Divining the 2019 local automotive scene:
Cloudy, with a chance of hybrids

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Philippine International Motor Show (PIMS)
This year’s Philippine International Motor Show not as extravagant compared to previous editions.

By Kap Maceda Aguila

2018 is about to be done and dusted and, truth to tell, many in the local motoring industry are heaving a sigh of relief.

It wasn’t a pretty picture, you see. The sector’s figures were down across the board for the first time after posting multiple, successive years of record growth. The joint report released by member brands of the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA) showed total vehicles sales in November fell by 23.4% year-on-year (from 40,799 to 31,258). From January to November, the dip was 14.4% — from 380,179 down to 325,465 units.

Sales in November declined 5.7% compared to October, or to 31,258 units from 33,150 units in the earlier month. Despite the decline, the industry is still positive with the result.

CAMPI president Rommel R. Gutierrez said: “We remain confident that the industry will continue to recover as the year ends.”

By category, passenger car sales went down by 2.6% with 9,197 units in November from 9,444 units in October. The commercial vehicle segment also declined by 6.9%, with 22,061 units sold in November compared to 23,706 units in the previous month. Sales of Asian utility vehicles (Category I) shrank 7.8%, with 3,142 units from 3,409 units in October.

The light commercial vehicle (Category II) was also down by 6.9% with 17,594 units delivered in November from the previous month’s 18,896-unit result. Sales of light trucks (Category III) increased 4.4% with 753 units, ip from 721 units. Deliveries of trucks and buses (Category IV) recorded the highest decline among all the segments, dropping 22.2% with 425 units from 546 units.

Aggregate sales for the first 11 months of the year retracted by 14.4% with 325,465 units compared with 380,179 units in the same period a year ago.

In terms of market share, Toyota Motor Philippines (TMP) remains the market leader with a 42.5% market share, followed by Mitsubishi Motors Philippines Corporation with 19%. Nissan Philippines, Inc. came in at third with 9.7% market share, followed by Ford Motor Company Philippines, Inc. and Honda Cars Philippines, Inc. with 6.6% and 6.5%, respectively going by year-to-date sales figures, the Asian utility vehicle segment has taken the biggest hit, falling by 39.1% from 73,414 to 44,732 units. Passenger cars didn’t fare much better with a 20.4% decline from 125,242 to 99,719 units.

In late November, Hyundai Asia Resources, Inc. president and CEO (and Association of Vehicle Importers and Distributors, Inc. head) Ma. Fe Perez-Agudo expressed in a statement accompanying a report of the company’s sales numbers that “the performance of the automotive industry is beginning to normalize.” On the heels of Hyundai’s 9.6% sales increase in October (compared to the same month last year), Ms. Perez-Agudo declared, “Our growth outlook remains to be upbeat for the remainder of the year.”

The release proposed that the “sales performance of the brand [remained] consistent with the overall demand for automotive vehicles in the country [and that the] monthly trend would show that unit sales would eventually pick up in the last two months of the year.”

What does 2019 bring for the automotive scene? That is probably the biggest question that auto executives need to divine the answer to. As this waning year was an unmitigated, if expected, letdown people are scrambling to provide clarity on the immediate future of our mobility here.

Mr. Gutierrez said at the recent launch of the all-new Toyota Camry that the industry is projecting a recovery of sorts next year by a modest rate of 10%. According to TMP senior vice-president for marketing Jose Maria Atienza, the company is expecting the eighth-generation Camry to move 40 to 60 units a month. TMP last year sold 286 units of the mid-size sedan.

Perhaps no one is betting more heavily on an automotive sector comeback in 2019 than AC Industrial Technology Holdings, Inc., or AC Industrials. On Jan. 30, the Ayala Corporation-steered firm will officially take over Kia through a brand relaunch, as well as the introduction of three new models. New Kia Philippines president Emmanuel A. Aligada recently said in news conference the brand aims to sell 10,000 units in 2019.

Appointed last December 5 as the exclusive local distributor of the South Korea-headquartered international auto giant, Mr. Aligada said: “Our objective is to stabilize the business… build the Kia brand, emphasizing on the Ayala partnership.”

Even casual observers readily attribute the sales downtrend this year to the effects of the Tax Reform for Acceleration and Inclusion (TRAIN) Law, which effectively drove up vehicle prices (with a few exceptions) through higher excise taxation. And because the market was able to anticipate the implementation of the tariff scheme, many bought new vehicles — further driving up 2017 sales figures, and providing a starker contrast to the diminished total of this year. Obviously, a lot of people stayed away from the showrooms.

Victories in this strange new time can still be had though, as the pickup segment has picked up owing to tax exemption for the genre, as well as for purely electric vehicles. The shock has also started to wear off, and buyers are starting to troop into the brick-and-mortar and digital showrooms.

But if automobile players are up for it, 2019 can be the year of the hybrids — which also benefit from lower excise tax (half of that levied on regular automobiles). This can be Toyota’s opportunity to properly push its longstanding Prius product. TMP executives have been ruing the general public’s lack of awareness regarding the technology and idea behind hybrid vehicles, which boast an internal combustion engine and electric motor. “Media can help us propagate the idea,” said Mr. Gutierrez.

As mentioned, purely electricity-powered automobiles have the benefit of full tax exemption, and now’s the best time to push this format. This not only puts the onus on car companies but, perhaps more significantly, on government to help provide an environment where prerequisite charging stations can be more widespread.

Will 2019 be the year of ICE alternatives? Maybe future-proofing our transportation tale can start next year since we’ve found ourselves pushed to the wall by our tariff scheme anyway.