Analysts at Ken Research in their latest publication “Philippines Auto Finance Market Outlook to 2024- Growing Prominence of Captive Finance and Surge in Used Car Sales Supporting Disbursement for Auto Loans” believe that the market demand is likely to follow a growing trend in the near future due to a forthcoming increase in used cars sales and a shift towards newer models of mobility such as car-sharing and leasing, which will, in turn, help the economy grow as well. The report provides a comprehensive analysis of the Philippines’ auto finance market including market evolution, market overview, market genesis, and Market size and market segmentation. Extensive focus has been placed in quantifying the auto credit disbursed auto loans outstanding and a number of vehicles financed. The report covers aspects such as market segmentation (by loan tenure, type of vehicles, new and used cars and type of institutions) and snapshot on general automotive space in Philippines Some positive factors expected to impact the market are the influx of digitization based lending models (introduction of fin-tech products), the spread of customized loan products and a further rise in the penetration rate of banks and Non-Bank finance. The market is anticipated to register a positive CAGR of 9.0% in terms of credit disbursed and 8.1% in terms of the total loan outstanding during the forecasted period 2019P-2024F.
Philippines Auto Finance Market Overview And Size
Market Overview: The auto finance market has played an imperative role in the overall GDP (Constant Prices) contribution in the Philippine economy with a valuable contribution of more than 25% in terms of the auto loan outstanding by the end of 2019 (Provisional). The Auto Finance Market in the Philippines is fairly new and has not been able to penetrate the country. There is a lack of knowledge and awareness in the country which leads to the problem of people opting for cash purchases, in place of finance payments.
Major operations are conducted by two types of entities namely, Banks & Subsidiaries and Non-Bank Financial Institutes. The only captive finance working in the country is Toyota Financial Services Philippines and other than that there is a lack of Captive finance institutions.
Philippines auto finance market size in terms of the auto loan outstanding increased with a double-digit CAGR during the same period. The growth factors include lowering lending rates, growth in new & used car sales, expanding household population and higher demand in the urban regions along with progressive technological advancements being mandated by the government and the adoption of digitalization by all major financial institutions in the country. Two-wheelers market witnessed growth with the rise in motorcycle fueled by the huge demand by small industry workers and rural business. Constant prime lending rates, growing car sales and evolving used car market have been the major push factors.
By Type of Vehicles Financed: Market segmentation is done on the basis of sales of a type of Vehicle financed. It was observed that out of total vehicle financed, new Automobiles capture the highest share of the market in 2019P, while used Automobile capture of the overall financed vehicle, and motorcycle captured rest share in terms of units.
By Banks and Non-Banks: Philippines Auto finance market is largely governed by Banks and banking segment of the market amounted to the overall market. Non-banking sector amounted to remaining the market in terms of the Auto loan outstanding.
By Banks on the basis of Auto Loans and Motorcycle Loans: In the Philippines, it is witnessed that the banks majorly focus upon providing loans to the Automobile segment rather than the motorcycle segment. Due to this, the auto loan segment of the bank captured the highest share of the market and Motorcycle loan amounted to the rest of the overall market.
By Non-Banks on the basis of Auto Loans and Motorcycle Loans: In Philippines, Non-Banking segment do not have a lot of capital and deep pockets, hence they majorly focus on providing loans for Used Automobiles and for motorcycle, as they have lower average price.
By Type of Banking Institutions: There are majorly two types of Banking Institutions in the Philippines; Commercial and Thrift banking systems. Commercial banks are big and govern the largest share of the banking segment of the market and thrift banking system amounted to the rest of the banks share in the market.
By Tenure of Loan: In Philippines Auto Finance Market, the Tenure of loan for New Vehicles is divided into 5 sections; 1 Year Loan period amounts to the lowest share on the basis of Auto Loan Disbursement for New Vehicle while remaining share is given to the 0-5 year or more tenure period amounts to the maximum share. Used cars, the most favourable tenure is said to be for 3 years or more.
By Sales Registration: In the Philippines, we witness that NCR region, have the highest value of sales registration and approximately the highest of the total vehicles are registered in this area.
