As countries including the Philippines relax their lockdown measures this week—including the gradual easing of travel restrictions—demand for new vehicles is expected to increase in the coming months.
While this doesn’t seem logical at the moment—customers won’t immediately return to the car dealerships in large numbers—the current state of public transport would convince many to think otherwise.
This could offer a ray of hope for local automakers and their dealers forced to temporality shutdown operations for more than two months and take a significant financial hit as a result. In fact, this renewed interest in cars could potentially be a seismic shift once consumers realize that cars will be as essential as wearing a face mask.
For these consumers, owning a car will give them greater control of hygiene and reduce their chance of getting infected rather than taking their chance at commuting on public transport or using ride-hailing services.
Due to COVID-19’s ability to easily spread from person to person, Tey Sornet, EVP and COO of the LICA Auto Group—one of the largest automotive dealership networks in the Philippines—believed that public transportation might become a definite risk for people needing to get around. “Due to the infectious nature of the COVID-19, people will rethink how they move around in the short and medium term. This could increase their desire to buy a car.”
Besides, with over two million commuters expected to use public transportation in Metro Manila once the enhanced community (ECQ) is completely lifted, imagine the chaos this would create considering PUVs are mandated to operate at 50 percent capacity. For instance, only a total of 150 passengers per MRT-3 train set will be allowed while public utility buses may only load up to 25 passengers in order for everyone would be able to comply with distancing measures, according to the Department of Transportation.
Indeed, Sornet may have a point: a recent global survey conducted by consultant Capgemini Research Institute reveals that almost half of the 11,000 respondents from around the world said they plan to drive their own cars more in the future and will rely less on public transportation and ride-sharing services.
Sornet added: “It is also not just avoiding public transport but it would also be hard to commute. It was already a challenge to get a ride before the lockdown, the more it would be difficult these days now that social distancing will be applied to public transports.”
The COVID-19 pandemic, the survey noted, also appears to be convincing a lot of younger consumers who have never owned a car to consider buying one for the reason that they worry about riding in a vehicle where they don’t know who was in it before or if the one seated near them is a COVID-19 carrier or not.
This should be a welcome challenge for car dealerships. Apart from preparing more flexible buying options and other enticing promos especially for those who already inquired before the lockdown, car dealerships have also fast tracked the digitalization of their customer and purchase experience.
“In our analysis of customer inquiries and reservations after ECQ, the demands are coming from cars priced P1.2 million or below. Car brands with compact cars priced P600,000 and below will have an advantage—which include small sedans and small SUVs—under this new normal. Moreover, there is demand for second or third vehicles for clients who do not want to use public transportation for themselves or their families due to social distancing and fear of infection.”
Rommel Gutierrez, president of Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and also First VP of Toyota Motor Philippines Corp., also shared that a number of these higher-income consumers may even opt to buy larger vehicles—like MPVs and SUVs—as their dimensions alone would enable occupants to follow proper distancing.
Indeed, all these are inspiring news for car dealerships facing an altered future.
Charles E. Buban is an old timer in the Philippine automotive journalism scene. He first started covering the automotive beat in 2003, writing news and reviews of new models and car tech, among other car-related stuff. When not writing about cars, he could often be seen riding his mountain bike or doing long walks in the hope of catching a couple of legendary Pokemons.