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Volkswagen’s China-sourced units expected to grow PHL sales by 60%

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Volkswagen Lavida
The Lavida is aimed at a more affluent set of buyers than that of the Santana. -- KAP MACEDA AGUILA

By Kap Maceda Aguila

TO BE perfectly honest, not a few mouths were left agape when Volkswagen Philippines announced a five-model onslaught last May 18. The China-sourced and badged models — the Santana, Santana GTS, long-wheelbase Tiguan, Lavida and Lamando — are widely expected to reestablish the German brand’s presence here while boosting sales.

Three parts of the five-headed hydra embodying the VW resurgence are already available, led by the P686,000 Santana, which effectively becomes the most affordable ticket to a previously prohibitive pool party of Euro vehicles.

But, first things first. China, despite its proximity to the Philippines and a shared affinity for left-hand-drive vehicles, had never been a source for vehicles. Chinese government fiat prohibited locally produced cars from leaving the country and were, instead, solely earmarked to satisfy domestic demand.

“Before, we had to ship units from so far away,” said Volkswagen Philippines chief operating adviser Klaus Schadewald in an exclusive interview with BusinessWorld. “In the past, it was difficult for us to get cars at the right price point [and] we were… suffering from 30% import tax. Aside from the higher price there was the excise tax. Sometimes, we paid up to 100% just in taxes.” Mr. Schadewald rued that at times it felt like being “doubly penalized.”

All this has changed through a free trade agreement with China which took effect in January 2018. The ASEAN-China Free Trade Agreements meant “the taxes of cars from [there] went down to 5%… it now makes [their] cars very affordable,” continued the VW executive. “For us, it was a chance to open up the discussion… with our joint venture partners to look into possible sourcing from China.”

Now, Volkswagen Philippines is immensely bullish about its sales prospects for the rest of the year, expecting 50-60% improvement owing to the more inexpensively priced new nameplates.

Our country has the honor of becoming the first market to import the China-made and branded VW units (from Shanghai). Mr. Schadewald said the Santana is primed for “the biggest segment in the Philippines, the P600,000-P800,000 [niche].” Above that is “another quite interesting level, the P1-million to P1.2-million segment [for which] we brought in the Lavida.”

Meanwhile, the long wheelbase version of the Tiguan SUV is priced with “a very, very attractive” tag of P2.259 million.

The Santana GTS, set to arrive in November, leverages the “success of the Golf GTS in the market,” according to Mr. Schadewald. “People are really loving this.” Lastly, the Lamando, also to set to appear that month, “is the symbol and statement about product quality and technology… This car has everything in it with a very attractive price.”

The new China-sourced models will not supplant VW Philippines’ previous offerings. Said marketing director Franz Henri L. Decloedt in a text message to this writer, “For now, the focus will be on the newly launched models. However, we’ll continue to sell the Golf, Jetta, and Polo while we still have inventory.

“If the demand is still there for these units, we’ll evaluate the sales lineup at that point again. Regardless, VW Philippines will ensure parts availability for all vehicles introduced by our group in order to provide customers the best after-sales experience possible.”

If anything, the opening of China as a source of vehicles promises enhanced access to “best offers” across VW’s 120 production plants around the world. China is undoubtedly one of the more important markets for the German car maker. According to a release, “of the 10,038,650 passenger cars the Volkswagen Group sold globally in 2017, 41.6%, or 4,173,834 units, were in China.”

Volkswagen Philippines further stated that, regardless of source, all its “vehicles meet the premium German car maker’s world-class design, engineering, manufacturing and safety standards that have cemented [its] reputation and heritage across cultures and generations.”

Three of the five new China-sourced models are already available in all eight Volkswagen Philippines dealerships. These are the Santana, the Lavida, and the Tiguan. The Santana GTS and the Lamando will be offered in November. Two automatic-transmission variants of the Santana are also scheduled for release that month.

Underscored Mr. Schadewald; “What we are looking at from a strategic [perspective] is [that we will have access] to the best, most suitable models for the [local] market — wherever the car comes from. I’m not saying that in the future, all cars will come from China. That’s not true… We’re looking now into the best offers with the most attractive price. It can be from China, from Europe, from South America, or from the US.”

Volkswagen is a little coy about the next nameplates set to hit local showrooms, but VW Philippines’ chief operating adviser does offer a tip: To look at the VW models on the company’s China website, and try to see which models would be perfect for import here.

One thing is certain. “More will be coming,” promised Mr. Schadewald.