Automakers rev up for sales turnaround

Louella Desiderio - The Philippine Star
Automakers rev up for sales turnaround
The country’s automakers are gearing up for the likelihood of reversing this year’s sales slump, although observers say it may take some time for the industry to return to pre-pandemic levels as speed bumps remain.
STAR / File

MANILA, Philippines — The country’s automakers are gearing up for the likelihood of reversing this year’s sales slump, although observers say it may take some time for the industry to return to pre-pandemic levels as speed bumps remain.

Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) president Rommel Gutierrez said in a text message that the country’s total vehicle sales, including those sold by members of the Association of Vehicle Importers and Distributors Inc. (AVID), would likely go up by at least 30 percent as demand improves next year.

“We project a range of 30 to 50 percent increase from the current level,” he said.

AVID president Ma. Fe Perez-Agudo said in an email the group expects a conservative recovery next year, with vehicle sales seen to grow by 30 percent coming from a low base this year.

For this year, CAMPI expects vehicle sales to reach around 240,000 units, down from the more than 416,000 units sold in 2019.

Of the total vehicle sales in 2019, CAMPI sold 369,941 units.

As of end-October, combined sales of the CAMPI and Truck Manufacturers Association reached 173,035 units, down 42.7 percent from the 301,761 units sold in the same period last year.

AVID’s sales in the same 10-month period reached 40,993 units, a 42.6 percent reduction from the 71,362 units sold a year ago.

The year 2020 started off on the wrong foot, so to speak, as Taal Volcano erupted and brought ashfall, forcing automotive firms to suspend operations of plants and dealerships in South Luzon.

After that, the coronavirus disease 2019 (COVID-19) pandemic hit the country and the lockdown imposed by the government to prevent the spread of the virus led to the temporary closure of automotive manufacturing facilities and dealerships.

As the government relaxed quarantine restrictions, automotive firms were allowed to resume both manufacturing and dealership operations, but demand for vehicles has been weak as many consumers put off purchases of big-ticket items like cars.

Agudo said 2020 “has been tough for everyone but, on the bright side, we have been forced to discover new ways to serve and excite the public.”

To help restore consumer confidence, she said automotive firms immediately put in place health and safety measures which included social distancing, wearing of personal protective equipment by staff, and regular disinfection in dealerships right after being allowed by the government to reopen.

She said automotive firms also took the digital route to cater to customers from the safety of their homes through virtual dealerships and the conduct of online vehicle launches.

“The pandemic triggered a digital revolution in the auto industry in a short period. By going fully digital, actual showrooms are transformed into virtual marketplaces where we can engage with customers, book appointments or test drives, and showcase our products and services. Digital has taken out the stress of car buying and this will only expand,” she said.

Louie Soriano, general manager for sales at Honda Cars Philippines Inc. (HCPI), said in an email the virtual dealership has contributed to inquiries, test drive, quotation and reservations received by the firm.

“For 2021, we are expecting more customers to be familiar with it and take chance of fully utilizing its features,” he said.

To push sales amid the pandemic, automotive dealers implemented aggressive marketing efforts which included offering free cars and low downpayment.

Among the promos that became available this year was the offer of a Hyundai dealership to get a free Accent or Reina passenger car for every purchase of the Santa Fe sports utility vehicle.

Kia Philippines, meanwhile, made the Picanto hatchback available for a downpayment as low as P1,000.

Kia Philippines president Manny Aligada said in a telephone interview automotive firms would likely continue to offer promos to encourage customers to make purchases next year, but “it may not be as aggressive as this year because of the unusual situation.”

While digital channels and promos are expected to help drive higher vehicle sales next year, challenges and risks remain.

“One of the major challenges that may affect vehicle demand and sales is the impact of the COVID-19 pandemic, which will most likely remain as a significant factor [in] 2021,” Soriano said.

Until a vaccine for COVID-19 becomes available, Agudo said there would always be a risk of second wave and another round of lockdowns.

“The earlier vaccines can be deployed, the faster the recovery of all businesses, including auto,” she said.

While waiting for the vaccines to become available, she said the government would have to strengthen the guidelines to test, trace and contain the pandemic so people can go out on the road and resume activities.

“As you know, the Philippines is a service economy, reliant on travel, tourism and transportation, among others, so any form of lockdown impacts negatively on the overall economy,” she said.

With over 80 percent of vehicle purchases financed through loans, she said cooperation between banks and the automotive industry would be key in a recovery.

“The main challenge is the speed in which we can, both the private and public sector, restore consumer confidence. More economic risks mean banks will continue to their conservative approach in providing auto loans, which will drag demand,” she said.

Aligada said another risk seen in 2021 that may affect vehicle demand and sales is the foreign exchange.

“The peso is very strong. We hope this does not deteriorate because we are an importing industry and you know, when forex deteriorates, pricing is affected,” he said.

Gutierrez said the ongoing investigation of the government to determine if a safeguard measure should be imposed on vehicle imports, is also a concern for the automotive industry as this would have an impact on sales.

Most vehicles sold in the country are from overseas.

“Safeguard measures, if imposed, will negatively impact on the recovery efforts of the industry,”  Gutierrez said.

A preliminary probe is being conducted by the Department of Trade and Industry (DTI)  to see if imposing a safeguard measure on vehicles from overseas is warranted based on a petition filed by the Philippine Metalworkers’ Alliance which claimed rising automobile imports hurt workers engaged in local manufacturing.

Trade Secretary Ramon Lopez said in a Viber message the DTI needs more time to evaluate the petition and may not be able to complete the preliminary probe within this year.

“[We] have to study further and consider impact on other stakeholders,” he said.

He said he has asked the technical team at DTI to look at other parameters to be used as basis in deciding on the matter.

Even as vehicle sales are likely to grow by next year, Gutierrez said the earliest it could reach pre-COVID levels is in 2022.

Aligada shared the same view noting elements to support recovery are in place in 2022.

He said the impact of the rollout of COVID-19 vaccines would likely already be felt by 2022.

In addition, 2022 is an election year.

“You always feel good economic result during an election year…So, 2022 will be closer to normal,” he said.

For Agudo, it may take two to three years for the automotive industry to hit or surpass 2019 sales.

“But we remain upbeat that we can recover sooner rather than later,” she said.

vuukle comment


  • Latest
  • Trending
Are you sure you want to log out?

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

Get Updated:

Signup for the News Round now

or sign in with