Competitive Landscape Of Philippines Auto Finance Market
The overall competitive nature has been fragmented owing to the large size of other players in the market. The top 5 entities capture over 50% of the total auto loan outstanding in the banking sector in 2019P. Banks have been the dominant entity in 2019P. Although there are approximate ~entities involved in extending auto finance in the Philippines, the market is dominated by banks in terms of auto loans extended owing to low cost of financing and high trust factor associated with their organized & stable business structures. In 2019P, there were 6 major banks namely Metrobank, BDO Unibank, Eastwest Bank, Bank of Philippine Island, Rizal Corporation and Maybank.
The overall competitive nature has been highly concentrated owing to major market share captured by 3 big players namely, Toyota Financial Services Philippines Corporation (TFSPH), Unistar Credit & Finance Corporation and Radio Wealth finance Company. A similar scenario has been observed for the year 2019P. The Largest player in this category is TFSPH.
Competing Parameters: These entities majorly compete on the basis of diversification of services; interest rates charged, expanded distribution network & regional presence and enhanced customer relationship. One of the chief competing parameters is digitalization that has completely changed the market along with major strategies used to attract customers & expand business including Cash Your Car and others.
Philippines Auto Finance Market Future Outlook
Future Growth Prospects: Philippines auto finance market is likely to witness a boom in terms of the auto loan outstanding, credit disbursed and a number of vehicles financed especially owing to fast paced developments on the technological front with the development of the Eastern Economic Corridor (EEC). Furthermore, the inclusion of many Japanese Automakers is also supposed to act as a catalyst for growth. This is expected to increase the number of total vehicles financed in the country. Customers would witness new schemes in the market focusing primarily on customers friendly outlook and enable customers to operate auto loans financial services from home, without any hassle. Moreover, the rise in commercial activities engaging automobiles, such as the use of vehicles in public transport, agricultural and industrial use, are expected to be the potential prospects of growth in the next five years.
Key Segments Covered:
By Type of Vehicle Financed
By Banks and Non-Banks
Banks (Auto Loans and Motorcycle Loans)
Non Banks (Auto Loans and Motorcycle Loans)
By Type of Banking Institutions
Commercial and Universal Banks
By Nature of Vehicles New Vehicles (Banks and Non-Banks)
Used Vehicles (Banks and Non-Banks)
By Type of Vehicle Sold
By Tenure of Loans
New Vehicle (1 year, 2 Years, 3 Years, 4 Years, 5 Years or More)
Used Vehicle (1 year, 2 Years, 3 Years or More)
By Registration of Vehicles
Key Target Audience
Existing Auto Finance Companies
Captive Finance Companies
Private Finance Companies
New Market Entrants
Time Period Captured in the Report:
Historical Period: 2014-2019P
Forecast Period: 2019P-2024F
Key Companies Covered:
The Philippine National Bank
Bank of the Philippine Islands
The Rizal Commercial Banking Corporation
United Coconut Planters Bank
Security Bank Corporation
The Philippine Bank of Communications (PBCOM)
Land Bank of Philippines
Asia United Banking Corporation
Bank of Commerce
Development Bank of the Philippines
Sterling Bank of Philippines
Radiowealth finance company (RFC)
Unistar Credit and Finance Corporation
Asia Link Finance Corporation Leauge
One Finance and leasing Corporation
DBP Leasing Corporation
First United Finance and Leasing Corporation
BPI Capital Corporation
Cebu International Finance Corporation
Orix Metro Leasing and Finance Corporation
Philippine Depository and Trust Corporation
LBP Leasing and Financing Corporation
RCBC Leasing and Finance Corporation
Toyota Financial Services Philippines Limited
Key Topics Covered in the Report
Philippines Auto Finance Market Overview and Genesis
Philippines Auto Finance Market Ecosystem, 2019P
Value Chain Analysis of Philippines Auto Finance Market, 2019P
Philippines Finance Market Value Chain Analysis
Philippines Auto Finance Market Size, 2013-2019P
Philippines Auto Finance Market Segmentation, 20113-2019P
Major Trends and Development in Philippines Auto Finance Market
Regulatory Framework in the Philippines Auto Finance Market
Snapshot On Philippines Automotive Sales And Manufacturing Market, 2014-2019P
Ways to Finance Automotives in Philippines(Bank Finance or Multi Financing Companies, Personal Finance, Lease Financing)
Vendor Selection Process for Auto Finance Company in Philippines
Competitive Landscape containing Company & Product Profiles in the Philippines Auto Finance Market
Financial Penetration of various OEM Brands
Philippines Finance Market Future Outlook and Projections, 2019P-2024
Analyst Recommendations for the Philippines Auto Finance Market