Stunned by a double-digit plunge in sales in the first quarter of 2020, auto industry leaders called for resilience and sought quick adjustment to the new realities in the business environment.

            A joint report released by the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA) last week indicated that the industry with 11,029 units sold in March 2020, posted a 65.7% decline from the 32,173 units sold in the same month last year.

            Moreover, month-to-month, the March 2020 sales reflected a 63% drop from the 29,790 units sold in February 2020.

            Year-to-date, the industry has sold 64,542 units, a 24.4% slide compared to 2019 first quarter YTD.

CAMPI IS ASSESSING

            CAMPI and TMA consist of 21 car, truck and motorcycle brands as members. CAMPI president Rommel Gutierrez, who is concurrently 1st vice president of Toyota Motor Philippines Corp., said that March 2020 was the industry’s weakest monthly performance so far, and attributed it to the shutdown of dealerships starting March 16 when the Luzon-wide Enhanced Community Quarantine (ECQ) was imposed due to the COVID-19 pandemic.

            “Indeed, challenging times lie ahead for the industry,” Gutierrez said in a press statement, adding that industry players will continue to assess further the effect of the quarantine in place while remaining hopeful that the virus will be contained at the soonest possible time. In the meantime, the industry is determined to be resilient amid the crisis and to adapt quickly to the new normal.

            Gloom in the industry deepened when the Yuchengco Group announced the closure this June of five dealerships in Metro Manila: four Honda and one Isuzu.

AVID SALES 34.4% DOWN

            Resilience was earlier mentioned last April 28 when the Association of Vehicle Importers and Distributors (AVID), which has 20 member companies representing 26 global brands, reported a 34.4% decline in first quarter sales amid the lockdown caused by the pandemic.

            AVID president Ma. Fe Perez-Agudo, who is concurrently president/CEO of Hyundai Asia Resources, Inc. (HARI), estimated that car sales may decline by 40% this year and that it would take at least 12 months for the local industry to recover after the quarantines are completely lifted.

            She said that second quarter sales may dip even further due to the ECQ for the whole month of April and its extension to the end of May.

            In a press statement, Agudo said: “AVID fully supports the government’s initiatives to combat this pandemic, and we remain optimistic and confident in the tried and tested resilience of the Filipino. The timely restart of the automotive sector is of utmost importance to mitigate the impact of this crisis since tens of thousands of Filipinos and their families depend on this sector.”

            She estimated that the Philippine automotive sector directly and indirectly employs 408,000 people.

CHANGES IN TOP 10 RANKING          

            Despite the March 16 to May 31 lockdown, the Top 10 players managed to retain their respective rankings (see Graph 1)) in the first quarter same as last year’s first quarter, except for Mazda (Bermaz Auto PH, Inc.) and Foton Motor PH, Inc.

            Kia (Adventure Cycle PH, Inc.) unboxed its Power to Surprise by replacing Foton at 9th place, in the process ousting Mazda which ranked 10th in Q1 2019, and pushing Foton down to 10th place.

            Kia accomplished this by selling 923 units YTD this March compared to Foton’s 755 and Mazda’s 492, as reported by CAMPI.

            Meanwhile, the Top 5 kept their slots, led by undisputed market leader Toyota Motor Corp. PH (25,696 units sold), perpetual runner-up Mitsubishi Motors PH, Inc. (12,235 units), third placer Nissan PH, Inc. (8,517 units), Hyundai Asia Resources, Inc. (5,461) in fourth and Honda Cars PH, Inc. (4,180 units sold) in fifth.

            Ford Motor Co. PH, Inc. almost slipped from sixth to seventh place as Suzuki PH, Inc. posted 3,867 sales, only 27 units less than Ford’s 3,894.

            Isuzu PH, Inc. retained eighth place by selling 2,599 units YTD March 2020.

MONTH-TO-MONTH SALES

            The impact of the coronavirus lockdown can be seen in the month-to-month sales report (see Graph 2). Before the pandemic, sales usually rose from one month to the next. But this year the upward trajectory was reversed to double digit downward.

