Corporate News

By Victor V. Saulon

Honda PHL sees slower car sales this year

Posted on February 25, 2016

HONDA CARS Philippines, Inc. sees a slowdown in vehicle sales in 2016, although it still expects to grow at a higher rate than the industry, the automaker’s country head said.

“We want to grow at least stronger than the market growth. If the market grows by 10%, we should be more than 10%,” Toshio Kuwahara, president and general manager, told reporters Tuesday night during the launch of the third generation Honda Pilot sport utility vehicle (SUV).

Last year, the company sold almost 20,000 vehicles, up 44% compared with sales in 2014. Based on preliminary figures from the Trade department, the local automotive industry in 2015 sold around 321,534 vehicles, up 19% from 269,164 units in the previous year.

“I’m not expecting that our sales will grow another 40%, another 30%… [but] at least stronger than the market growth,” he said.

Mr. Kuwahara said Honda’s City model accounted for 40% of the company’s sales last year. The rest was contributed by its 12 other models. The newly introduced Pilot accounted for just 1%-2% of sales. Most of the cars were manufactured abroad.

In 2015, the company brought in the more affordable seven-seater multi-purpose utility vehicle Mobilio, which has become its second best-selling vehicle next to the City. It also launched the latest version of its Odyssey and one of its global products, the HR-V.

“I am pleased to announce that we have already increased our supply and stabilized our stock situation. The all-new HR-V vehicles are now readily available at any Honda dealership,” Mr. Kuwahara said in a speech at the same event.

He said the 10th generation Civic “is coming soon,” but he declined to give a specific month or quarter. Earlier this year, the company introduced the new CR-Z 1.5 IMA Hybrid Navi.

Honda introduced the first generation Pilot a decade ago. The model was its first mainstream eight-passenger SUV built on a car-like body. It offered more space and better fuel efficiency. The second generation came in 2012, and featured upgraded rugged utility and better off-road capabilities.

The third generation, with a retail price of P3.38 million, has “more advance technology and more premium attributes,” he said.

Mr. Kuwahara said that the previous Pilot generation was not able to “compete head to head” with its counterparts in the local market because of its size, seat and engine. It only had basic safety features.

But he said the Pilot’s target customers “are very wealthy”, thus its performance was not that strong. “This [third generation] Pilot has a great opportunity to tackle and get some volume,” he said.

On the sidelines of the event, Mr. Kuwahara said the company would not apply for the third and last slot in the government’s Comprehensive Automotive Resurgence Strategy (CARS) scheme, which requires each enrolled car companies to locally manufacture 200,000 units of a specific model in the next six years in exchange for an incentive that is equivalent to about $1,000 per car.

“We are not applying for CARS simply because we cannot,” he said. “They are demanding 200,000 units in six years and our production is below 10,000. Our capacity from the beginning is more or less 11,000. Even if we maximize the production and do it for six years, it will be less than 70,000 units, which is far below 200,000 units.”

The CARS program is expected to heighten pricing competition as supply increases, but Mr. Kuwahara said local motorists’ decision to buy a car was not based solely on price. He said buyers evaluate a car’s “design, interiors, roominess, fuel efficiency, power.”

Toyota Motor Philippines Corp. and Mitsubishi Motors Philippines Corp. have officially signified their intention to join the CARS program.