China-sourced cars surge into PH market

It all began in May 2018 when Volkswagen Philippines, an Ayala Group company, launched five new VW models imported from China.

The vehicles – the Lavida, Lamando, Tiguan, Santana and Santana GTS – are manufactured in Shanghai by SAIC VW, one of the German brand’s joint venture partners in China. The five replaced the Beetle, Golf, Golf GTS, Jetta, Passat, Polo, and Touareg in the PH lineup.

When the SRP of the 1.4-liter Santana subcompact sedan MT was announced at P686,000, the lowest price point ever for a

German marque offered here, the plan of Ayala Corporation’s AC Industrials became crystal clear: to ramp up VW’s market share by making VW cars more affordable for the Filipino people.

AC Industrials was able to overhaul its VW lineup because China-sourced cars are taxed only 5 percent in import duties, thanks to the ASEAN-China Free Trade Agreement.

SURGE OF CHINA-SOURCED CARS

The strategic move of VW PH released a surge of China-sourced cars entering or re-entering the Philippine market, aside from all-new models being launched by Chinese brands already operating here.

For example, that FTA between the ASEAN and China was maximized again by AC Industrials after it acquired and relaunched the Kia brand on January 30, 2019, the sixth brand to be folded into AC Industrials’ vehicle and dealership unit, AC Automotive.

The centerpiece of the Kia brand relaunch by Ayala’s Adventure Cycle Philippines, Inc. (ACPI) was the the Soluto, a Kia subcompact sedan manufactured in China under the direct management of Kia Motors of Korea. The Soluto, with an SRP starting at P625,000, appeared in a full-page full-color ad in PDI and other major broadsheets the next day, January 31.

KIA SOLUTO

KIA SOLUTO VS HYUNDAI REINA

However, another Korean brand distributor, Hyundai Asia Resources, Inc. (HARI), pre-empted Kia by publishing on the same day a two-page full color center spread in PDI and other newspapers introducing the China-sourced Hyundai Reina subcompact sedan with SRP starting at P638,000.

The Soluto and the Reina share the same 1.4-liter, 95 PS gasoline engine which can be explained by the fact that Hyundai Motor Co. has a 33.88 percent stake in Kia Motors in Korea. But on a global scale, Kia and Hyundai operate independently with separate design, production, marketing and branding activities. Both brands have production facilities in China.

MAXUS OF LEYLAND

Ayala’s AC Industrials tapped the ASEAN-China FTA anew when they launched on June 5, 2019 in Manila, the 9-seater Maxus G10 MPV and the Maxus V80 in three variants: family van, cargo hauler, shuttle bus. Maxus thus ventured into a segment dominated by the Toyota Hiace, Hyundai Grand Starex and Nissan NV350 Urvan, none of which are made in China.

On the other hand, Maxus is not a Chinese brand. Maxus has a 123-year history originating from the Leyland Steam Van in Britain in 1896, followed by its inclusion under the Leyland Motors aegis in 1907. Over the years, Maxus became a leader in the design and production of international commercial vehicles, and was finally acquired by Shanghai Automotive Industry Corporation (SAIC) in 2010.

THE RETURN OF GEELY

Geely cars were being sold in the Philippines a few years after 2011, but the business did not last long. Now it is making a comeback via Sojitz Corporation, which acquired the Philippine distributorship of Chinese carmaker Geely Auto in July 2019.

Geely Auto is part of the Zheijang Geely Holding Group (ZGH) which is listed on the Fortune Global 500, and has under its wing Volvo and Polestar, Lotus, Proton and London Cab, among other brands. In 2018, ZGH sold over 2.15 million cars globally.

Sojitz Corp. has been active in the PH auto industry since the 1960s, with local distributorships such as Fuso trucks and a number of distributorships worldwide. The Yuchengco Group has been a business partner of Sofitz for the last 50 years, and will also invest in the new Geely distributorship.

On September 25, 2019, Sofitz G Auto Philippines (SGAP) relaunched the Geely brand at glittering ceremonies at the Grand Hyatt in Bonifacio Global City.

At the same time, SGAP introduced the Geely Coolray compact crossover as its first offering. The turbocharged, 174 hp Coolray has Level 2 and Level 3 Autonomous Driving technology, and major components developed in partnership with Volvo, such as the BMA platform. Its SRP starts at P978,000.

TO MANILA THRU CHINA: MG

In October 2018, The Covenant Car Company, Inc. (TCCI) which also distributes Chevrolet vehicles, announced its appointment as the exclusive importer and distributor of Morris Garages cars and parts in the PH. The launch of the MG ZS crossover, the RX 5 SUV, and the MG 6, followed the announcement.

