The car buyers’ behavior

The year 2018 has shown ongoing shifts when it comes to the preferences and attitudes of Filipino car buyers. As this year witnessed the implementation of Tax Reform for Acceleration and Inclusion (TRAIN) law, rising of prices, launching of new cars, and other developments, car buyers are seemingly making more careful decisions in which cars they purchase.

AutoDeal, a notable car-buying Web site in the Philippines, releases the Philippine Automotive Industry Report (also called Insights Report) every quarter of the year. Using the data gathered from the transactions transpiring in the online platform, the quarterly report reflects not only the behavior of the automotive industry but also the preferences of buyers.

The Industry Reports from the first half of the year reported on what types of vehicles buyers are interested to purchase. In the first quarter, AutoDeal found out that “[i]nterest levels in subcompacts, light pickups, MPV/AUV’s, compact crossovers and vans/minivans continue to rise.”

In the second quarter, “[s]ubcompact cars, light pickup trucks and compact crossovers continue to be the preferred purchases of choice”, while mid-size SUVs still earn the interests of consumers with a 10.59% rise from the first quarter.

Meanwhile, Association of Vehicle Importers and Distributors (AVID), a private, nonstock, nonprofit business association representing world-class automotive brands, stated in its sales performance and outlook published last October on its Web site that the “[demand] for Passenger Cars (PC) continues to dip in favor of SUVs with 23,531 units sold in the first nine months of the year, down by 20%.”

This agrees with what some industry executives told some media outfits. In an interview with Philippine car-oriented Web site CarGuide.ph, deputy chairman and managing director of Tan Chong International Ltd. Glenn Tan has observed “the buyer’s shifting preference away from Pickup-based Passenger Vehicles or PPVs” and towards compact SUVs.

For Mr. Tan, these kinds of vehicles “can easily go toe-to-toe against PPVs when it comes to ground clearance and even water wading, two very important considerations for Filipino buyers.” He adds: “[T]hey’re easier to drive and park in traffic dense settings like in Manila. They are also more comfortable and handle better.”

Moreover, a regional media outfit quoted Steve Gingco, general manager of Isuzu Cebu Inc., regarding what consumers prefer, especially as price is considered. “[B]uyers’ preferences have [been] shifting toward smaller sedan vehicles, compact sport utility vehicles (SUV) and pickup models,” he said.

“With the Philippines still experiencing the onset of the motorization stage when per capita income reaches $3,000 starting in 2014, this trend of preference due to price affordability is consistent with the basic mobilization needs of the buyers and a view of value for money in buying SUVs,” Mr. Gingco added.

A recent research published by online vehicle marketplace Carmudi PH in its Carmudi Insider website also confirms this trend. In its study entitled “The Changing Landscape of the Car Industry in Asia: Automotive Search Preferences in the Philippines 2014 — 2016”, Carmudi reported that under the used car segment, “three body styles were the most popular with searchers for both years — the Multi Purpose Vehicle (MPV), sedan and SUV.”

In support of this finding, Paolo Brambilla, general sales manager of Audi Philippines, was quoted as saying: “SUVs and compact sedans are the most popular body styles with our buyers. Most of these buyers are young executives, and the pricing of these said body types falls within their executive car plans, and meets their needs and wants as well.”

In addition, AutoDeal’s third quarter Insight Report revealed the most inquired for brands. Starting from the highest, the top 10 brands noted are the following: Toyota, Ford, Mitsubishi, Nissan, Hyundai, Suzuki, Honda, Chevrolet, Mazda and Isuzu.

When it comes to how consumers do their car-shopping, the AutoDeal Insights Reports noted that from 64.8% in the first quarter, the percentage of mobile use raised to 74.4% in the third quarter. In other words, “[c]onsumers are predominantly car-shopping using mobile devices.”

Regarding the length of research and purchase buyers undertake, the Insight Report from the first quarter wrote that “[prospective buyers] will take longer to research and transact their vehicle purchases. This is indicated by more consumers stating that their buying time would be in 3-6 months or 6-12 months period.”

In terms of purchase urgency, the Insights Report from third quarter stated that it takes 44 days for buyers in the online platform to purchase after their online inquiry. However, as stated from that same report, “[w]hile total online car buying inquiries are up by 17% year on year… we’ve observed that the purchase intent continues to be persistently slower than 2017. As we complete Q3 2018, it continues to become increasingly apparent that the speed in which consumers aim to purchase is unlikely to accelerate to the same astonishing pace that we experienced at the end of 2017.” — Adrian Paul B. Conoza