With the end of the pandemic tunnel still not in sight, the car industry continues to pivot
OUR VERITABLE pandemic tango is continuing with another relaxation of the quarantine controls. As we go to press, President Rodrigo Duterte, with guidance from the Inter-Agency Task Force on Emerging Infectious Diseases (or, simply, IATF) has declared that the so-called NCR Plus will again revert to GCQ (general community quarantine) “with heightened restrictions” until the end of the month. The rest of the Philippines, with some exceptions, remains under the looser MGCQ (modified general community quarantine) restrictions. If you’ve been regularly following the news, you should know that whatever officials decide on would be contentious.
On one hand, a segment of the population has long been lobbying for the government to open businesses and allow more people to return to work and establishments to increase capacity. On the other are medical frontliners overwhelmed and distressed by the rate of infection and even deaths that had been threatening to overwhelm our country’s health system — obviously struggling amid a less-than-stellar rollout of COVID-19 vaccines.
Whatever side you’re on, one thing is clear: People displaced and affected by restrictions cannot sustainably survive, even with well-intentioned community pantries, if government fails to offer neither livelihood alternatives nor adequate ayuda (help or assistance). Even a cursory inspection of the nearest mall will show the direct, tangible consequences of restrictions. How many of your favorite restaurants or shops have shuttered permanently? Do you even remember how it was like to eat popcorn and kick back inside a movie house?
At a recent online event staged by Melbourne-headquartered Pentana Solutions which specializes in “the development and supply of automotive software tailored to the needs of dealerships,” Philippine Automotive Dealers Association President Willy Tee Ten delivered a talk entitled “The State of the Local Automotive Industry.”
Mr. Tee Ten, who also heads the Autohub Group of Companies handling no less than 20 automotive brands, spoke about how Philippine auto sales started to trend upward from 2012 (with some 152,000 units sold) to the “spectacular year” of 2017 and its 426,000 vehicles delivered.
The executive, of course, qualified that the 2017 spike was due in part to the impending implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law in 2018 — effectively jacking up the SRPs of many automobiles on account of higher excise tax. In a way, a percentage of the otherwise fully organic growth was artificial — and it ate up on the performance of 2018. Year 2019 saw an industry suffused with hope once more and, indeed, the numbers trended up anew to reach 416,628 units.
Then 2020 happened.
Last year’s 40% drop in sales, though distressing, was thoroughly expected, and the woeful 248,171 total could have really been much worse. But that’s all said and done, and 2021 is supposed to be, according to industry executives, a “recovery year.”
From a low base, of course, it should be easy to register a spike, but you get the point. The two things that can negatively impact this intent stand out most clearly: The aforementioned quarantine restrictions — which directly impact auto operations, as well as the lives of the people who should be buying cars; and the so-called safeguard measure (RA 8800), which basically imposes a P70,000 bond on imported passenger vehicles and P110,000 for imported light commercial vehicles. We have yet to see if this measure will stick, but many have understandably pulled back on acquiring new vehicles during this challenging time.
Mr. Tee Ten said, “People would still love to buy cars, but buying conditions are very erratic.”
He correctly noted that many businesses have been impacted, resulting in “postponed purchases,” if at all. “It’s either they hold on to funds, or there are no funds to begin with,” he quipped.
CONCERNS AND TRENDS
Adding to the maelstrom of worries is, of course, something that deals with the pandemic. “The biggest concern of Filipinos now is when we’ll be vaccinated,” declared the executive. “The only way for us to recover is for everyone to be safe in the streets, and that means being vaccinated.”
It’s hard to argue with that observation as we look on with obvious envy at states which have more efficiently rolled out vaccines and have quickly, though deliberately, gotten back on the saddle.
Mobility will always be a concern, of course, and these days when public transportation has been severely limited for obvious reasons are pushing people to acquire their own set of wheels — even if the vehicle isn’t exactly what they were aspiring to park in their garage.
