What’s happening to the automotive industry right now can be likened to a restaurant. Let’s say you’ve just experienced highly successful years of operations, with each year exceeding the previous ones. So, you’re planning your menu and project the quantity of food you’ll be serving for next year, and you’re anticipating a record-breaking year based on the past years’ performance.
So, you’ve bought all your ingredients, hired all the people, and spruced up your dining area–all in anticipation of a record-breaking season.
But then, disaster strikes. A pandemic forces all your customers to cancel all their reservations. But you’ve spent so much money hiring new people, buying the best ingredients and in full quantities, and making the restaurant looking at its best ever.
What do you do now? Cut your losses, let go of the new hires, cook the food before they spoil, and sell, sell, sell, however which way you can.
You may say a car isn’t literally as perishable an item as foodstuff. But in the world of marketing and branding, they are, because newer models of cars are coming out in the pipeline, and today’s stocks must go before the new ones can come in.
Car companies and their dealerships are now getting truly aggressive in their sales promos in order to empty their inventories.
A week after Hyundai Commonwealth offered its “buy-one Santa Fe, take-one Accent or Reina promo”, several more Hyundai dealerships followed suit. A Santa Fe SUV is worth over P2.5 million. An Accent (either a GL MT without SRS or a 1.4 GL A/T) goes for P790,000 to P838,000, while a Reina sedan (1.4AT or MT) is worth over P600,000.
Inquirer Motoring called a Hyundai Quezon Avenue agent last Monday. The agent disclosed the dealership set aside 40 units of the Santa Fe into the promo, and currently 20 buyers had already made their P10,000 reservations.
Meanwhile, another Hyundai dealership is doing all of them one better, a buy-one, take-two offer: Buy a Santa Fe, get a free Reina sedan and a free motorbike.
An auto sales veteran who handles several Hyundai dealerships said: “Hyundai’s promo is a marketing strategy. Why would you offer cash discounts when you have an equivalent model of the price? Think of it this way: Two vehicles get to be removed from your inventory instead of just one.”
Kia Philippines’ biggest discount so far is the P430,000 slashed off the Sorento EX 4×4. The discount is available for outright cash purchase only. Other discounts from Kia Philippines begin from P35,000 on its other models the Picanto, Soluto, Rio, Forte, Seltos, Sportage, Carnival, K2500 and Stinger.
Kia Philippines told Inquirer Motoring that these price cutbacks have been the brand’s “most aggressive since Ayala took over the brand in December 2018.”
“Different markets employ various tactical campaigns to promote sales. From cash discounts to easy ownership packages to bundled offers; it would all depend on market conditions. For Kia Philippines, the value of the brand and its vehicle line-up are vital communication points. Through proper brand building messaging coupled with essential features a customer needs, there is a power to surprise in every Kia with deals designed for you,” said Jun Cajayon, Kia Philippines’ sales director, responding to Inquirer Motoring’s query if there have been similar promos the Kia brand had been offering globally or in other countries.
He added that the promos would all depend on the messaging and execution of the campaign so as to not harm the brand in the long run.
He explained: “With the same amount of subsidy, any brand can communicate it as a once-in-a-lifetime opportunity for buyers to take advantage of (highlighting customer benefits of easy ownership). Every brand caters the need for mobility of its consumers, it is one of the reasons promos are being offered.”
Rommel Gutierrez, president of the Chamber of Automotive Manufacturers of the Philippines Inc (Campi), said: “It’s a buyer’s market right now, but dealers must be cautious as big promos today may have a negative impact in the long run.”
Honda Cars Philippines Inc (HCPI) is also offering cash discounts on its product lines this July, the biggest of which is P500,000 for its 2018 Accord 2.4 S Navi AT. It’s also offering cash discounts on the City, CR-V, Civic, Brio Amaze, Mobilio, and other Accord variants, starting from P165,000. Aside from the price cutbacks, buyers may also get a free Blaupunkt Air Purifier Airpure AP 1.0 set for their purchase of the City, CR-V, Mobilio, Brio Amaze, and Civic. HCPI also offers an all-in financing program, which include low cash-out, low monthly amortization, and free one-month amortization, among others.
Toyota Motor Philippines is offering various discounts, including P125,000 off select Vios variants with aged stocks.
Elijah Sue Marcial, TMP vice president for marketing services, said: “We would like to offer other values to customers aside from outright cash discounts, such as flexible financing deals through Toyota Financial Services. We also have free one-year insurance, 20,000km periodic maintenance, etc. We think there is more to offer our customers aside from direct cash discounts.”
Toyota is offering flexible financing, outright cash discounts, and other offers this month on its well-loved models. Aside from the P125,000 savings, buyers can enjoy light monthly payments for as low as P6,571 per month, and a 5-year warranty for the purchase of a G Prime, E Prime, G, E, or XLE variant of the locally assembled Vios.
Promos are also available for the Corolla Altis, Avanza, Rush, Innova, Fortuner, and Hiace. Hiace. The Hilux is offered with as much as P80,000 discount on the 4×4 G MT variant.
Customers also get free periodic maintenance services up to 20,000 km for certain variants of the Vios, Corolla Altis, Rush, Innova, Fortuner, Hilux, and FMC Hiace, or free one-year comprehensive insurance when they purchase the new Wigo.
Trade-in rebates are also available. Up to P40,000 in rebate is available for trade-ins for a Corolla Altis, P35,000 for a Vios, and P20,000 for the Innova, Fortuner, Avanza, Wigo, Rush, Pre-FMC Hiace Commuter, and Hilux (except for PUV, Cab & Chassis, and FX). The rebates can be used on top of existing promos, and may also be used to purchase accessories.
Suzuki Philippines’ discounts range from P32,000 to P160,000 for cash and PO transactions on the following vehicles with model years 2018 to 2020: Ciaz, Celerio, Dzire, Ertiga, Swift and APV. Suzuki is also offering an additional discount of P15,000 to frontliner customers who purchase any variant of Suzuki APV, Celerio, Ciaz, Dzire, Swift, and Ertiga (excluding the Ertiga Upgrade variant) within May 29 to July 31, 2020.
Willy Tee Ten, president of Philippine Automotive Dealers Association (Pada), explains the frenzy of discounts: “These are probably because some brands need to clear their inventory. Maybe new units are coming. It’s a program by the distributors and not the dealers. I sincerely believe it’s a temporary thing. After the inventory clears, the discounts will not be that big. It’s also one way to jumpstart the economy as well.”
He added: “I don’t think any promo will destroy any brand right now because this pandemic has brought on extraordinary times for everyone, and almost all types of businesses are affected.
“In my opinion, it won’t be like this for long. People should buy now.”
Willy Tee Ten, president of Philippine Automotive Dealers Association (Pada)