MANILA -- The Philippines' auto market has been growing well, but not exactly smoothly, skidding and swerving as the government tries out one policy or another -- including a freeze on applications for ride-hailing services -- or vacillating on decisions entirely.
New car sales surged in July and August this year, for instance, as government proposals for tax reforms started taking shape, spurring car purchases before taxes went up. Sales of luxury cars, such as BMWs and the Toyota Lexus -- which face large tax increases -- rose by 50-100% from a year before.
Then in September, demand slipped as the government cracked down on the number of cars providing ride-hailing services by suspending new registrations following an earlier sharp rise. There have been effectively no new registrations since.
Sales of the Philippines' most popular car, the Toyota Vios compact sedan, fell 22% that month from a year earlier, to 2,603 units. Sales of Mitsubishi Motors' Mirage G4 dropped 33%. Both cars are favorite choices of people who want to start ride-hailing services through the apps Uber and Grab.
Satoru Suzuki, president of Toyota's local unit, said the decline in Vios sales was equivalent to almost 25% of the company's sales for the month.
Although the overall market grew by 10% to 38,602 cars in September, it was slower than around 20% growth in July and August.
Sales had fallen similarly at the beginning of 2017 after the Land Transportation Office tightened regulations on temporary license plates by unifying their design in February.
Auto retailers, which had created temporary plates due to a delay in the issuance of official ones, complained bitterly, saying they did not have time to prepare for the change. Some consumers held off car purchases, and new car sales gained only 1% in April.
Still, for all of 2017, new car sales will likely rise more than 10% from the year before, to around 450,000 cars.
Industry officials expect the market to grow steadily over the longer term as well, as the economy grows at an annual rate of 6-7%, pulling average incomes up with it.
Along with Thailand, the Philippines is one of the main market drivers in Southeast Asia. But its vagaries have left industry officials divided over their expectations for the coming year. There is cause for optimism, but manufacturers need to be careful about how they conduct business.
Yosuke Nishi, vice president of Mitsubishi Motors Philippines, expects reasonable market growth, but cautioned, "I cannot say for sure that it will maintain double-digit increases."
Toyota's Suzuki said next year's growth "will fall short of this year's."
The looming tax rise is a particular uncertainty. The fact that its timing has yet to be decided makes its impact hard to foresee.
Nor has the government decided when it will resume new registrations for ride-hailing services.