Fuel costs, traffic jams push sales

Making the switch. Kymco Philippines president Frank Yang (left) and general manager for spare parts and logistics Allan Santiago explain why motorcycles are gaining popularity among Filipinos. (SunStar Foto / Katlene O. Cacho)
Making the switch. Kymco Philippines president Frank Yang (left) and general manager for spare parts and logistics Allan Santiago explain why motorcycles are gaining popularity among Filipinos. (SunStar Foto / Katlene O. Cacho)

IT is not only the rising middle class that drives the growth of motorcycle sales in the Philippines.

The rising prices of fuel and frequent traffic jams have also prompted more Filipinos to shift from buying cars to two-wheelers.

Taiwanese motorcycle brand Kymco (Kwang Yang Motor Co. Ltd.) is aiming to capture a good slice of this growing market, banking on the country’s strong preference for motorcycles, particularly from the lower income segment.

Although they are still new in the Philippines, having captured only one percent of the motorcycle market, Kymco Philippines Inc. president Frank Yang says they are optimistic about growing their market in the country.

“We aim to corner five percent share in the market within this year,” said Yang.

Kymco motorcycles have gained prominence in Europe, but the company wants to grow its Southeast Asian market base, with the Philippines as one of the leading markets because of its population growth.

According to Kymco Philippines general manager for spare parts and logistics, Allan Santiago, 95 percent of the market is dominated by Japanese-branded motorcycles. But he noted that slowly, more consumers are shifting to other motorcycle brands.

“Kymco is poised well to serve the price and quality-conscious consumers. Despite high inflation, the economy is growing. The middle-income class is expanding. There is a room for growth for us here,” said Santiago.

Kymco officials were in Cebu last Tuesday to launch their partnership with Cebu-based San Jose Bakeshop for marketing promotions. Santiago said this is also another marketing tool to boost brand awareness and bring the product closer to Cebuanos.

Owning a motorcycle is more economical than maintaining a car.

Santiago said a car with one liter of gasoline (without traffic jams) can can cover a distance of between seven and 10 kilometers while a liter of fuel in a motorcycle is good for 45 to 50 kilometers.

“It’s the economic difference plus its mobility. You can sway around during traffic jams. That makes motorcycles appealing to commuters,” said Santiago. “Plus, it’s fuel efficient.” He pointed out that despite the rising costs of fuel, motorcycle sales are better.

Data from the Asean Automotive Federation showed motorcycle sales (including scooters) in the Philippines grew by 22.8 percent in the January to September 2018 period.

This translates to 1.17 million motorcycles sold compared to the year-ago level of 956,632.

Car sales, on the other hand, dropped by 13.8 percent from 302,869 units from January to September 2017 to 261,161 units in the same period this year.

Production for motorcycles including scooters also rose by 4.4 percent from 907,256 units to 946,866.

Car production, meanwhile, dropped by 44.8 percent to 62,491 units from 113,167 units.

The car industry was one of those affected by the implementation of the Tax Reform for Acceleration and Inclusion (Train) Law.

The government has increased the excise tax on vehicles depending on its type, putting an exemption for pick-ups and e-vehicles, while hybrid models are subject to 50 percent of the rates.

In the Philippines, motorcycle ownership ratio is 23:1, which means that for every 23 Filipinos, only one owns a motorcycle. Dumaguete, a city known for having plenty of motorcycles, has an ownership ratio of 2:1.

Santiago said the ratio of motorcycle ownership in the Philippines is expected to improve, as more Filipinos can afford to own one.

Because of its growing popularity, motorcycle manufacturers have also stepped up the advanced safety features and installed top-tier technologies to address the needs of every consumer, the Kymco official said.

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