Add it up

How much do you love your car? Let us count the pesos.

BUYING A CAR is a serious matter. It is often said that next to a house, this is the single most expensive purchase of a Filipino. A quick dive into the universe of car-ownership factoids online reveals some interesting insights, albeit a tad dated. A 2023 study by the International Trade Administration of the United States government avers that the average vehicle lifespan in the Philippines is 15 years or more. A 2013 Nielsen survey, on the other hand, found that 47% of Filipino households were carless, 38% owned one car, and 16% owned more than one. The same study revealed that in Thailand the percentages were 82%, 54%, and 27%, respectively. Another report published by Ken Research in 2021 revealed that although a high-income individual may own eight or more cars, the average Filipino would own only two to four in their lifetime.

The statistics above would clearly benefit from updated research. They were culled from when the country was on the cusp of motorization and during the pre-COVID years or those immediately following. Somehow, I get the feeling that the numbers might change only slightly, since our socioeconomic landscape has not moved much either.

Undoubtedly, motorization has progressed much in the intervening years. In 2024, the auto market eclipsed its previous record of some 473,000 units sold back in 2017. In 2025, it broke the record of 2024 with 493,000 or so units moved. This year, the fearless forecast is that the market may finally breach the elusive half-million mark.

But car ownership is definitely not for the faint-hearted, and the rise in auto sales is largely reflective of the rising purchasing power of the Filipino consumer. In 2024, the Philippines recorded a gross national income (GNI) per capita of US$4,470 which was US$26 short of the threshold for an upper middle-income economy. For 2025, it was expected that the country would hopefully surpass the threshold, despite the dip in GDP in the last quarter.

So, what does it take to own a car? Car ownership costs go beyond just the purchase price. Let us take the example of an entry-level sedan with a 1.3-liter gasoline engine and automatic transmission. The suggested retail price is around P1 million. If bought by cash, you will need to pay for the three-year registration fee of P8,400. You will also need to get the mandatory Third Party Liability (TPL) insurance that costs P1,800 for the three years. A comprehensive insurance policy is optional, but most buyers would get one. Yes, Juan dela Cruz, accidents — and acts of God like floods — happen. That policy though will set you back around P35,000.

Let us assume for simplicity that you will take the car
ex-stock. Otherwise, you will need to pay extra for accessories such as glass tint that, again, most buyers would do because of the heat. This would cost you about P4,000. There are a host of other accessories that could easily add up to a tidy sum, if you choose to dress up your vehicle.

Technically, your drive-away price for a cash purchase of the vehicle will be P1,010,200, excluding comprehensive insurance and accessories which will all be add-ons.

In the Philippines, an estimated 40% of vehicle sales are done via cash. I think this is a function of the low propensity to save by most Filipino households, which is estimated at between 5.4% to 10%. The bulk of sales, particularly for first-time car buyers that are entering the auto market, is still done through bank financing.

If you buy the car through financing, there will be added costs though you will cough up less money up front. Assuming you can get bank approval, you will need to pay a 20% down payment or about P200,000 on the P1-million SRP. In case of financing, you must get a comprehensive insurance policy that I mentioned will cost you P35,000 for the first year. Your registration fee and TPL insurance is the same as with cash. Then, with some banks, you need to pay a chattel mortgage fee of about P32,000. Your total cash out will be approximately P277,200.

On a five-year tenure for the loan, you will need to pay an estimated P20,500 per month for 60 months, at prevailing rates of interest. Simply adding your up-front cash-out and your monthly payments over the term of the loan, your cost to purchase will total P1,507,255. That is a pretty hefty sum, but it makes your acquisition more affordable in relation to your earning capacity. Of course, you can choose a higher down payment or shorter term, depending on your financial circumstances.

The choice between a cash or financing purchase is yours to make, but it is always best to make that choice with eyes wide open.

So far, we have only tackled the purchase price of the car. Vehicle ownership comes with other recurring costs, though. After the third year, registration costs will be P2,500 a year, including the TPL and required emissions testing. Assuming you will keep your car for five years, insurance premiums for the remaining four years will add up to about P92,000 or an average of about P23,000 per year.

You will also need to cover periodic maintenance service (PMS) expenses. Assuming your average annual mileage is 10,000 km, PMS will cost you an estimated P120,000 covering your regular checkups up to 60,000 km over five years. These exclude costs for tire and battery changes and other general repair servicing (that are out of warranty). In case of accidents, you will need to pay for the owner’s equity on repair costs on the premise, of course, that you did take out an insurance policy. If not, the entire repair costs will come out of your pocket.

But wait, there is more to the cost of car ownership in addition to the up-front costs and recurring costs. We need to cover the variable operating costs that are a function of your usage of the vehicle. These consist of your fuel expenses, toll fees, car cleaning (if you are the type to take your car for cleaning), parking expenses, a driver (if you prefer the luxe experience or if you don’t drive) and other contingent usage costs (traffic citations, for example).

Finally, there is the depreciation cost of your car. A car is, after all, a depreciable asset. Over the life of your vehicle ownership, you will not recover the full amount of money you put up to buy it and to keep it in operation. This cost is directly affected by the resale (or residual) value of your car and should, therefore, be a consideration in your choice of brand and model up front and not as an afterthought.

So, what is the point of running through all these costs of vehicle ownership? Surely, it is not meant to discourage your purchase or intent to do so. We love cars; personal mobility is an essential part of life. I just wanted to underscore the economic responsibility that comes with car ownership. Sometimes, with so many sales promotions being offered by auto retailers, it is easy to get confused or misunderstand what having a car in our garage entails. The freebies given and special offers made by dealers may bring down the acquisition price of your vehicle. However, it really does not absolve you of the responsibilities. Assuming the dealer cuts back on its promotions, you need to cough up the cost of all the attendant costs such registration, insurance, down payment, and the like. And, surely, all the recurring and variable costs are coming out of your own budget.

When the time comes that we are ready to buy a car, we must be aware of how it will impact on our economic well-being. If we are willing and able to take on the responsibility, then owning a car can bring us a lifetime of happy moments on the road.