A compelling question arises from the new lockdown of Metro Manila and environs: how will it impact the auto industry in the run-up to year-end 2020?
Unlike the Enhanced Community Quarantine (ECQ) that shut down all except essential economic activity for almost three months earlier this year , the Modified ECQ starting yesterday allows the continued manufacture, retail and repair of motor vehicles for the next two weeks, although at 50 percent capacity.
The imposition of the August 4-18 MECQ is causing industry leaders and achievers to recalibrate their outlook for the rest of the year, although many car companies have already adjusted to the “New Normal” of doing business by transitioning to digital solutions such as virtual launches, video conferencing, distance marketing and the creation of virtual showrooms.
Asked to give her outlook on the industry, Association of Vehicle Importers and Distributors (AVID) president Ma. Fe Perez-Agudo, who is concurrently president/CEO of Hyundai Asia Resources, Inc., said in an emailed statement: “At the onset of the pandemic and lockdowns, we forecasted industry sales to drop by at least 40 percent for 2020. We initially based our assumptions on a U-shaped or slow recovery based on existing indicators then.
“However, the resurgence of cases and the shift back to MECQ makes any forecast unpredictable and more complex. Now more than ever, the auto industry needs to focus on demand recovery, driven by more innovative and disruptive selling tactics, to rebuild consumer confidence and manage a possible W-shaped or deeper recovery scenario.”
A more upbeat outlook was expressed by Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) president Rommel Gutierrez.
“The government announcement on the implementation of MECQ for two weeks may slow down the August automotive market, but we are optimistic that this is just temporary and the delay in sales is targeted to be recovered from September onwards. Before the announcement, the market momentum has been increasing and we are confident that with digital technology, this can be continued,” said Gutierrez, who is concurrently 1st vice president of Toyota Motor Philippines Corporation.
In this context, the brands that bucked the sales plunge of the first semester (due to the coronavirus-triggered March 16-May 31 lockdown) are confident that the industry remains on track to recovery.
MG: CHALLENGES AND OPPORTUNITIES
Albert Arcilla, president of The Covenant Car Co., Inc. (TCCI), the distributor of MG, said: “There are challenges as there are opportunities this year. The outlook for the whole industry may be challenged but certain segments will grow as a result of the public’s requirements for new and accessible mobility.”
MG (Morris Garages), the Brit Dynamic brand with a fabled racing heritage that dates back to 1924, entered the Philippine market only two years ago in October 2018, but captured 9th place in the Top 10 list of the consolidated CAMPI-AVID sales report for the first half of 2020.
TCCI’s achievement was recognized at the 2020 MG Overseas Dealers and Distributors Conference held online recently when the company received the Five Star Award, the highest recognition among all overseas MG distributors. MG, which was acquired by China’s SAIC Motor International Co. Ltd. In 2005, is available in 86 countries worldwide and in 2019 scored 298,000 in global sales.
“We are privileged and proud to represent the MG brand in the Philippines, and to be recognized on our first year of full operations,” Arcilla commented on the Five Star Award.
Though acknowledging that the market dynamics will remain challenged and fluid in the second half of the year, Arcilla said MG is focused on achieving its sales target of 8,000 vehicles this 2020.
In fact, MG is so confident about its future here this year and beyond that TCCI plans to add a new MG model to its current lineup of four models in the fourth quarter. Moreover, MG is scheduled to open seven new dealership sites nationwide before the end of 2020.
KIA’S UTMOST PRIORITY
Kia, exclusively distributed in the Philippines by Adventure Cycle PH, Inc., an Ayala Group company, is another achiever as it was the only brand that increased its sales in the first quarter of this pandemic year.
Kia thereby gained 9th place in the Top 10 Sales Performers list of AVID and CAMPI for January-March 2020, only to drop out of the list by the end of the first semester.
But Kia PH president Manny Aligada is still bullish about the Korean brand’s future in the country: “While the situation now is very volatile and may change any time, we do not monitor the automotive industry ranking as our upmost priority is our sincere intention to offer Filipinos the chance to own vehicles that will help them improve the circumstances that they are in.”
Aligada said Kia PH remains optimistic based on month-to-month improvement in sales performance, since Kia has a complete model lineup to cater to the varying needs of Filipino motorists.
He confirmed that Kia PH will launch its virtual showroom and increase its product portfolio of 11 models by introducing an all-new model in the last quarter of 2020. In addition, four new dealerships will be opened in the third quarter to bring the total dealer network to 34 nationwide, plus four more appointments by the end of 2020.
Although Kia has had to adjust its targets due to the pandemic, Kia PH scored 1.2 percent market share in the first half of the year and plans to grow to 1.5 percent by the end of 2020.
Regarding his outlook for the industry, Aligada said: “While the industry is dependent on certain economic elements, we see the month-on-month performance moving up. If this trend is sustained, full recovery is expected soon. In addition, there are opportunities that are coming in spite of the continued challenged times and there are industries that will continue to do well in the market, thus our view of the steady path to normalization.”
He added that because of a steady improvement in vehicle sales, including aftersales requirements since the gradual opening of dealerships in May, he expects this recovery process to continue towards the end of the year.
“Business ethics that are operational can still look forward to various opportunities for growth while still ensuring the health and safety of employees, partners, customers and the general public,” Aligada concluded.
SUZUKI WAY OF LIFE: MOVING UP
Suzuki is the brand that amazed the industry when it moved up from 7th to 5th place in the consolidated Top 10 list of CAMPI and AVID for the first semester, in the process overtaking both Ford and Honda.
Buoyed by this feat, Suzuki Philippines, Inc. vice president/ general manager of the automobile division Keichi Suzuki said in an online interview that it has made the company even more focused to push for better performance in the remaining months of 2020 despite new challenges arising day by day.
Recognized worldwide for its product line of small but sporty and attractive vehicles, Suzuki offers 11 models in the Philippines to cater to various market segments and answer their current needs. SPh has 79 dealerships nationwide and was scheduled to break ground for a new dealership in Kawit, Cavite this month before the new MECQ intervened.
There are no plans to introduce new models before yearend since SPh launched the S-Presso baby crossover hatch and the XL7 7-seater SUV just before the first coronavirus-instigated lockdown in mid-March.
Regarding his outlook on the auto industry for the rest of the year, Keichi Suzuki noted that the industry was not spared from the economic effects of the pandemic, “but just like other businesses, we hold on to our ability to build on our current achievements, inspired by the prospect of continuing to serve our customers through our premium quality vehicles.”
“Currently,” he added, “the industry is together in figuring out how best we can pivot and move forward by placing the needs of our customers first. One of which is offering attractive price points that aim to entice Filipinos to consider purchasing their own vehicle, among many other promos we have available.”
For the industry to recover fully, Suzuki said that we must work together to rebuild industries, especially the small and medium scale enterprises.
“We are one with the Filipino community in helping put together our society facing this ‘new normal’,” the head of SPh automotive division declared. “We are hopeful that we reach more and more Filipinos who will find Suzuki vehicles as reliable partners in our collective journey in bouncing back.”
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.