Exactly one year later on October 6, 2019, TCCI celebrated its first anniversary as the PH distributor of China-sourced MG vehicles by launching the 2020 MG 5 subcompact sedan with a SRP starting at P658,888.

MG is a fabled British brand dating back to 1924. To create an ambience evoking MG’s rich British racing heritage, TCCI displayed a vintage 1974 MG B GT in British racing green body paint at the venue, ditto sporting icons such as Liverpool Football Club banners.

In the United Kingdom, the MG brand underwent several ownership changes until 2005, when it was acquired from the MG Rover Group by SAIC, one of the Big 4 state-owned Chinese automakers.

With SAIC’s financial and technical support, MG resumed designing and manufacturing vehicles. In September 2016, SAIC ended MG production in the UK, and moved it to China although design continues to be developed at a design studio in London.

The 1.5-liter MG 5, TCCI’s fourth offering, is available in four variants with either a 5-speed MT or a CVT gearbox, with the top-of-the line CVT variant priced at P938,888.

GAC VIA LEGADO MOTORS

GAC Motor is not exactly a newcomer, having quietly entered the Philippine market in November 2018 with Legado Motors, Inc. (LMI) as its exclusive distributor. Although LMI hosted a lavish launching event for GAC attended by no less than President Duterte, it did not immediately follow through with promos and ads to market the initial GAC

offerings.

More recently, however, LMI began marketing GAC SUVs more aggressively with full-color ads in major newspapers. Last week, LMI advertised the GAC GS3 compact SUV as its latest and third offering with a SRP of P888,000.

CHERY THE 4TH TIME AROUND

Chery, one of China’s top ten car brands, was brought to the Philippines in 2007 by Iseway Motors, a subsidiary of a Hong Kong-based conglomerate.

Chery’s first offering, the low-cost but cute little QQ

mini hatchback, became a hit and hundreds of units were acquired by business enterprises for use by their field salesmen. QQ cars bearing the Coca-Cola logo were frequently seen on the road.

Unfortunately, unsatisfactory aftersales service and an inadequate inventory of parts, eventually eroded consumer demand and caused Chery dealerships to close down. Two more attempts followed to revive the brand, but did not succeed.

Now Chery is coming back again, this time via a partnership with United Asia Automotive Group, Inc. (UAAGI), the exclusive Philippine distributor and local assembler of Foton vehicles.

At the contract signing ceremony of Chery and UAAGI at Chery’s headquarters in Wuhan, China, the president of Chery International promised to excel internally and focus externally to give buyers a great customer experience.

The new partnership did not reveal what Chery models would be the brand’s initial offerings in the Philippines, but the fact that motoring media guests were invited to test drive the Tiggo crossover and the Exceed premium SUV, may have been a hint.

Given the checkered history of Chery in the country, it would be fascinating to see what UAAGI will do to re-establish the brand’s market viability.

NOT THE ONLY CHINESE BRANDS

Geely, GAC and Chery are by no means the only Chinese brands vying for market share in the PH.

Foton Motor has successfully penetrated the market for vans, light and heavy duty trucks, buses and heavy machinery. Foton is the only Chinese brand that has made it to the Chamber of Automotive Manufacturers of the PH, Inc. (CAMPI’s) list of top ten best-selling brands, and the only Chinese brand operating an assembly plant in the PH. Its P1.2-billion assembly plant in the Clark Freeport Zone, Pampanga was inaugurated in February 2016.

Alphabetically listed, the other Chinese brands selling cars here are BAIC (Beijing Automotive Industry Holding Co., Ltd.) known locally as Bayanihan Automotive Industry Corp., BYD (Build Your Dreams), the world’s leading electric vehicle and battery manufacturer; Chang’an Automobile Co., Ltd.; Haima Automobile, a subsidiary of Dongfeng; Dongfeng Motor Corp.; FAW (First Automobile Works); Great Wall Motors and JAC Motors.

SAIC (Shanghai Automotive Industry Corporation), the largest automaker in China, has joint venture partnerships that enable it to export to other countries, including the Philippines, vehicles bearing the Volkswagen, Maxus and MG marques.

Over the years, vehicles made in China have greatly improved in design, engineering and technology, thanks in no small part that partnerships with European, American, Japanese and Korean brands have taught Chinese automakers.

With their very affordable retail prices, China-sourced cars are poised to grab market share in the PH auto industry– provided that they can establish their durability and reliability through the test of time.