New VW PH president targets 50% sales growth

What a difference six years make! In September 2013 when the Volkswagen brand was relaunched by Ayala Corporation’s Automobile Central Enterprise, Inc. (now AC Automotive), ACEI president John Philip Orbeta said, “What’s made in China stays in China.”

Orbeta was answering a question as to whether the vehicles that Volkswagen Philippines will be selling would be sourced from China.

Fast forward to Feb. 28, 2019, and the newly appointed president of VW Philippines, Felipe Estrella III, is saying that all the new VW vehicles in the market are or will be built in China.

Previously, VW Philippines sourced cars from VW plants in Mexico, India and Brazil.

Why China? Because the Asean-China Free Trade Agreement (ACFTA) has lowered the tariff rate for made-in-China goods sold in Asean countries, and consequently, reduced their retail prices.

At a social event last Thursday hosted by VW Philippines to introduce Estrella to the motoring media, he said, referring to the five made-in-China VW vehicles launched at Bonifacio Global City in May 2018: “For Volkswagen Philippines, our game plan is to bring German automotive engineering, design and motoring lifestyle to even more Filipinos.

“That is precisely the reason we introduced last May our five new models, highlighted by the Santana subcompact sedan, which is equipped with distinct features and the build quality of a German-made Volkswagen, but at an accessible retail price of just P686,000.”

Timely intro

In an online interview with Inquirer Motoring the next day, Estrella pointed out that VW Philippines was able to weather the tanking of automotive sales in 2018 “by the timely introduction of the five new models, highlighted by the Santana subcompact sedan, that offered premium amenities but still at very accessible prices.”

Based on these five made-in-China models—the Santana MT, Santana GTS, Tiguan, Lavida, and Lamando—plus the intro of two new SUVs this year, Estrella aims to grow VW Philippines’ sales by 50 percent compared to 2018, when sales were the same as 2017, at a flat 1,363 units.

To hike sales, Estrella plans to expand the VW dealer network from the current eight to 12 before yearend.

Estrella faces formidable challenges this year, given VW Philippines’ sales dip to 50 units in January 2019 from 110 in the same month in 2018.

An MBA graduate of Columbia University in New York, Estrella, 49, joined Ayala Corporation in 2010 as head of the Corporate Finance and Asset Management Group.

In 2017, he was promoted chief financial officer of AC Industrials, which is on top of AC Automotive (Honda Cars, Isuzu, Kia, KTM Motorcycles, Volkswagen) and Integrated Microelectronics, Inc. (IMI).

Before joining Ayala, he worked in various capacities for SGV & Co., East West Bank, Citibank in the Philippines, and JP Morgan Chase & Co. in New York.

Finance man

Although his track record is mainly in finance, Estrella said that as president of VW Philippines, he plans to provide direction in terms of the over-all business operations across all functional areas, including strategies on model lineup, sales, marketing, aftersales and dealer network.
Klaus Schadewald will continue as chief operating adviser in charge of the day-to-day operations of the distribution business.

The German expat will be reporting to Estrella, who in turn reports directly to AC Industrials president Arturo Tan.

Last year, VW Philippines changed its entire product lineup. The popular Golf, Beetle, Jetta, Touareg V6 SUV, and the low-priced subcompact hatchback Polo were not in the vast Volkswagen exhibit at the 2018 Philippine International Motor Show (PIMS) last October.

For those who lament the sudden unavailability of the sporty 220-horsepower Golf GTI and other models, Estrella has this to say: “The Asean-China FTA has made our new Asia-sourced models, such as the Santana, key volume sellers.

“The Polo is in the same segment as the Santana, but the latter enjoys a more competitive price point, with features to match, largely because of the FTA.

People’s Car

Since the Volkswagen brand originated in Germany as “the People’s Car” in 1937, will his marketing strategy hark back to the People’s Car concept, but in a digital age-updated way?

Estrella replied that yes, VW Philippines “would hark back to those days when Volkswagen was created to be able to incorporate the automobile in their daily lives.

“Eighty or so years on, however, the automotive world has become a complex market of vehicles that have been built to suit specific lifestyle and business needs, and that only means our marketing strategy must be backed up by actual, practical, real-world applications that our intended markets must see and feel for themselves in the vehicles we offer.”

He stressed his objective to make Volkswagen’s premium motoring lifestyle even more accessible to Filipinos, and yet offer vehicles that are affordable and remain true to the People’s Car legacy.

As Estrella confidently concluded in his special message last Thursday, “By the end of 2019, we look forward to having a bigger, better, and more relevant Volkswagen Philippines, powered by the many smiles on our customer’s faces because their drives just got better.”