicle sales record of 429,807 in 2023.

The 2023 total sales figure marked a significant achievement for the industry, surpassing expectations and even the pre-pandemic sales record. Back in 2017, the industry achieved a then-record sales figure of 425,673 units.

Furthermore, the LTO’s report reveals an estimated total of 24.7 million unregistered vehicles in the country, representing a substantial 65 percent of all motor vehicles as of 2024.

Based on the most recent data, the total number of registered vehicles nationwide was approximately 13.9 million in 2022. This number is expected to grow annually by around 5 percent to 7 percent (excluding the consistent rise in unregistered vehicle volume).

Another bright spot for the industry is the emerging electric vehicle (EV) sector in the country. EVAP data indicates that there are roughly 15,300 EVs in operation nationwide, including 354 electric motorcycles and 88 electric buses as of the end of 2023. EVAP predicts that the volume of EVs in the country will increase to about 6.6 million units by 2030.

“Inevitably, a rising number of the Philippines’ vehicle fleet is also already ageing. Though the average vehicle lifespan in the country is about 15 years or more, there is a constant need for automotive parts whether cars are newly purchased or are running for quite some time,” said Rungphech ‘Rose’ Chitanuwat, Informa Markets General Manager in the Philippines, the organizer of the upcoming Auto Parts & Vehicles Expo Philippines (APVE).