TRAIN derails auto industry Q1 sales momentum

Philippine automotive industry players knew that the Tax Reform for Acceleration and Inclusion (TRAIN) law would have an impact on sales this year, especially in the first quarter.

They just didn’t know how big an impact.

Now they know.

Six out of the 10 brands that made it to the Top Ten in sales for the first quarter posted negative variances, with four in negative double digit percentages, compared to the same year-ago period, thanks to the higher excise tax imposed by TRAIN on new car sales.

TRAIN also scrambled the rankings in the Top Ten, although not reshuffling the first three leading brands. (See graph next page.)

Toyota remained no. 1 with 34,440 vehicles sold in Q1 2018, representing 37.4 percent market share, but its sales were 15.4 percent lower than the same year-ago period’s 40,689, when Toyota enjoyed 41.0 percent market share.

Mitsubishi, still a runner-up to Toyota with 19,554 units sold in Q1 2018, was one of the four brands that increased market share, from 16.6 percent in Q1 2017 to 21.2 percent this year, reflecting a positive 18.4 percent increase.

Hyundai sustained a 1.2 percent slowdown in sales for the first three months of 2018 to 8,731 vehicles sold versus 8,841 in the year-ago period while strengthening its hold over third place by expanding its lead over fourth placer Ford.

This quarter, Hyundai sold 2,551 more vehicles than Ford, which sold a Q1 2018 total of 6,448. In Q1 2017, Hyundai’s lead over Ford in sales was 1,068 units.

In the process, Hyundai also increased its market share from 8.9 percent in Q1 2017 to 9.5 percent this quarter.

Gains for Nissan and Suzuki

After the first top three, Nissan and Suzuki emerged as gainers to the detriment of Isuzu.

Isuzu, with 3,795 total vehicles sold, plunged from sixth to eighth spot.

Nissan (5,783 units sold) rose from seventh in Q1 2017 to replace Isuzu at sixth, while Suzuki (4,917 units sold) climbed from eighth to take seventh.

Both Nissan and Suzuki posted positive growth variances: Nissan by 9.6 percent, representing a 6.3 percent market share this first quarter compared to the year-ago’s 5.3 percent.

Suzuki outdid everyone by posting a 21.4 percent increase as its market share rose from 4.1 percent in Q1 2017 to 5.3 percent in Q1 2018.

Honda, placing fifth with 6,180 units sold in Q1, was again nipping at the heels of fourth placer Ford, whose sales declined to 6,448 units from 7,773 in last year’s first quarter.

Ford’s market share consequently fell to 7.0 percent versus 7.8 percent in Q1 2017, as reflected by the 17.0 percent decline in sales.

Honda also lost market share from 7.4 percent in Q1 2017 to 6.7 percent in Q1 2018 for a negative 16.0 variance percentage.

At the bottom of the list, Chevrolet dislodged Kia from ninth place with total vehicle sales of 1,213 in Q1. In the same period last year, Chevrolet was 10th with 1,308 units sold.

Kia dropped out of the Top Ten to 11th place as its sales plummeted by 54.1 percent from 1,563 units in the first quarter of 2017 to only 705 this quarter.

Foton took the 10th and last spot by selling a total of 1,141 vehicles in Q1 2018 versus 984 in Q1 2107, reflecting a positive 16.0 percent increase in sales.

Losers and gainers

Summing up, among the Top Ten, there were four gainers in Q1 2018: Mitsubishi, up 18.4 percent; Nissan, up 9.6 percent; Suzuki, up 21.4 percent, and Foton, up 16.0 percent.

The Top Ten brands that sold less this first quarter versus 2017’s first quarter were: Toyota, down 15.4 percent; Hyundai, down 1.2 percent; Ford, down 17.0 percent; Honda, down 16.0 percent; Isuzu, down 41.8 percent, and Chevrolet, down 7.3 percent.

Early this month, the Chamber of Automotive Manufacturers of the Philippines, Inc. (Campi) and the Truck Manufacturers Association reported a combined 86,037 total vehicle sales for the first quarter of 2018 compared to 94,026 in the same period last year.

Rommel Gutierrez, first vice president of Toyota Motor Philippines Corporation and concurrently president of Campi, which has 17 member companies representing 19 global automotive brands, sent this statement together with the release of CAMPI’s first quarter sales report:

“The decline in sales in the first quarter of 2018 is not unexpected. The impact of the change in excise tax rates under the TRAIN law was anticipated for this particular period. We remain confident that the market will improve in the coming months.”

Avid’s 2% decline

Meanwhile, the Association of Vehicle Importers and Distributors, Inc. (Avid), which has 11 member companies representing 20 global, mostly premium brands, reported first quarter total sales of 22,758 units, a 2.0 percent decline from the 23,317 units sold in Q1 2017.

Nonetheless, Ma. Fe Perez-Agudo, Avid president, as well as Hyundai Asia Resources, Inc. president and CEO, expressed optimism that the association’s Q1 performance “gives an indication of the industry’s stability amid the transitional or short-term effects of TRAIN on consumer sentiment and purchase behavior.”

She added: “Despite given market challenges, we remain resolute that the stabilizing market condition and the influx of new products and services will serve as an ample boost as we wind up for a stronger 2018.”

Big picture

To get the big picture based on these reports, we combined Campi’s 86,037 total vehicle sales with Avid’s 22,758, but counted the sales figures of Ford, Suzuki and All Nations Group (Mercedes-Benz) only once (these three brands are enrolled as members of both Campi and Avid) to arrive at a total of 97,115.

In 2017, the first quarter grand total, after counting those of Ford, Suzuki and ANG only once, was 105,170.

Thus, from more than 100,000 vehicles sold in Q1 2017, the numbers dipped to less than 100,000 this quarter.

So what happens to the industry’s pre-TRAIN dream of selling 500,000 vehicles by the year 2020?

Industry players have expressed hope that sales will recover despite the effects of the TRAIN law.