MANILA — Rising food, transport, and consumer goods prices are making it harder for Filipino households to set aside cash for a vehicle — or to find an institution willing to fund one. For many families, buying a car is less a luxury than acquiring a utility: it means choosing a model that suits their needs and, increasingly, finding a payment arrangement that fits their income. With vehicle prices running from hundreds of thousands to millions of pesos, financing programs and flexible payment options have become central considerations in the car-buying process.

Demand for such arrangements is visible in the country's developing automotive market. Vehicle sales reached a record 491,395 units in 2025, up 3.7% from the 473,842 units recorded in 2024, according to the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA). Although the industry fell short of its 500,000-unit target, December sales hit 47,371 units — the highest monthly figure since 2017.

Sales have fluctuated since then. In July 2026, combined vehicle sales reported by CAMPI and TMA declined 2.5% year on year to 37,319 units, though the figure was slightly above June's 37,079 units. Estimated total-industry sales, which include brands outside CAMPI and TMA, recorded 40,240 units in September — the third-highest monthly performance of the year — following a slowdown in August.

Taken together, the numbers point to continued consumer interest in vehicle ownership even as household budgets face mounting pressure. Since CAMPI and TMA release their sales figures monthly, upcoming reports will show how the balance between buyer interest and budget pressure develops.

Financing remains a major consideration

Data from automotive marketplace AutoDeal show that financing is a common requirement among prospective vehicle buyers, regardless of the brand they are considering. In August 2026, 65.84% of shoppers inquiring about Chinese vehicle brands said they intended to use an auto loan or dealer financing, while the corresponding share among shoppers considering other brands was 65.09% — meaning roughly two out of every three prospective buyers in both groups were weighing financing to proceed with a purchase.

The figures diverged in September, when the share of Chinese-brand shoppers seeking financing rose to 66.71%, while the figure for other brands declined to 60.58%. Across the first nine months of 2026, however, a majority of prospective buyers in both categories consistently indicated a preference for financing.

The data also underscore how Chinese automotive brands are expanding their presence in the Philippine market, with more models entering different vehicle categories and price segments and piquing consumer interest. Their growing selection of hybrid and electric vehicles may be attracting consumers who might otherwise have considered other established manufacturers.

BYD Cars Philippines, for instance, reported selling 28,399 units from January to August 2026, surpassing its full-year 2025 record of 26,122 units. Higher fuel prices have helped generate interest in electric vehicles, as motorists consider alternatives that could reduce their everyday operating expenses.

Financing preferences also vary by powertrain. AutoDeal data for October showed that approximately 68% of shoppers inquiring about plug-in hybrids needed financing. The figure was around 58% among shoppers considering gasoline, diesel, and battery-electric vehicles, and approximately 50% among those considering conventional hybrids.

Making monthly payments manageable

Access to financing becomes particularly important when household expenses are rising. Philippine headline inflation reached 7.2% in September 2026, compared with 1.7% in the same month a year earlier, according to the Philippine Statistics Authority (PSA). Food prices increased 6.8% year on year, while transport costs rose 14.6%. Inflation accelerated further to 7.8% in October, its highest level since February 2023.

These increases affect how families allocate their income. A household considering a vehicle must account for existing expenses — groceries, utilities, education, housing, and transportation — before deciding how much it can commit to monthly installments.

Auto loans give buyers the option to spread the purchase price over an agreed repayment period. Depending on the lender and the financing arrangement, buyers may be able to negotiate the down payment, loan term, and corresponding monthly amortization. These factors determine how much cash is required upfront and how much the buyer will pay over the life of the loan.

Buyers therefore need to assess the full cost of financing rather than focus solely on the advertised monthly payment. Interest rates, processing fees, insurance requirements, and other charges can all affect the final amount payable.

Borrowing conditions also influence financing decisions. The Bangko Sentral ng Pilipinas (BSP) lowered its policy rate to 4.25% in February before raising it to 5% in September and 5.50% in October — a net increase of 1.25 percentage points over roughly eight months. Changes in the policy rate can affect banks' funding costs, although individual auto loan rates depend on the lender's assessment and the terms offered to borrowers. Future BSP policy announcements and monthly PSA inflation reports will show how the borrowing environment evolves for households weighing loan terms.

The importance of accessible financing

The availability of financing does not automatically mean every applicant will qualify for a loan. Banks and other lending institutions must evaluate a borrower's income, existing financial obligations, credit history, and ability to make regular payments.

BSP data compiled by The Mobility Signal show that outstanding auto loans reached ₱659.10 billion in August, just 0.36% higher than in January. During the same period, non-performing auto loan balances increased 9.74% to P32.90 billion.

By August, approximately P5 of every P100 in outstanding auto loans was classified as non-performing, while the past-due share reached 8.39%. Both ratios rose 0.43 percentage points from January.

AutoDeal data further show that few prospective buyers arrive with an existing bank pre-approval. Among shoppers considering Chinese brands, the share reporting a pre-approved bank loan increased from 3.19% in February to 7.88% in May before declining to 3.35% in September. For other brands, the monthly figure remained between 3.32% and 4.55%. Set against the majority of shoppers who intend to finance, those low pre-approval shares indicate that most buyers arrange their loans during the purchase process itself rather than beforehand.

That gap gives dealerships an opportunity to assist customers who have yet to arrange financing. Sales representatives can guide prospective buyers through the application process, explain available payment options, and help them understand how much they need to pay upfront before taking delivery of a vehicle.

Vehicle ownership involves a long-term financial commitment, making affordability and financing particularly important considerations. When choosing a vehicle, buyers must also weigh its ongoing costs, including maintenance, insurance, fuel, and monthly loan payments.

Ultimately, the decision to buy a car depends on whether a household can comfortably accommodate the expense within its existing budget. A well-structured financing arrangement can make vehicle ownership more attainable — giving more Filipinos the opportunity to own a vehicle while maintaining control over their finances.

This article was originally reported by Jomarc Angelo M. Corpuz for BusinessWorld.