Will the auto world remain flat for the rest of 2019?

The world is flat. At least, as far as the world of the local automotive industry is concerned.

The Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA) jointly reported that a total of 174,135 vehicles were sold from January to June. This was a about a 1.5% increase from the 171,635 vehicles delivered during the same six months in 2018. “Having reached the same level as mid-year 2018, the sales performance as of end of 1st half of 2019 is already an achievement. We face 2nd half of 2019 with great optimism as we sustain the growth momentum.” said Atty. Rommel Gutierrez, CAMPI president. Atty. Gutierrez is also the FVP for Toyota Motors Philippines, as Toyota’s sales remained basically flat for the 1st half with a 0.4% growth versus 1H last year. However, its June 2019 sales surged by 27.8% vs June 2018.

The Association of Vehicle Importers and Distributors (AVID) reported earlier this month that its member companies sold 43,333 units during the 1st half this year, about 1% increase from the group’s result of 43,084 units for the same period last year. Despite the rise in the sales of light commercial vehicle (LCV) and commercial vehicle (CV) models, sales remained relatively flat for imported vehicles. AVID reported that LCVs posted a 4% increase and CVs merely enjoyed a 1% increase over last year. It was AVID’s sales of passenger cars that pulled down the figured with a 4% decrease in the first half of 2019. AVID president Ma. Fe Perez-Agudo attributed the group’s performance to an economic slowdown in the first quarter of 2019. She is also Hyundai Philippines’ president and CEO, and her brand continues to be the top-selling brand among AVID members, accounting for 41% of AVID’s total sales for the 1st half of 2019.

BMW PH president Spencer Yu

Spencer Yu – President, BMW PH

“BMW registered a positive growth in vehicle sales against its 2018 figures. While we see a good uptake for the brand, the rest of the premium segment is still in recovery. There is no particular way to predict the trend across the market as this is heavily dependent on consumer behavior. But, as long as we continue to widen our portfolio, consistently provide the right products, and deliver the best service to our discerning customers, we feel that the industry will soon see an upswing.”

TCCI president Atty. Albert Arcilla

Atty. Albert Arcilla – President / CEO, The Covenant Car Company, Inc. (distributors for Chevrolet and MG vehicles)

Looking at the sales performance in the second quarter of 2019, we can see that there has been a steady increase month to month and year on year. Clearly, the motoring public is starting to buy again. Many factors may be attributed to the increase in sales like aggressive promotions and good financing deals offered by the banks, dealers and manufacturers.

It is very clear though that its growth is triggered by new models offered by new and resurging brands with very competitive entry-level models. There is still hope that the industry as a whole will recover to the 2016 base level and have a modest growth in the second semester, thanks to strong growth of markets outside NCR and Regional Luzon and the pick-up truck segment and the strong campaigns of the new brand offers with exciting models participating in growing and well-established segments.

Hyundai and AVID president Ma. Fe Perez-Agudo

Ma. Fe Preez-Agudo – President, AVID and President / CEO, Hyundai Asia Resources, Inc. (HARI)

Hyundai’s sales during the 1st half grew 9.1% on average compared to the same period last year, but the biggest growth was its light commercial vehicles (LCV) at 50.2%. HARI also expects sales of its commercial vehicle (CV) models to be boosted by its modern jeepneys as the implementation of the government’s Public Utility Vehicle Modernization Program progresses. Sales of the brand’s passenger cars on the otherhand, dipped 12.7%. According to her, HARI is “invigorated” that its sales performance outpaced that of the local auto industry during the first half of the year. “Despite this flat growth in June, we believe that auto sales will continue to get better in the coming months, buoyed by higher infrastructure spending, lower inflation, and increased consumer confidence,” she said.

“We believe that this slowdown is temporary since the Philippines is now on a higher growth path and is a leading economy in the ASEAN. Given these, we will continue to introduce exciting models and innovative services to give consumers more value for their money,” she added.

KIA PH president Manny Aligada

Emmanuel Aligada – President, Kia Philippines

“The market came in strong for January this year, on a good part due to the introduction of new models but it dipped in the succeeding months specially with the demise of AUVs from brands like Isuzu and Mitsubishi. For our own brand Kia, the introduction of new models like Soluto, Forte and our high performance Stinger sedan gave us the sales volume but it will not be in the same trajectory we wanted.” Said Aligada, citing their five-fold increase in target of 10,000 units from a little of 2,000 units sold last year. Ayala Corp., through its subsidiary AC Industrial Technology Holdings, Inc., took over the distributorship for Kia vehicles last year and achieved 38% growth from the same period last year.

“Next to Nissan, Kia achieved the second highest growth rate. We hope we will achieve our targets in the next 6 months. By and large we remain positive since there is nothing in the horizon that is keeping us worried.”

Lexus Manila president Raymond Rodriguez

Raymond Rodriguez – President, Lexus Manila

“Regarding the 1st semester, there was a decline in sales for Lexus as the 1st semester was slow compared to the same period last year. Some of the reasons back then may have been attributed to the high interest and inflation rates. Some customers may have held back their purchases and are waiting for the right time to buy their cars when the situation improves. There were also aggressive promotional campaigns by some brands most especially on huge discounts that we could not match. We are hoping however that the second semester will improve based on recent positive indications that we are starting to experience including favorable projections.” Rodriguez further added that with the recent lowering of inflation rates, he looks forward to a better 2nd semester performance for Lexus and the auto industry as a whole.

Steven Tan – President / CEO, Mazda PH (Bermaz Auto Philippines)

“The industry data shows that there is a small growth coming from 1st half last year, less than 10%, but growth nonetheless, which is a positive sign of economic growth. Last year was the 1st year of the new excise tax implementation, so it is natural to expect a slowdown in consumer demand as the market adjust to higher transaction, especially at the higher end of the market price. For Mazda, as we are moving into next phase of new product wave, like the new generation Mazda3, any indication of growth, even of small, is positive and encouraging.”

Foton PH president Rommel Sytin

Rommel Sytin – President, Foton Philippines

“The sales for the 1st half of our commercial trucks and vans was slow largely due to the economic slow down as interest rates became higher. Most of the construction companies, which is one of our main markets, were also affected by the budget issue. We hope that the 2nd semester will be better in the coming months.”