The expansion of the two-wheel business, in particular, has not been entirely surprising, said Mr. Tee Ten — whose group handles iconic moto brands such as Vespa and Triumph. Let’s also add e-scooters, bicycles, and second-hand vehicles into the mix — a direct reflection perhaps of how people are solving transportation woes for themselves.
The recent spate of cases hasn’t helped either, which Mr. Tee Ten described as “horribly high in the last few months.” He added, “We hope that this second lockdown will reduce the number of cases, as Filipinos are suffering terribly when it comes to the economy.”
“We’re still optimistic that things will change,” declared the executive with a grin, addressing attendees from various countries. But like many companies, Autohub didn’t twiddle its thumbs while waiting for things to go back to a semblance of normalcy.
Mr. Tee Ten enumerated the digital pivots that the company and its brands have made. There are the online, so-called “virtual showrooms” that have leveled up on the offerings and functionality of the traditional, largely static websites of yore.
Paper brochures have given way to QR codes, and business cards have been made irrelevant by social media accounts. These days, it’s normal to see your suki sales consultant on Facebook or Instagram. Companies, added Mr. Tee Ten, are doing prospecting through vloggers. Meetings are, as you’d expect now done online; same thing with the training of staff.
“These days, Wi-Fi is one of the most important infrastructures,” he declared.
Even after-sales service is doing the digital dance. Customer relations management is migrating to mobile apps and such, and it’s no longer uncommon to hear of car companies offering pickup and delivery services for customers needing PMS on their vehicles. Technicians and required tools and equipment are deployed through service “caravans.”
The vehicles which do enter the limited-capacity casa service bays now not only receive the complimentary car wash but some anti-bacterial cleaning and sanitation.
Speaking of casas, once a ubiquitous, fixed part of the showroom experience, car accessories and lifestyle items are also finding their way onto online selling platforms like Lazada or Shopee, revealed Mr. Tee Ten, for safer, contactless transactions.
The campaign for a paperless office has also been given a huge leg up by the pandemic. Autohub’s service forms, as well as surveys, can be accomplished online. Feedback is now solicited through aforementioned social media platforms, and even vehicle insurance can be renewed online.
Perhaps most obvious to anyone since last year: Your favorite auto brands are now, more than ever, digital-savvy like you.
Product launches are being done online (and often live). I can personally attest to the fact that Zoom and Facebook launches are now de rigueur for any brand (not just auto marques). As mentioned, physical information sheets and collaterals are giving way to product videos and social media. Mr. Tee Ten said that traditional “car ambassadors” are being supplanted with “brand influencers.” As the fight for the finite online eyeballs ensues and escalates, companies are becoming even more creative and savvy. Physical billboards and streamers are being replaced with web banners, animated posts, or made-for-YouTube content. Podcasts or online interviews, rather than face-to-face or traditional interviews, are rapidly becoming standard fare.
While test drives are still happening in a more limited and careful fashion, companies are also offering to bring the units to the prospective customer’s location. How’s that for service?
With a smile, Willy Tee Ten shared that even giveaways have started to reflect the times. “The usual novelty items are being replaced by so-called ‘pandemic freebies’ — sanitizers, face masks, face shields, and even vitamins.”
The brick-and-mortar facilities are still in place, of course, and there will always be (at least for now) a reason for their being — primarily as a tangible showcase and, maybe more importantly, an after-sales service revenue stream.
If you haven’t been to a dealership during the time of the pandemic, it might just surprise you when you enter one these days. Mr. Tee Ten said expect to see frequent sanitation/disinfecting of all areas, rubbing alcohol and sanitizers at the entrance and restrooms (which now have been retrofitted with swing doors for hands-free operation). Add this to the familiar temperature check and sanitizing shoe mat before entry, online declaration forms for contact tracing, and social distancing — and you get an idea of how much things are changing.
You’ll also see much less people at the dealership, as some are working from home to promote social distancing, while perhaps reflecting tough times for many companies.
All these changes are the hoops companies have jump through to, well, make sure that one blessed day, we’ll all emerge unscathed at the other end of this long, long tunnel.