Auto Finance Market Is Expected To Grow At A CAGR Of 11.4% By 2027. Will The Philippines Auto Finance Market Stand On This Expected Figure? : Ken Research

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1. 60% of the mobile and internet users had an online financial transaction in the past and accounts with NGOs and cooperatives were primarily transacted over-the-counter (OTC).

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• Increased use of online banking/mobile apps reflects a progressive shift towards digital payments. These online payment channels helped in weathering movement restrictions imposed by months of COVID-19 lockdown measures.
• Adults who were uncomfortable using online platforms were worried about the possibility of losing money due to hacking and inadvertent transactions (i.e., transfer to wrong account). To address these concerns, FSPs are improving their security measures to ensure that users are shielded from fraudulent transactions.

Trends and Developments in Philippines Auto Finance Market

2. Incentives provided for development and Deployment of Electric Vehicles in Philippines.

• Electric Vehicle Industry Development Act (EVIDA) gave incentives to electrified vehicles pushing for lower to zero-emission vehicles as well as improving EV charging infrastructure network.
• EV players consist of 54 manufacturers/importers, 11 parts manufacturers, and 18 dealers/traders. There are 19 charging stations, mostly in the main island of Luzon.
• In 2018, there were about 7,000 registered EVs for local use in the country according to Land Transportation Office (LTO).
• The Electric Vehicle Association of the Philippines (EVAP) forecasts an annual growth rate of 8-12% that will produce P1.68 B ($33.6 M) revenue from services and sales of 200,000 units by 2024.

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3. Major Regulatory Authorities & Associations

Bangko Sentral ng Pilipinas: The central monetary authority in charge of regulating money, banking and credit in the Philippines.

Bankers Association of the Philippines: A non-profit organization that frames rules and regulations in co-operation with the Central Bank that will help in efficiency and effectiveness of banking services.

Securities and Exchange Commission: The national government regulatory agency charged with supervision over the corporate sector, capital market participants, and securities and investment instruments market, and protection of the investing public.

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Philippines Auto Finance Market

In 2022, the number of vehicles funded rose to ~1,600 Th units. Will future growth of this number be supported by the Philippines Auto Loan Market? Ken Research

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1. The rising consumption, availability of auto loans and initiatives by automakers restored the market after Covid-19 pandemic.

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• The vehicle registration data reflect the overview of number of vehicles present in the market. Gradual increase in car parc size in industry can be attributed to the restoration of consumption and the initiatives of banks in providing consumer durable loans, post-covid.
• Launch of new models and initiatives to support electric vehicle adoption in Philippines by automakers stimulate the consumer interest in autos. Companies have started focusing on increasing the volume along with preserving the margin. Promos are focused on value enhancement than price.

Trends and Developments in Philippines Auto Finance Market

2. Introduction of Comprehensive Tax Reform

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• The passage of the Comprehensive Tax Reform Bill will adjust the excise tax on automobiles increasing their cost and makes motorcycles more affordable than cars.
• The Comprehensive Tax Reform Program will help the economy grow by 3% by 2022. GDP will be boosted as a result of higher household consumption due to lower income tax and the cash transfers. Increased economic activity will be buoyed by increased household consumption and higher investments.
• The motor vehicle users charge (MVUC) or Package 1C of the Comprehensive Tax Reform Program was introduced to provide adequate funding for the maintenance of national and provincial roads. It also aims to address air pollution from motor vehicles.

3. Major Partnerships of Auto Finance Players

• Lazada sellers can avail of SB Finance’s multi-purpose loans through a hassle-free application and a low interest rate of 1.8%. Sellers may avail of up to 12-month payment schemes and can expect funds to be credited within 3 banking days.
• Security Bank Corporation’s consumer finance arm SBF has partnered with Grab Philippines to offer personal loans to Grab users, driver-partners, and merchant-partners through the Grab super app.
• SB Rental Corp. is in a partnership with Cats motors inc., the principal dealer of Mercedes Benz locally to offer operating lease options for the acquisition and use of Mercedes Benz vehicles.
• The partnership, which started in 2016, began with global bank MUFG acquiring a 20% stake in Security Bank for PHP 36.9 Bn. Since then, the two lenders have capitalized on its partnership by bringing top-notch products and services to customers.

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Philippines Auto Finance Market