Auto weakness outweighs electrification gains

From AB Capital's The Opening Bell: Three Moves

Event

Chamber of Automotive Manufacturers of the Philippines Inc.-Truck Manufacturers Association (CAMPI-TMA) vehicle sales fell 11% YoY to 204,557 units in 1H26, with both passenger and commercial volumes declining. Electrified vehicle sales more than doubled to 31,381 units, lifting penetration to roughly 15%, although the broader market remained materially weaker than last year.

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We think the headline is negative for GTCAP because Toyota Motor Philippines remains exposed to the sharp industry slowdown, even with its 49.3% market share. The stronger xEV mix does not yet offset weaker aggregate volumes and could also require higher incentives and product investment.

Catalyst

The key second-half indicators are financing costs, consumer confidence, fuel prices, and whether June's sequential improvement is sustained. A recovery in total industry sales would ease earnings pressure, while prolonged double-digit contraction could weaken Toyota's volume contribution and operating leverage.

Action

In our view, the cleaner positive read-through is for Ayala Corp. (AC) through its BYD exposure, as rapid battery electric vehicle (BEV) and plug-in hybrid electric vehicle (PHEV) adoption validates demand for electrified models. However, the contribution remains small relative to AC's net asset value (NAV), making this supportive for sentiment rather than a major earnings catalyst.

Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.