Car repair tumbling in the country has sent the country into an economic tailspin and raised concerns that its economy is about to turn into one of the most unequal in the world.
Car companies say they have had to scale back operations in the last year amid the country’s severe recession, but the slowdown has left thousands of small- and medium-sized businesses, including auto parts shops, unable to compete.
Carmakers say the recession is the biggest challenge they face as the Philippine economy continues to recover from the economic damage caused by the tsunami in November 2011.
They say they will continue to sell their vehicles in the coming months, but they say the recovery is not sustainable, and they fear that if they do not find new markets, they could be forced to stop selling.
The country’s manufacturing sector, one of its main sources of income, has been battered by the recession and is now shrinking at a rate of just 2.5 percent.
The downturn is also hurting the carmakers.
While the overall economy has grown, manufacturing has shrunk by more than 3 percent in 2016, according to the International Monetary Fund.
The slump has left carmakers with less revenue than they had anticipated, and it has prompted carmakers to slash their investment plans and shut down operations in parts of the country.
The loss of revenue has been particularly significant in the automotive parts industry.
Since the beginning of the recession in November, carmakers have cut investments in the auto parts sector by a total of more than $1 billion, according a Reuters review of company filings.
The government has cut government subsidies for the sector by about half, and a recent move by the central bank to increase the interest rate on its bonds has further hurt the sector.
Car parts have been a mainstay of the Philippine auto industry, a major export destination and a pillar of the economy.
But the downturn has left many small- to medium-size carmakers in deep financial trouble.
They have struggled to sell parts and spare parts to customers because of the lack of financing.
The car companies say the crisis has also hurt their ability to hire workers.
They said they had lost about 50,000 workers in the first six months of the year.
“This is a recession that is very hard on our company,” said Daniel Ola, the head of a small-car parts manufacturer in Pasay City, the southern Philippines province.
The Philippines has had the worst recession in the Americas, the World Bank has said.
But some economists say that its economic recovery will be slow and uneven.
It will be a difficult time for small carmakers, said Jose Miguel Gonsalves, chief economist at the University of the Philippines in Manila.
The economic slowdown has also led to concerns among some economists that a deep recession is not likely.
“The country has experienced a lot of turbulence and is recovering from a massive crisis,” said John López, an economist at Bank of America in New York.
But, he added, it could be years before the economy is back to normal.
The collapse in the peso has hurt carmakers badly.
The peso is currently trading at around 78.4 to the U.S. dollar.
Its value has dropped by nearly 15 percent against the U, from about 70 to 66 percent against other major currencies.
In a speech on Friday, Philippine Finance Secretary Wanda Cebuco said the pesos currency strength would continue to hurt the economy and hurt the car manufacturers.
But she did not specify how the country would deal with the effects of a peso collapse.
The peso was worth about 90 percent of the dollar on Monday, according the International Finance Corporation, up from 75 percent a year ago.
In recent weeks, the Philippine government has stepped up its support for the car companies.
In August, President Benigno Aquino III signed an order granting subsidies to more than 100 car parts companies that had not received subsidies in the past, in a move that was widely seen as an effort to shore up the car market.
But many small car manufacturers are struggling to survive in a country where most people cannot afford a car.
The Philippine auto market is not expected to recover in time to offset the losses, and carmakers are now struggling to keep up with rising costs.