Whether we like it or not, the fate of the country’s economy going into 2021, particularly in the automotive sector, hinges largely on how well our society quells the Covid-19 outbreak.
During the Inquirer’s 35th anniversary motoring industry webinar on Dec. 9, auto industry pundits were one in saying that the Philippines must find a way to extricate itself from the list of Covid-19 hotspots in Southeast Asia, and that the government should focus on such a concerted effort, while the private and business sectors—including the auto industry—should work on building consumer confidence.
“Call it a fail-fast-succeed-sooner program, but this is the only way we can weather the storm. We’ve had testing, (then there were) no tests. We’ve failed, but we can (still) succeed. But we have to do it now. We cannot wait for a second wave. We really need to put the public and private sector together. We have to work together to bring this economy forward,” stressed Ma. Fe Perez Agudo, president of the Association of Vehicle Importers and Distributors, adding that there could be a good chance the industry can recover “sometime in 2022”.
“The horizon is anywhere from three to five years. This is already our new normal, which we have to embrace. And our young generation (is) telling us to be more digi-savvy, to be more advanced in technology. I think it’s also part of a revolution that is happening in the industry. And then you see the influx of different brands coming in. There’s no stopping the launches of new models even these last two quarters,” Agudo observed.
Vaccine must come sooner
She said that there are certain things that should happen first before automotive companies could realign their targets.
“The vaccine is here, but how soon it will come to the Philippines will be critical. So we need government intervention, we need financial institution intervention to help us go through this. Though we understand the Bayanihan Act is there, the “Build! Build! Build!” program is there; the bills have been passed. Then, maybe, the faster we can recover. Next year we’re almost entering another political arena with the (buildup to the) 2022 elections,” Agudo pointed out.
AC Motors president Antonio “Toti” Zara, who was also one of the guests at the webinar, estimated that the Philippine auto industry could be looking at total unit sales of up to 350,000 in 2021.
“This would mean greater than 20-percent growth versus where we would land in 2020, but this is well below pre-Covid levels. With a risk-averse banking industry, we will have to shift back to a more reasonable equity on the side of the consumers, and we will find a new equilibrium. My fearless forecast is it will take one year to find that new equilibrium. So the soonest the industry can recover will be 2022. That’s fairly optimistic, considering that in the 1997 financial crisis, it took the Philippines 10 years to recover. So, all of us hope for the best that with the stimulus package the government has set up, we should recover faster than we have in the past,” Zara explained.
Fellow guest Albert Arcilla, president and chief executive officer of The Covenant Car Company Inc (TCCCI), said, “If we define recovery from what we are right now, definitely there will be recovery next year because it cannot get any worse. I think all of us will work doubly hard to ensure that we learn from what happened this year. We know what we have to do, and we will do it for 2021. This entails not only us manufacturers or importers, but also our dealer network, banking and financing institutions. I think this has been the best time to calibrate because our clients and our dealer-partners were able to see who their real partners were. We were there for them, we felt that we were able to even show to our bank partners how we do our business. We ensured that equity of the purchase was there.”
Arcilla added: “We’ve seen a lot of new models introduced this quarter. We’ve seen a lot of brands coming into the Philippines going into 2021. These will all fuel the recovery from 2020. Though it may be very optimistic, that’s the only way the manufacturers, the importers need to look at it. Maybe we won’t get to the numbers of 2018 or 2019 right away, but at least we will be able to calibrate our operations to make it profitable, to make it viable, for our companies to continue serving our clients. I think that’s what’s more important. The auto industry is not just selling cars. This is the time that we can prove to our clients that we are here to protect their interests, to be able to serve their requirements the best way we can despite all the challenges. And that I think will be the way for our brands to be able to go higher going into 2021 and 2022.”
Lawyer Rommel Gutierrez, president of the Chamber of Automotive Manufacturers of the Philippines Inc. (Campi), quipped: “If cars were vaccines, where demand is very high and supply is low, this industry can begin again next year, but it’s the opposite of course. Demand is not actually there yet, but we have the supply. It’s just a matter of time restoring the confidence of customers. It will take some time, but definitely we will recover.”