            Examples: Last February, Toyota sold 12,283 vehicles, but in March sales plummeted to only 4,523 units, reflecting a minus 63.2% variance percentage.  Remember that the ECQ was imposed starting March 16, requiring the industry to immediately shut down.

            Mitsubishi sold 5,579 units in February, followed by 1,645 units in March for a negative 70.5% variance.

            Four brands saw their four-digit February sales figures reduced to three digits in March: Honda, Ford, Suzuki and Isuzu.

            Nissan, Hyundai, Kia and Foton also sustained substantial cuts in their March sales compared to the preceding month.

DIGITAL TRANSFORMATION

            Adjusting to “the new normal” has become key as industry players scramble to recover post-ECQ.

            As HARI president Ma. Fe Perez-Agudo pointed out, “Even if the ECQ is lifted or modified, we do not expect to return to business as usual. The great lockdown has radically changed consumer behavior, but we are ready for the next normal in auto.”

            With staying home, sanitizing, hygiene and social distancing protocols still being mandated, car companies have come up with various contact-free digital processes for car previews, launches, purchases, maintenance and repairs to protect the health and safety of everyone concerned.

            For example, Sofitz G Auto PH, the local distributor of Geely Auto, streamed the preview and launch of the Azkarra on its official Facebook page last month.

            HCPI is launching a Virtual Dealership Online called VIRTUAL@Honda plus a new website feature, Auto Loan Link page, which provides customers an easier, safer way to apply for an auto loan with the brand’s official bank partners.

            Last Saturday, Toyota Motor PH (TMP) launched the Toyota Online Virtual Showroom to make car-buying a safer experience.

            TMP also scheduled the Webinar launch of the new Wigo on June 15, and will open to the public the online launch of its latest e-sports program, the GR Supra GT Cup Asia-Philippines, in July.

            Isuzu PH has scheduled the “Live Life Differently” June 17 digital launch of the D-MAX Boondock 4×4 on Facebook.

            Customers can now preview and reserve a Maxus vehicle via Lazada.

            #Kia Deals Designed For Your Needs is a social media marketing strategy of Adventure Cycle PH offering great discounts and low down payment deals.

            HARI has rolled out several virtual collaboration tools to ensure “no-contact” transactions and engagement with its stakeholders.  Hyundai GPS (Guidelines for Protection and Safety) covers the entire chain of HARI including the customer journey, facilities, processes, manpower and operations.

            Hyundai C.A.R.E.S (Customer Assistance and RESponse) is also accessible online at Facebook Messenger.

BUT WHO WILL OR CAN AFORD TO BUY A CAR NOW?

            Negative economic growth in the first and second quarters of this pandemic year as a result of lack of economic activities and consumer spending means that the Philippines will have its first recession since the Asian financial crisis of 1997-1998.

            According to the National Economic and Development Authority, 2.2 million people had already lost their jobs as of the first week of April.  The NEDA anticipates the unemployment rate to rise to double-digits this year.

            Tens of thousands of OFWs have come back or are in the process of coming home, having lost their jobs overseas where the global pandemic has also stifled economic activity.  This could mean a steep decline in dollar remittances from OFWs which plays a major role in keeping the Philippine economy afloat.

            The tourism and retail industries as well as small and medium-scale enterprises are struggling to recover, or even survive.

            In this bleak scenario, who will want, or can afford, to buy a car?  Naturally, consumers will be more prudent and prefer to spend on more urgent needs.

            As Josiah Go, an innovation strategist, wrote in PDI Marketing recently, “We need to acknowledge new consumer behavior – increased mindfulness of safety, greater attention to health and wellness, preference for work from home, better eating, time spent with family, fewer nonessentials, frugality, review of life’s purpose and digital acceleration.”

            But mobility, as represented by motor vehicles, cannot be categorized as nonessential. As AVID president Agudo has posited, “Mobility is the lifeblood that drives the nation’s economy, and other essential establishments rely on mobility for sustained operations.”

            Now that lockdown measures are being gradually eased, auto industry players are innovating and pivoting to not only survive the crisis, but also to recover and thrive after the coronavirus is finally contained with a new vaccine — whenever that may be.