The most accurate, most honest and most succinct assessment of the Philippine automotive industry’s performance in 2018 came from the unlikeliest of sources and at the most unexpected of occasions: BMW Philippines president Adrian Spencer Y. Yu at his company’s year-ending Christmas party for the motoring media.
“I think you will all agree that 2018 is a year to forget,” Yu said during his speech. It seemed to dampen the celebratory mood somewhat, but it was spot on. With overall industry sales down by several tens of thousand vehicles from last year, no amount of alcohol consumption and raffle prizes could mask that fact. Best to acknowledge it and strive for better things in 2019.
With that, allow me to share with you my short compilation of the most memorable car business stories this past year.
1. Philippine car sales plummeted. The local auto industry’s sales performance was so bad that by September, the year-to-date tally had already been 40,000 units fewer than the total from the same period in 2017. I suspect this was why I stopped receiving the combined sales reports from the Chamber of Automotive Manufacturers of the Philippines (CAMPI) and the Association of Vehicle Importers and Distributors (AVID) in the last quarter. Perhaps the car companies simply got tired of looking at the numbers. Maybe those digits gave them anxiety attacks. With the notable exception of Nissan and Suzuki, most car distributors in the country saw a substantial dip in vehicle sales versus last year. Sure, one might argue that the 2017 figures were artificial — that many of the purchased cars last year were merely the result of people buying in advance to avoid the perceived pricing increase brought about by the new TRAIN law — but it’s not that simple.
As Toyota Motor Philippines president Satoru Suzuki told me last week at his firm’s media thanksgiving lunch, the number one car company is likely to close the year with 154,000 sold vehicles. That’s a massive drop from last year’s 183,908 units (with Lexus sales), yes, but it’s also down from Toyota’s 2016 total (158,728, also with Lexus). Clearly, this wasn’t just the handiwork of the TRAIN-induced advance purchases. Other factors — like inflation, fuel prices, traffic congestion, the rise of transport network companies, scarcity of parking — also played a role in the local industry’s sales decline.
All in all, our car industry should just be thankful if it wraps up 2018 with more than 400,000 sold cars (versus 470,000 last year). That is still quite an accomplishment, especially considering the circumstances. Hopefully, our importers and sellers will bounce back in the coming year.
2. Pickup trucks are now exempt from excise tax. Thanks to the above-mentioned Tax Reform for Acceleration and Inclusion Act, mechanical workhorses that were previously associated with commercial use are now being positioned as lifestyle vehicles. Yes, the TRAIN law was officially ratified in December 2017, but it was in 2018 when Filipinos enjoyed its rare pro-consumer benefits — specifically the zero excise tax on pickups. Car companies started adjusting the prices (lowering them, obviously) of their pickup offerings at the beginning of the year. And then they updated their trucks one by one to make them more appealing to customers (Toyota’s Hilux Conquest, Isuzu’s D-Max X-Series and D-Max RZ4E Blue Power, Chevrolet’s Colorado High Country Storm, and Ford’s updated Ranger lineup).
Of course, one of the hottest product news in our market this year was the arrival of the Ford Ranger Raptor, whose surrounding hype was drowned out only by that of the Suzuki Jimny. It’s a badass truck on its own, but much of the electricity that accompanied its launch was courtesy of its attractive P1,898,000 price tag — no doubt made possible by the excise tax exemption. Next up: the face-lifted Mitsubishi Strada in January (or February, if things get delayed).
3. The phaseout of diesel engines has started. Overseas (in Europe, particularly), the motoring industry’s drastic shift away from oil-burners prominently figured in the news in 2018. In February, a court stamped its approval on the proposal to ban diesel in key cities in Germany. In March, Japanese automaker Toyota announced it was soon ceasing the distribution of diesel products in Europe. In May, Swedish car manufacturer Volvo declared that it would “no longer develop a new generation of diesel engines,” and that the third-generation S60 sedan would be the first-ever model in the brand’s history to not have a single diesel variant.
And then, in June, the German government fined Volkswagen a billion euros over the Dieselgate fiasco, and also ordered Daimler to recall a total of 774,000 diesel vehicles that were fitted with emissions-cheating shutoff devices.
What an ignominious year for diesel. With the United Nations’ Intergovernmental Panel on Climate Change revealing in October that global warming could reach catastrophic levels by as early as 2030 if we don’t curb our pollutive ways, you can expect more auto companies to move away from diesel and just focus their resources on electrification. Unfortunately, the Philippine government seemingly remains clueless about the harmful effects of diesel on both humans and the environment.
4. Nissan, Renault and Mitsubishi chairman Carlos Ghosn was arrested in Japan. The legendary French-Lebanese industry executive, who had famously saved Nissan from bankruptcy after joining the Asian company in 1999, was detained by Tokyo prosecutors for alleged financial violations committed in Japan. Specifically, Ghosn is said to have understated his income on his financial statements. Also accused of misappropriating company assets, the fallen boss was subsequently relieved of his duties at both Nissan and Mitsubishi. Depending on the industry whispers you choose to listen to, it looks like there is so much more to this story than what we read in the press. Nevertheless, an undeniable truth is apparent here: No one stays in power forever.
5. Several auto brands were taken over by new Philippine distributors. Of course, the biggest of these developments was Kia being transferred from Columbian Autocar Corporation to Ayala Corporation. After many months of rumors and speculations, the Korean car brand is now officially under Ayala’s AC Automotive umbrella, right next to Volkswagen. Another brand that changed distributor hands this year was the British-Chinese MG, which went from mom-and-pop to corporate almost overnight when it was acquired by Chevrolet handler The Covenant Car Company Inc. from a little-known independent importer.
And then there’s Ferrari, whose Philippine representative was given a new lease on life when Phoenix Petroleum chairman and president Dennis A. Uy invested in the venture — a “partnership” that was formally announced at the market launch of the Portofino in October. Interestingly, the new general manager that is expected to lead Ferrari in the Philippines moving forward is Ginia R. Domingo, the former president of Kia Philippines (which now has an Ayala-appointed boss in Emmanuel A. Aligada).
It’s a ruthless business, this automotive trade. It’s an industry that is greatly affected by countless market forces over which no executive — no matter how brilliant and experienced — has control. You strategize, you execute, you either succeed or fail, and then you move on. Just like in life, I guess.