IF THERE’S anything I’ve learned over the last few months of interviewing auto executives and dealer principals, it’s that the renaissance of the industry is more of a group project. The business of selling cars doesn’t only hinge on making digital showrooms available, or equipping salespeople with gadgets and the resources to reach out to prospects in this new normal, or even the rollout of enticing promos.
While these are obviously good to have in the pocket, the chief enabler of growth will be the banks — particularly since about 70% of vehicle purchases involve some form of financial instrument or car loan.
Having said that, Kia Philippines President Manny Aligada said that we should see (and expect) “a very cautious approach” for banks, such as enacting measures to “ascertain liquidity of customers who are applying” for loans. The Bayanihan to Heal As One Act certainly helped to ease payment woes for those affected by the lockdown, but if we get down to the brass tacks, this buys a grace period and not much else.
The Philippines, the executive averred, is in recession, and a full recovery isn’t expected until the fourth quarter of next year. He added that household spending is weak, and that we might still see companies closing down.
Mr. Aligada is one of those people to talk to if you want straight answers and, to be honest, hope. And who can’t benefit from a dose of that right now? But don’t get me wrong, though. It’s not false hope he’s peddling but one based on empirical data (see the graph he presented to media).
That’s a pretty steep and optimistic upward trend, but he thinks it can be realized. “We think the economy is resilient, (much like) Filipinos,” he said, and added that total vehicle sales are expected to end at 275,000 units (or 35% below the original 420,000 projection). In concert with a market decline, Kia Philippines is expecting a shift to “entry segments and commercial vehicles due to the need for personal mobility and movement of essential goods.” Indeed, from an all-time low of 133 units in April sold for CAMPI and TMA members, a 3,500% jump was registered the next month — due in no small part to a (limited) reopening of showrooms.
But this was no surprise.
To be honest, this is consistent with what many in the industry are divining as well. Because of the continued limitations of public transportation and the uncertainty (i.e. risks) with taking it, personal mobility is seen to grow. And while the dire economic effects of pandemic cannot be discounted, it’s becoming apparent that there is still, as in other markets and territories, pent-up demand.
However, what is a yellow light for unmitigated growth is the aforementioned (expected) cautiousness of banks.
Having said that, aside from entry-level personal mobility, Mr. Aligada said that the “new star” of this COVID-19 period is logistics, so Kia Philippines is covering those bases (see Angel Rivero’s article) to make the affordable even more accessible.
Kia Philippines is also busy adjusting to the new normal in other ways, while soldiering on ahead as planned in areas such as the opening of additional dealerships (Kia Marikina, Kia Fairview, Kia Isabela, and Kia Bonifacio Global City) in Q3 — bringing the total to 34. Isn’t this counterintuitive, we asked. The executive said it’s still about widening the reach of the brand to reach underserved or unserved markets. Four more facilities are planned to go up by the end of the year or early 2021. It’s also about “mimicking” the anticipated rebound of business.
One of the uncertainties that the company had prepared for is a disruption in parts supply. Mr. Aligada boasts that they have bolstered their inventory from 2,000 to 8,000. All told, 14 containers of parts are now awaiting distribution to dealerships for both current and future models.
Speaking of future models, Kia is set to unveil a new model in the last quarter of 2020. The company isn’t confirming just yet but, based on the teaser graphic, the vehicle in question might be the Kia Stonic crossover. I took a different tack and asked, “So, how many variants of the Stonic will you be bringing in?” The Kia executives in the Zoom call laughed heartily and said we’ll know soon enough. It was worth a shot, right?
The firm also intends to unveil its virtual showroom by the last quarter, as it is cognizant of how “customers “will increasingly prefer to do their product research online.” Meanwhile, “traditional customer interactions” such as during test drives, showroom visits, and coordination with sales agents will be done via “digital touchpoints” to promote physical distancing.
“All these are designed to not only jump-start our brand but the economy as well,” concluded Mr. Aligada.