KIA Philippines expects a 20% year-on-year sales drop to 4,000 automotive units in 2020 as the lockdown measures in response to the coronavirus disease 2019 (COVID-19) have reduced consumer mobility.

After selling 5,019 units in 2019, the company in the first five months of 2020 sold 952 vehicles or 50% less than its sales in the same period last year.

But the five-month sales figure contributes to the company’s optimistic projection of 275,000 units in sales for the Philippine automotive industry in 2020, which Kia Philippines President Emmanuel A. Aligada said is above other industry projections.

“Other sources have said that we are looking at about a range of 240,000 to about 255,000 unit sales for this year versus about 417,000 last year. So that’s roughly almost a 40% drop. In Kia Philippines, we spent some time trying to analyze and doing a forecast on how things will be. So our forecast for the industry this year is a more aggressive 275,000,” he said in an online press conference on Thursday.

Combined figures released as of January by automotive manufacturing and import groups show the industry sold 457,925 vehicles last year.

Mr. Aligada said that the company is optimistic about the country’s automotive industry because it sees greater demand as employers look to transport workers amid public transportation challenges, while individuals prefer transportation with fewer health risks.

“While general numbers are dropping, if you look and scrutinize at several industries, there are also beneficiaries to the situation. For example, people now want ease of movement in terms of their goods. There were many overnight businessmen who were able to recreate themselves and come up with certain products over the last few weeks of the lockdown and we think the movement of their goods is critical,” he said.

He added that repatriated overseas Filipino workers may also start businesses, buying vehicles for the transportation of employees and goods.

But he also said that margins have thinned as the company offers discounts for its vehicles.

“We really have to provide that as our contribution to the solutions that are needed in the economy. Thinning margins both at dealer and distributor levels… but that’s how we have to play. All businesses are affected. We really have to do that. Margins are thinned by a lot.”

The company is offering discounts and lower down payments for some of its vehicles.

In addition to a decline in sales this year, Mr. Aligada said the automotive industry is also dealing with cautious bank lending and dealer closures caused by incurred fixed costs.

“Banks have always been strict because they have a portfolio to protect. They are lending, they want to be sure that the people that they will be lending to would be there for the term of the loan and that the vehicles that they are financing would be vehicles that would keep their value. And therefore, is there an impact? You know luckily the banks are still lending… the adjustment there is the wait period,” he said.

The company is also providing options for cash purchases.

Kia Philippines is opening four new dealerships in the third quarter of 2020, adding to it 30 existing dealerships. — Jenina P. Ibañez

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