In an ideal world, every Pinoy citizen deserves a brand-spanking new car parked in their respective garages. Unfortunately, we don’t live in an ideal world. The reality is that not everyone can afford a new car in the Philippines, and buying a used car is presumably the cheaper and smarter choice, especially for those who don’t have the means to plunk a massive down payment for a new car.
The growth of the used car industry in the Philippines is inevitable. According to the Philippine Star, the used car market is actually keeping pace with new vehicle sales. How many second-hand cars were sold in the Philippines in 2015? We can’t find an exact figure at the moment, but know this: there were 8,623 new passenger cars sold in January of 2016, compared to only 7,200 units in the same period last year.
Here are some of the factors that we believe are the contributing factors to the growth of the used car industry in the Philippines:
The Philippine public transport system needs a lot of work in order to be called “efficient” in the first place, so who can blame the average Filipino to save up and buy a car?
Have you tried riding the EDSA MRT in rush hour? What about waiting for a bus or jeepney in the pouring rain? Notice the long queues of hardworking people lining up to get a ride on a climate-controlled yet cramped UV Express van?
Because of these inadequacies in the public transport system, the average Pinoy’s desire towards motorization is higher than ever, and that’s a good thing.
Let’s look at motorcycle sales as a baseline to explain this fact. The Filipinos bought 351,102 new motorcycles in January to April of 2016, which is a 38.7% jump from only 253,129 units sold in the same period last year. As these people get jobs, get married and have kids, the need for a bigger vehicle will naturally point them towards the used car market.
We’re simply stating the obvious. It’s no secret that the market is flooded with cheap new cars, some of which are cheaper than sending your child to a prestigious university. But used cars are more affordable, and you can get a lot of car for the money if you know how and where to look.
Take for example the Nissan Cefiro, a luxury car that costs more than a million pesos brand new. Did you know that you can get your hands on a used Nissan Cefiro for as low as 150,000 pesos? That’s less money than the required down payment for a brand new compact car, and we can tell you outright that the Cefiro has a more comfortable ride compared to a brand new compact.
Of course, we all know that the Cefiro is a gas-guzzler, and maintenance costs will probably cost you an arm, a leg, and both your kidneys. But that’s not the point. Used cars are more affordable than new cars, and you get a lot more car for the money. This is probably one of the most defining factors that contribute to the growth of the used car industry in the Philippines.
As of the beginning of 2016, 61.6% of the total Philippine population is made up of people between the ages of 15 and 64 years old, and 34.6% is under 15-years old. This means that a huge majority of the Philippine population is made up of Millennials, who according to Bloomberg, can’t afford to buy a new car. But young people need to get around, so they settle for used cars instead.
The Emergence of Online Car Portals for both New and Used Cars
We are currently living in the information age, and everything that you need to know about a particular new or used car can be accessed on your laptop or smartphone. Online car portals such as CarFinder.ph and CarBay.ph will not only help you find a new or used car, but these sites successfully managed to simplify the whole car buying process.
Online car portals are also home to expert car advice, car reviews, car maintenance tips, and a host of vital information on where to get the best deals. The emergence of online car portals have successfully lead the growth of the used car industry in the Philippines, and they will continue doing so for years on end.
Let us introduce you to this thing called depreciation. You know, the decrease in value of an asset over time. Did you know that a brand new car can lose 20% of its value the very moment you drive it off the showroom floor, and that your new car can lose up to 30% of its value after the first year alone?
If you bought a new car for 700,000 pesos and decide to sell it after three years for 300,000 pesos, then your new car has cost you 400,000 pesos in depreciation after only 3 years.
But let’s say you buy the same car in the used car market. Using our example, let’s assume you bought the car for 300,000 pesos. After three years, you decided to sell the car for 130,000 pesos. This means that your used car only cost you 170,000 pesos in depreciation.
Using our example above, a well-informed car buyer will think that it’s more practical to buy a used car, especially if he or she is bothered by the cost of depreciation. This information is also a leading factor that contributed to the rise of used car sales in the Philippine market.
Nothing beats the feeling of driving a brand new car, and many people say that the scent of a brand new car is worth the price of admission. While the Philippines is poised to become a major car market by the year 2020, the used car industry is expected to serve a huge majority of the population who are looking for the cheapest way to drive around the woefully congested streets of Manila.