How to make a German car affordable
Last Friday, during a multi-product launch extravaganza, Volkswagen Philippines astonished almost everyone by introducing a car priced at P686,000.
The lavishness of the event in the posh ballroom of the Shangri-La at the Fort, complete with performances of several modern dance groups and fashion shows by young, up-and-coming designers, contrasted with the lowest SRP ever of a German marque.
The main attraction at the launch was the bargain-priced P686,000 Santana, an entry-level subcompact sedan propelled by a 1.4-liter, 4-cylinder gasoline engine producing 92 hp and 132 Nm max torque through a 5-speed manual transmission (MT).
The Santana’s SRP competes with the P629,000 price point of the 2018 Toyota 1.3 base 5-speed MT.
The VW costs P57,000 more than the country’s top-selling car across all segments, but what’s a little extra for German engineering and prestige?
The question naturally arises: How did VW PH make the Santana so affordable?
Prior to the Santana’s arrival, the most affordable VW was the P800,000 1.6-liter Polo sedan Trendline with automatic transmission.
A clue came when David Powels, the 1st vice president of Shanghai VW, appeared onstage to plug the Santana, the Lavida and the Tiguan, the three cars being launched. (The Santana GT and Lamando will be available in November.)
“Being responsible for the sales of these models in China,” Powels said, “I know directly from personal experience how great their appeal is to our customers. Volkswagen is very much committed to further growing our brand in the Philippines. We will do this by offering Philippine car buyers these fantastic products shown here today.”
Made in China
In fact, all five cars displayed at the launch were made in and imported from China, where VW is the best-selling brand.
Volkswagen’s success there could be traced to the fact that it was the first foreign carmaker to invest in China with a joint venture called Shanghai VW Automotive Co. in 1984.
Now China accounts for nearly 40 percent of the German brand’s global vehicle sales.
Volkswagen AG is the biggest carmaker in the world, with 10,312,400 units sold globally in 2017, because of growth in China, its largest single market.
In 2017, VW Group China delivered a record-breaking 3.8 million vehicles to customers in the Chinese mainland and Hong Kong, with more than 98 percent of these manufactured in the 20 locations of joint ventures SAIC VW and FAW VW.
Up to January this year, VW Group China produced vehicles exclusively for the Chinese market. “What’s made in China, stays in China,” J.P. Orbeta, the first president of VW Philippines, which was founded in 2013, used to say.
Volkswagen, Honda, Isuzu, and KTM belong to AC Automotive, which represents Ayala Corporation’s interest and investments in mobility.
AC Automotive, in turn, is part of AC Industrials together with Integrated Microelectronics, Inc. (IMI).
The made-in-China VW vehicles shown at last week’s product launch are part of a pilot shipment to the Philippines following a plan of the two VW China JVs—SAIC VW and FAW VW—to expand into overseas markets.
The move of Volkswagen AG optimizes its global production network to build up its presence in the Southeast Asian market, which has been dominated by Japanese brands.
This expansion to overseas markets reflects a new milestone in Volkswagen AG’s relationship with its two long-standing Chinese partners.
It also validates the international standard of VW joint venture products.
As Ayala Corporation president and chief operating officer Fernando Zobel de Ayala said at the product launch, “These newest car models are the latest expressions of the Volkswagen tradition of world-class, superior German craftsmanship passed on from generation to generation. They represent the kind of craftsmanship, engineering, and design that Volkswagen is known for.”
Recalling the long and colorful history and heritage that VW shares with Filipinos, AC Industrial president and CEO Arturo Tan said: “With these five new models, Volkswagen Philippines takes the Filipino car-loving public into a bold, exciting future, yet remaining faithful to the original intent of Volkswagen to offer cars that are accessible to the people.
“Volkswagen will once more become top of mind of both a new generation of Filipinos, and of those who still remember those good old days when those iconic Volkswagen cars dominated the motoring landscape everywhere you looked.”
Also during the product launch, VW Philippines revealed the P1.171 million Lavida, a compact sedan equipped with a 1.4-liter turbo engine mated to a 7-speed direct shift gearbox (DSG) capable of 128 hp and 225 Nm max torque.
The only SUV/crossover in the batch was the 1.4-liter turbocharged Tiguan with 6-speed DSG delivering 148 hp and 250 Nm max torque.
Fitted with an array of safety features and creature comforts like leather seats, two-zone aircon, panoramic sunroof, 8 speakers, and 12-way driver seat power adjustment, the Tiguan compact crossover sells for P1.648 million.
The SRPs of the two remaining cars, the Santana GT and Lamando sedan, will be available in November.
All the five new VW cars displayed are gasoline-fed as they were all manufactured in China, where diesel passenger cars are rare.