The reasons may be largely economic, but whatever these car companies are thinking when they roll out these jaw-dropping, “once-in-a-lifetime” discounts, promos, and even buy-one-take-one schemes, the Filipino commuter should take a bite now if they already can afford to.
Yes, it’s a buyers’ market in the auto industry, and if there’s something our rollback into stricter modified enhanced community quarantine (MECQ) has taught us, it’s that having your own car is the only reliable and safe transport you can use nowadays. Car makers’ and dealers’ promos may be that tipping point to finally get you to buy one.
Undoubtedly, these are winning deals for the end-users. But do the sellers stand to gain something from what may be practically (and literally) giveaways? Inquirer Motoring asked key auto industry players their assessment on the ongoing sales “madness”, and the possible long-term implications of such.
Ma. Fe Perez-Agudo, president of the Association of Vehicle Importers and Distributors (Avid) explained: “Across industries, ‘once-in-a lifetime deals’ are being offered to spur demand recovery and keep businesses afloat. We are in survival mode and you will see straight discounts ranging from hundreds of thousands to even millions of pesos, while other brands have gone into leasing cars. These extraordinary promos in these extraordinary times are a way of boosting consumer confidence by giving best value for money in these times.”
She added: “From a business perspective, sales promos are our response towards resilience and recovery since it helps in managing inventory, ensuring cash flow, and ‘future-proofing’ our balance sheets.
“While these promos are driving short-term sales, they cannot make up for the initial sales losses in the first half of 2020. Given that we have bottomed out already in the first semester, we believe the second half of the year will be better, assuming there are no further lockdowns past August 18.”
Never forget experience
On the impact of such promos on the industry, Agudo said: “Let me share with you an insight from an esteemed marketing professor in the Asian Institute of Management. In the long run, consumers will forget about your promos, the same way they will want to get out and forget about this CoViD pandemic, but they will never forget the experience you gave them. That lasts a lifetime.”
Lawyer Alberto B. Arcilla, president and CEO of Chevrolet Philippines-The Covenant Car Company Inc, said: “While attractive promotions contribute to increases in car sales, these offers are likewise indicative of a unified effort among auto manufacturers to keep the industry strong while serving the mobility requirements of the market.”
He added: “In recent years we have seen a developing definition of a buyers’ market, where the availability of options has been laid out by all the manufacturers to address different and individual mobility solutions of each client. The understanding that each client has their individual needs has been the drive for us at TCCCI, and it is our motivation to offer high build quality vehicles that are reliable and have attainable price tags while maintaining viable operations.
“Though it’s clear that sales promos increase healthy competition among car brands, it’s also the best time for the industry to collectively serve the public, while moving forward and doing its part in rebuilding the economy.”
Rommel Sytin, president of United Asia Automotive Group Inc (Foton Philippines/Chery Philippines), told Inquirer Motoring: “Aggressive and generous financing schemes have been around since before the pandemic. It’s just become even more so now, partly to move inventory, but mostly to stimulate the demand affected by the ongoing quarantine. It might not necessarily make up for the low sales during the months of ECQ, but it should help accelerate the recovery.”
He added, “Since the promos are limited offers, the effects should be immediate or at least meet short-term goals. In terms of impact, it can only be good. Demand, no matter how the different brands meet or stimulate it, is ultimately dictated by the buyer. Even high-end luxury lifestyle brands do promos and offer huge short-term discounts without affecting their long-term brand value and equity.”
Banks must be more aggressive
Froilan Dytianquin, general manager for Sojitz G Auto Philippines/Geely Philippines’ sales and marketing, said: “I believe automotive players are really exerting their best effort for a V-shaped recovery, providing a lot of incentives to new car buyers. Some of these promotions are geared towards vehicle financing. But unless the banks are back to being aggressive in providing vehicle loans to customers, then the possibility of faster recovery can’t be realized. However, I have observed that banks are really cautious as there are still a lot of uncertainties, especially in the case of borrowers, such as capacity to pay, job security, nature of business, etc. Normally, dealers rely heavily on financing transactions which on the average comprises about 70 to 80 percent of their total sales.”
Keiichi Suzuki, vice president and general manager of Suzuki Philippines Inc’s Automobile Division, said: “The times have changed and the circumstances are evolving, primarily because of the effects of the health crisis we’ve experienced here in the Philippines that have pushed forward a change in market behavior. This calls for us to be able to adapt to these changes without compromising our offerings, and rather make them more enticing to our customers.”
Suzuki added: “The promos we introduced are a result of studying how best we can help those who are looking into purchasing their own vehicle to make life easier with the demands of the ‘new normal’. With these discounts and flexible payment schemes available to the market, we’re optimistic when it comes to our sales as we are looking into having more and more people consider and eventually purchase their very own Suzuki vehicle.”