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Don’t let the door hit you on your way out, 2020

We should never let go of hope, and good news indeed appears to be on the horizon

AND SO it is upon us: the last breath of 2020.

The seemingly interminable year of heartache, disappointments, death, sickness, violence, natural calamities is coming to its inevitable close. A year marked by pain and suffering inflicted upon us by both ourselves and nature is now ready to be torn off from our walls and discarded in the trash bin like the much maligned 2020 planner that we almost never needed to use.

The recent deluge of news offers both hope and even more reasons to rue the year that should have been a lucky one. Yes, there are several vaccines available, but we don’t know when the Philippines will get any of them. While we wait with bated breath, social media exploded with a viral video of a double murder, starring a police officer. The long parade of horrors seemingly never ends.

As we plod on to Jan. 1, the irony is that we never quite managed to get, well, 20/20 vision on 2020. It was a rollercoaster ride that just jarred us from the get go. We got all the G forces and very little straights. How could we enjoy the view or even get a breather to focus when it was one haymaker after another?

If you’ve been a constant reader of this space, first, please accept my gratitude. You should also know that I’ve wanted to see how 2020 would pan out for the auto industry. From the direst days of the ECQ lockdown, we’ve seen the path to recovery — not a very clear-cut trajectory, but definable as it was directly impinged by the quarantine level and natural disasters (specifically a volcanic eruption and a slew of typhoons).

“There’s no way to go but up,” said dealer principal Vincent Licup, who is involved with the following brands (in alphabetical order): Chery, Chevy, Foton, MG, and Nissan. “The industry has stayed buoyant amid the waves. But of course, a lot is anchored on banks’ appetite to lend to consumers.”

If you talk to industry executives, this remains a common concern as loan facilities enable (depending on who you talk to) up to 80% of vehicle purchases. The role of finance institutions cannot be overstated. On the side of car distributors and brands, Mr. Licup said, “New models and better promos will propel the comeback.”

Continued the executive, “I’m confident that banks will renew their confidence on consumer financing next year, because it has the highest yield backed by a collateral (a vehicle). Second, they are in the business of banking; the only way to recover from losses is to lend. In fairness, interest rates were maintained.”

Meanwhile, Southgatemotors Ventures Corp. President and Auto Transport Ventures Managing Director Tey Sornet shared with “Velocity,” “Overall, the industry from January to November 2020 had a monthly average of 14,492 units or a -41.8% decline compared to the same period last year. We expect the total industry to finish the year 2020 at around 240,000 units or a decline of 42% compared to the full 2019 results of 410,000 units.”

Mr. Licup observed that the shuttering of hotels and schools in 2020 also negatively impacted vehicle sales. “The demand for vans disappeared. The number coding was also lifted, so the need for additional cars also dissipated.”

2021 HERE WE COME
Chamber of Automotive Manufacturers of the Philippines President Atty. Rommel Gutierrez confirmed to “Velocity” that 2021 will be a year of recovery for the auto industry, with a projected growth rate ranging from 20%-30%.

Mr. Sornet shared, “Our forecast for 2021 is at 320,000 units level or a growth of +33% compared to the result this year. It would be recovery year for the industry that has been greatly affected by the pandemic but would still be 22% below the peak level of 2019. This is mainly due to the continued weakness of the economy continuing to affect the demand and the appetite of the banks in approving auto loans.” I must add that the industry veteran has consistently been very vocal about how important it is for banks to loosen up and, well, start lending out to people again.

“Similar to the trend the past two years, we expect the top three next year to remain Japanese brands: Toyota, Mitsubishi and the brand we carry, Nissan. Their strong brand presence, proven quality and top-notch reliability is expected to keep them atop a very competitive market situation,” he continued.

Having said that, Mr. Sornet averred, “Chinese brands like MG, Foton, Chery, Geely would continue to be strong players next year with their striking designs, strong crossover lineup and attractive pricing. We expect the commercial vehicle segment to continue to increase its ratio of 34.60 versus passenger/SUV vehicles. Trucks, buses, van, and pickups will continue to be in strong demand.”

He also observed that smaller cars are now back to selling “at almost pre-pandemic levels.” This is indicative of a segment of the population “avoiding the use of public transportation.” Mr. Sornet anticipates this trend to continue next year.

For Atty. Gutierrez, the availability of that much-coveted COVID-19 vaccine can be the game changer — one that can enable the industry to realize a sharper growth trajectory. “It will definitely help restore confidence in the buying public,” he concluded.

Let’s cross our fingers and keep praying that tomorrow will be infinitely better than yesterday. We’ve had more than our share of sufferings this year.

Happy holidays, everyone. Keep safe!

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