Vehicle sales, an important lead economic indicator, have proven lackluster in recent months such that sales of commercial vehicles, for example, contracted by 3.8 percent.
Were it not for the 1.2 percent expansion in the sale of passenger cars in August, vehicle sales performance during the month would not have sustained positive growth averaging 2.4 percent.
“The string of growth in vehicle sales was snapped in August with vehicle sales pulling back by 2.4 percent as commercial vehicle sales struggled, posting a -3.8 percent growth print. Offsetting the weakness in commercial vehicles was the modest gain in passenger car sales, up by 1.2 percent for the month,” Nicholas Mapa, economist at the Manila unit of ING Bank, said.
“For the year, vehicle sales still managed to post a 2.4 percent gain although the performance of the industry remains lackluster compared to recent years,” he quickly adds.
As lead indicator, car sales performance allow private industry executives and government policy planners alike to gauge more or less accurately what is happening in a key sector of the economy and respond accordingly.
A slowdown in car sales figures, for instance, potentially means trouble down the line unless its cause or origins are quickly identified.
“Industry officials cited ‘supply constraints’ as one of the key factors for the poor performance which reflects still present demand from consumers with supply unable to keep up.
“The tightness in supply is reflected in the contraction in passenger car imports reported in the most recent July trade numbers that showed that imports of consumer vehicles contracted by 9.5 percent in July and is currently 12.8 percent down for the year,” he noted.
“Successive months of subpar car sales may have led to car importers to cut back on orders from the region, given that several of the SUV and other commercial vehicles are sourced from our neighbors like Indonesia and Thailand.
“Meanwhile, still very recent heavy-handed rate hikes by the BSP to quell cost push inflation continue to handicap appetite for investments in durable goods equipment, which was reflected in the negative showing of investments in the 2Q GDP figures,” Mapa said.