Cost Of Car Ownership In The Philippines

Written by Marc Adrian

An earlier survey found that for more than 80% of Filipinos, a car is an important tool in life. Those who live in more congested areas and experience the struggles that come with public transportation, in particular, will be more attracted to the idea of owning one, as a private car can help ease daily commutes. 

The numbers certainly reflect just how much Filipinos value cars, as a 2017 report indicates that cars make up about two-thirds of the 2.7 million vehicles that pass through Metro Manila every day. Similarly, trends over the past few years have allowed for more Filipinos to own a car – such as the addition of millennials to the workforce, which enabled them to have access to resources that make car ownership possible.

Globally, the lure to get behind the wheels is also a well-funded venture. According to Two Cents by PBS, car companies spent around $14.2 billion in marketing in 2014 alone. And cars have been seen as integral to society, especially American society, since the 1950s.

However, the actual cost of owning a car is not always clear from the get-go. There are a lot of ancillary costs that add up over time. In this article, we examine the true cost of owning a Toyota Vios, the most popular car in the Philippines, for five years.

1. Financing

Unless your pockets are deep enough to buy a brand new Toyota Vios in cash, chances are you will have to get a purchase loan in order to buy the car in the Philippines.

Although there are some really low down payment deals, the interest rates are what usually increase the cost of ownership. The standard down payment for buying a car in the Philippines is at least 20% (but you still have the option of putting down more) with a maximum of 60 months or five years to pay the loan off. This is the cost of in-house financing and can differ depending on the loan provider.

The longer the car buyer decides to pay for the vehicle, the more expensive the loan will be. However, with either a bigger down payment or a shorter monthly payment plan, the car buyer will be able to save a significant amount of money.

2. Depreciation

Depreciation is naturally the highest cost of owning a car. It is generally how well the vehicle is expected to hold its value over time. This is particularly if you keep the car for less than five years as the depreciation rate is always higher in the initial years of ownership.

The moment you purchase a car, you are already spending thousands of dollars which will only accumulate over time. Although a car is technically considered an asset, it is actually more of a utility or a liability depending on how it’s used.

The average mileage per year is about 24,000kms for a total of 120,000kms. The price of depreciation might differ depending on mileage, brand, history of reliability, degree of wear and tear, modifications and who will be buying the car. Selling the car to a car dealer will lower the car price further.

3. Gas consumption

Surprisingly, petrol is the second-highest cost of vehicle ownership.

Choosing a fuel-efficient car can help decrease the cost of owning a car significantly. Generally, the Toyota Vios gets a good 10 kilometers a liter. For those getting a good 24,000kms a year, you’ll need about 2,400 liters a year.

4. Maintenance and repair

The key to keeping the car in mint condition is to get maintenance on a consistent basis, maintenance costs are generally quite low in comparison to repair costs.

Although most new cars already come with a five-year warranty, sometimes the warranty does not really cover service costs. The total service maintenance schedule Toyota Vios is as follows:

Distance and time	Maintenance cost
1,000km / 1 month	₱1,500
5,000km / 6 months	₱1,500
10,000km / 12 months	₱3,600
15,000km / 18 months	₱2,600
20,000km / 24 months	₱3,600
25,000km / 30 months	₱3,600
30,000km / 36 months	₱3,600
35,000km / 42 months	₱2,600
40,000km / 48 months	₱5,300
50,000km / 54 months	₱3,600
60,000km / 60 months	₱3,600
TOTAL	₱35,100

*prices computed are conservative estimates according to philkotse

Although buying a brand new Toyota Vios might come with a five-year warranty, to be on the safe side, it is better to allocate an amount every year for emergency occurrences. Although major repairs might not always happen, it’s always good to be ready whenever they do.

It’s always better to be safe than sorry when it comes to maintenance since it allows the car to stay in top shape over time. It’s much cheaper to have parts routinely taken care of instead of replaced.

5. Insurance

Another annual cost of owning a car is the insurance premium car owners have to pay. This might be higher depending on the value of the car, the insurance provider, and coverage.

The price of an Annual Premium with Acts of Nature Coverage for a Toyota Vios premium costs ₱12,924. In a five-year period, the car owner will spend around P64,620 on insurance. 

7. Parking and toll

Parking can be a big problem depending on where the car owner lives. Let’s say you live in a condo, either you park your car outside where it is more vulnerable to damage or buy a parking space within the condo.

Condo parking lots can cost like ₱500,000 to ₱1,500,000 depending on where the condo is located and how expensive the condo is in general. Condos do not always include parking space which means you’d have to spend extra in order to get parking.

Average price of parking per day: ₱40

Average price of parking per year: ₱11,520

Total cost for five years: ₱57,600

How much would you be paying? 

Downpayment	P204,000
Loan/financing interest	₱1,093,440
Gasoline costs	₱573,000
Maintenance	₱35,100
Insurance	₱64,620
Parking	₱57,600
Total	₱2,027,760

Though it’s easy to be a car owner in the Philippines, it is a much bigger investment than most people would expect. While cars can be quite useful depending on where you might want to go or who you might want to go with, this is not always the case. Although public transportation can be hard in some parts of the Philippines, it might be better to compute how much you spend on commuting before committing to buy a car.

If the total car price costs ₱2,027,760 for five years, this would mean the car owner spends roughly 405,552 a year. Try to compute how much you spend a year when commuting to get the difference.