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Car importers expect 40% sales slump

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PHILSTAR

By Jenina P. Ibañez

IMPORTED vehicle sales are expected to drop by 40% in 2020 after the car manufacturing and distribution shutdown during the Luzon-wide lockdown caused a 34.4% decline in the first quarter, the Association of Vehicle Importers and Distributors, Inc. (AVID) said.

In a report released on Tuesday, AVID said that imported car sales dropped 34.4% to 14,404 units in the first quarter compared with the level in the same period last year, as most dealerships along with their repair and maintenance facilities have been closed since the lockdown began on March 17.

“The local industry is reeling from this invisible enemy as vehicle manufacturing, importation, distribution, and maintenance have stopped completely. Demand has likewise declined as consumers spend on more urgent needs. With this disruption, we estimate that car sales may drop by around 40% for the year,” AVID President Ma. Fe Perez-Agudo said.

Imported vehicle sales had steadied in full-year 2019, slipping only 0.5% to 87,984 from the year before. The 2018 drop in imported car sales was deeper at 16.8% with the impact of high inflation rates and new tax hikes on the industry.

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Passenger car sales in the first quarter fell 43% to 4,506 units, led by Hyundai and Suzuki sales with 2,724 and 1,127 units sold, respectively. March sales dropped by 48% to 1,023 units from 1,954 in February.

Light commercial vehicle sales fell 29% to 9,806 units sold, with Ford leading the segment with 3,479 units and Hyundai following with 2,797 units. Sales dropped 62% to 1,620 units in March from 4,247 the previous month.

Commercial vehicle sales dropped by 62% to only 92 units in the first quarter. Sales of this segment fell 90% month-on-month to six units in March from 61 in February.

Total March sales dropped 58% to 2,649 units, from 6,262 units in February.

AVID said that second quarter sales may fall even further as the enhanced community quarantine (ECQ) was extended to the month of April and at least half of May in major urban areas. The ECQ was extended up to May 15 in areas in Luzon, including Metro Manila and Calabarzon (Cavite, Laguna, Batangas, Rizal and Quezon).

“The industry is no stranger to adversity but this pandemic will be our toughest challenge yet. We estimate that it would take at least 12 months for the local industry to recover once the ECQ is completely lifted. There will be a ‘new normal’ and we must be quick to adapt since Filipino consumers will be even more prudent and looking for more value in their purchases,” Perez-Agudo said.

“We are working closely with our stakeholders so we can resume our operations, especially our repair and maintenance services, in a manner that protects the health and safety of our workforce and customers, once the ECQs and GCQs are lifted,” she added.

AVID said that its 20 member companies have been preparing health protection and safety strategies, including social distancing, the use of personal protective equipment, and the implementation of sanitation measures.

The companies will be conducting antibody testing for its workforce before they re-enter operations, as part of Project ARK — the private sector-led initiative aimed at increasing tests for the virus.

Fitch Solutions in its country risk and industry research had downgraded its projection of automotive industry growth in the Philippines for this year, estimating a 0.4% growth to 371,456 units sold from its previous estimate of 7.4% growth.

The Fitch Solutions report said that the closure of non-essential business activity will negatively impact vehicle sales for the first half of 2020 as customers are unable to make new purchases. They said that most spending will likely go to essential goods, and consumers will hold off on spending on cars.

AVID said several of its member companies had provided free transport for frontliners, as well medical supplies and essential goods.

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