As the only brand that managed to increase its sales in the first quarter of this pandemic year, KIA PH is maximizing various opportunities to help jumpstart the country’s economic recovery
Still reeling from the four-month lockdown triggered by the Covid-19 pandemic, automotive industry players are scrambling to recover with innovative marketing strategies.
The car companies are compelled into action by reports from the Chamber of Automotive Manufacturers of the Philippines (CAMPI), the Truck Manufacturers Association and the Association of Vehicle Importers and Distributors (AVID) that industry sales slid 52 percent year-on-year due to the impact of Covid-19. In May, the market slightly recovered from minimal April sales, but was still far down from the usual 30,000 units per month level in 2019.
At present, the industry faces weakening consumer confidence due to virus fears and the continued community quarantines, the closure of many businesses because of reduced credit and money supply, shrinking dollar remittances from Overseas Filipino Workers who have lost their jobs abroad, and the slowing growth of Business Process Outsourcing (BPOs).
In short, the stark reality of Gross Domestic Product plunging from a projected 6.6 percent growth to 0.6 percent for 2020 with full recovery forecast more than one year later in the last quarter of 2021.
The industry is further challenged by the cautious lending of banks operating under the uncertainties of the pandemic, forcing some dealers with fixed overhead costs and limited volume to close and re-evaluate.
To drum up sales, dealers are offering hefty discounts for cash purchases and low down payment or low monthly amortization options to consumers. Transitioning to digital solutions such as virtual launches, video conferencing and “distance marketing” via the creation of virtual showrooms is common now, given the stay-home and social distancing imperatives imposed by the government to limit the spread of the virus.
Amid this gloom, the only brand that managed to increase its sales in the first quarter of this pandemic year is maximizing various opportunities and moving quickly to help jumpstart the country’s economic recovery.
Adventure Cycle PH, Inc., part of the AC (Ayala Corporation) Motors group and the distributor of Kia vehicles and parts, barged into the Top 10 Sales Performers list for January-March 2020 by scoring 923 unit sales compared to 793 in the same year-ago period.
Others may scoff that Kia’s total sales did not even reach four digits, but the fact remains that it was the only brand to post positive results for Q1, in the process grabbing 9th place.
Kia dropped to 10th place in the year-to-date May 2020 ranking by selling 952 units compared to 1,896 in YTD May 2019, but that hasn’t deterred Kia PH president Manny Aligada.
Instead of cutting back, Kia is opening four new dealerships by the third quarter to bring its total dealer network to 34 sales and service facilities nationwide. “Kia intends to continue expanding its reach way into 2021, starting with four more facilities planned for early 2021,” Aligada told PDI Motoring during an eRound Table Discussion on Zoom.
And to top it all, Kia PH is unboxing an all-new model in Q4 this year, reflecting the brand’s optimism that the market will have substantially recovered by then.
Also before the year ends, Kia will launch its Virtual Showroom which allows customers to shop for a new Kia vehicle from the comfort and safety of their homes.
Meanwhile, Aligada admits that the credit crunch during the lockdown forced many small and medium-size enterprises (SMEs) to close shop, and that thousands have lost their jobs. But he points out that “the Filipino is resilient and Filipinos are creative enough to adapt, to do things they never did before in order to survive during the quarantine periods. I believe in the resilience of the Filipino. That resilience will carry us through.”
(He may be referring to those who used the emergency cash they received from the Social Amelioration Program to start a small business enterprise at home.)
As for so many SMEs shutting down, Aligada asks rhetorically: “How many new SMEs have opened in the last few months?” His view is that the SMEs are merely pausing, and are still there, waiting to reopen when the economy improves.
The news that some 300,000 OFWs will be repatriated this year does not worry Aligada, either, in terms of shrinking dollar remittances. “There are 10 million OFWs, so if 300,000 are returning, nine million will be left abroad.” This means that the dollar remittances will continue, albeit in reduced amounts, and the families here of OFWs can still afford to invest in major purchases like a new car.
In a best case scenario in line with estimates by various banks, Aligada estimates the industry’s total sales to reach 275,000 units this year, 35 percent down from the originally projected 420,000. The monthly sales forecast plummeted to its nadir in April but is expected to climb gradually until November when it will catch up with the originally projected total and complete the transition fo the “new normal.”
THE ACE UP KIA’S SLEEVE
Kia has an ace up its sleeve in that its product lineup is in sync with the new market dynamics. The market, while slowing down, is shifting toward entry-level segments and commercial vehicles because of the need for personal mobility and the movement of essential goods.
The overcrowded and unreliable public transportation system where social distancing and other health and safety measures are nearly impossible to observe is pivoting an increasing number of people to consider buying safe and reliable cars priced within their budgets.
Kia has the goods that consumers in the new reality need. So instead of promoting cars known for speed, luxury, and/or style, Kia is touting affordable personal transport like the Picanto and the Soluto that can be depended on for daily drives, plus the K2500 Karga, a light commercial vehicle ideal for delivery and shuttle services of businesses.
Complying with the social distancing proctocol required in vehicles, Kia took the initiative of fitting the K2500 Karga with plastic dividers that are easy to remove, clean, and restore, so that it would be immediately ready to use for shuttle service or as a modern passenger jeepney.
Kia dealers are conducting aggressive campaigns to drive sales of these three key vehicles, such as a super low down payment of P1,000 for the mini subcompact Picanto or a low monthly amortization of P12,115. A hefty cash discount of up to P70,000 is offered for the K2500 Karga. Kia offers these attractive auto loans in coordination with the Bank of the Philippine Islands (BPI), which happens to be part of the Ayala Group, but also does financing business with other banks.
The priority given to the Picanto, Soluto and K2500 in its current marketing strategy does not mean that Kia PH’s product lineup is limited to entry-level and service vehicles. For the driving enthusiast, there is the Kia Stinger sport sedan and for big families wishing to motor together in comfort, the spacious Carnival van is available. Those who want a sporty crossover can choose from the subcompact Sportage, the compact Seltos or the midsize 7-seater Sorento. The Forte and the Rio are attractive compact sedans for young startup families.
Kia vehicles have a 5-year/160,000 km warranty, whichever comes first, and 24/7 roadside assistance for those under warranty. The availability of parts, which was a problem last year, has been resolved with the increase of parts stock by 2,000 to 8,000 and still counting, plus their delivery to dealers starting in March.
Aligada says that despite the economic crisis, the market for more expensive motor vehicles will continue to grow. “Nobody is traveling because of the travel restrictions worldwide,” he observes. “The people who often travel have money, and they would be willing to part with their money for a good product.”
Despite his optimistic attitude, Aligada cautiously projects Kia PH’s total sales this year to hit 4,000 units, given the nine-month setback from March to September. He is aware that the Korean brand is a small player among the giants from Japan and America, but he aims nonetheless to eventually rank Kia with the top 5 sales performers in the future.
“My objective is to address the market that we have the products for,” Aligada concluded. “I am positive that the brand will move up because of product lineup, design, function, price, and value. Who will need our vehicles? We will go to them.”
IN PHOTO: KIA Philippines president Manny Aligada with the KIA Karga K2500
Aida Sevilla Mendoza is fascinated by everything about cars: their power, styling, design, technology, craftmanship, exciting history of motor sport through the years, and the ever-evolving industry that creates them. But above all, she enjoys driving, especially on a traffic-free expressway where she feels the connection bonding her and the car.