Lockdown drives car sales lower in Aug.

THE automotive industry’s sales slump continues with an almost 40% decline in August after Metro Manila and nearby provinces were placed under a stricter lockdown for two weeks.

Data from the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA) showed sales stood at 17,906 units in August, or 39.5% less than the 29,599 in the same month in 2019.

Vehicle sales dropped by 12.8% compared with the previous month, reversing month-on-month growth since April. Metro Manila and nearby provinces were once again placed under a modified enhanced community quarantine for the first two weeks of August in an attempt to curb the rise in coronavirus cases.

From January to August, sales plunged 47.6% to 123,489 units compared with the same period last year.

CAMPI President Rommel R. Gutierrez said the decline is due to low business and consumer confidence amid the economic slowdown.

“Spending remains a challenge especially for big-ticket items such as cars,” he said in a statement.

The Philippine economy entered a recession after gross domestic product shrank by a record 16.5% in the second quarter.

Mr. Gutierrez said possible safeguard duties on vehicles may limit the recovery of the industry, referring to the Trade department’s investigation on possible safeguards on imported vehicles. The department is conducting the investigation after the Philippine Metalworkers Association flagged a possible link between a surge in automotive imports and a decline in local employment.

“Economic recovery can be a gauge of the industry’s future performance, but it also depends on the policy environment. Any restrictive policies such as safeguard duty will only limit the industry’s capability to navigate the current crisis,” he said.

CAMPI is hopeful the ongoing evaluation by the Department of Trade and Industry will consider the pandemic’s impact on the industry.

The industry group maintains that it will be able to sell 240,000 units in 2020, which Mr. Gutierrez said can be done through “aggressive promotions.”

Car dealers have lowered down payments and even slashed prices for new vehicles in an attempt to revive sales.

“Our objective is to achieve if not outperform this new target. Otherwise, recovery will be even more difficult,” he said.

In contrast, car sales in 2019 reached 369,941 vehicles, up 3.5% year on year mainly due to improved sales of light commercial vehicles and light trucks.

Commercial vehicle sales in August, accounting for 70% of auto sales, plummeted 40.2% to 12,452 units compared with the same month last year.

Broken down, Asian utility vehicle sales slipped 37.6% to 2,020 units, while light commercial vehicle sales slid 41.1% to 9,707.

Passenger car sales fell by 37.9% to 5,454 units compared with 8,781 a year before.

Year to date, commercial vehicle sales dropped by 46.7% to 87,966 units, while passenger car sales plunged 49.7% to 35,523 units.

For the first eight months of the year, Toyota Motors Philippines (TMP) remained the market leader with a 42.53% market share. Mitsubishi Motors Philippines Corp. followed with 16.93% market share, while Nissan Philippines, Inc. had a 11.1% market share.

TMP, due to a slowdown in production caused by both the pandemic and the Taal Volcano eruption earlier in the year, wants the government to extend  the compliance period for automotive companies under an incentive program designed to support local car parts production.

Mr. Gutierrez, who is also a Toyota first vice-president, said over the weekend that companies are unable to meet the volume requirement under the Comprehensive Automotive Resurgence Strategy (CARS). The program offers fiscal support to car companies that locally produce 200,000 units of high-volume car models over a six-year period. — Jenina P. Ibañez