The first half of 2015 was an eventful, confidence-boosting episode for the Philippine automotive industry.
First, there was the release of the long-awaited Comprehensive Automotive Resurgence Strategy (CARS) by the Department of Trade and Industry in March.
Second, the industry’s biggest business associations, CAMPI (Chamber of Automotive Manufacturers of the Philippines, Inc.) and AVID (Association of Vehicle Importers and Distributors) both reported major growth in the first six months: a 21 percent increase year to date in total sales of 131,465 units by the nine regular and five associate members of CAMPI compared to 108,957 in the first semester last year, while AVID’s 13 members posted a 15 percent growth from 17,941 units sold in the first half of 2014 to 20,626 units during the same period this year.
But to understand the PH auto industry, one must look at the background of CAMPI and AVID. CAMPI was founded in May 1995 by Jose Ch. Alvarez to strengthen the auto industry by consolidating the players into an all-inclusive organization and coordinating with the government in forming policies, programs, regulations and standards for the industry, including the Motor Vehicle Development Program and Progressive Car Manufacturing Program which have been superseded by CARS.
At present, the nine regular members of CAMPI are (by brand, alphabetically listed) BAIC (Beijing Automotive Industry Holdings, Inc,), BMW, Daewoo Bus, Kia, Honda, Isuzu, Mitsubishi, Nissan and Toyota, while the five associate non-voting members are Mazda, Mercedes-Benz, Peugeot, Suzuki and Volkswagen.
The president of CAMPI is lawyer Rommel Gutierrez, whose main job is vice president of Toyota Motor Philippines.
As expected, the car firms of Alvarez (BMW, Kia, Peugeot) are within the CAMPI fold.
AVID was organized in July 2010 by Ma. Fe Perez-Agudo, the president and CEO of Hyundai Asia Resources, Inc. (HARI) after HARI and other non-voting CAMPI associate members broke away.
AVID aims to improve the industry’s competitiveness by assisting government and private sector experts in crafting a system of industry laws and regulations that advance free and fair competition and consumer welfare.
Leap with Ford
The total sales record of AVID leaped when Ford Motor Group Philippines, Inc. joined up last May.
Ford quit CAMPI some years ago when the latter’s president was Elizabeth Lee of Universal Motors Corp., then the assembler and distributor of Nissan light commercial vehicles, and Ford was led by Henry Co. Ford bolted CAMPI long before the American automaker shut down its assembly plant in Santa Rosa, Laguna in January 2013.
Aside from Ford, the current members of AVID are Auto China, Inc. (Geely), Auto Nation Group (Chrysler, Dodge, Jeep, Mercedes-Benz), British Bespoke Automobiles, Inc, (Rolls-Royce), British United Automobiles, Inc. (Mini Cooper), The Covenant Car Company, Inc. (Chevrolet), Focus Ventures, Inc. (FAW and King Long buses, vans and trucks), HARI, Jaguar Philippines, Inc. (Land Rover), Motor Image Pilipinas, Inc. (Subaru), PGA Cars, Inc. (Audi, Porsche, Lamborghini, Bentley), Scandinavian Motors Corp. (Volvo) and United Asia Automotive Group, Inc. (Foton.)
The president of AVID is Agudo. Note that Mercedes-Benz is a member of both CAMPI and AVID, while the car companies majority-owned by industrialist Richard Lee (Chevrolet, Hyundai and Volvo) are all in AVID.
To qualify for regular voting membership in CAMPI, one must manufacture/assemble vehicles in the Philippines. Yet, BMW, Kia, BAIC and Daewoo Bus, all of which import the vehicles they sell, are CAMPI regular voting members. Go figure ….
Tug of war
Going back to the sales performance of the industry in the first semester, the tally is complicated by Ford’s impressive sales record being claimed by CAMPI.
On the other hand, AVID includes in its counting of total sales the number of vehicles sold by Ford in May and June when Ford was already an AVID member.
Responding to a question whether Ford ranks third in sales, CAMPI president Gutierrez said: “Ford, as a member of the Truck Manufacturers Association, is part of the joint CAMPI-TMA Marketing Committee that releases the monthly sales report including the top 5 industry performers. Yes, based on reports issued, Ford has been the top 3 performer with 7.9 percent share for the first semester of 2015.”
On the other hand, AVID issued a media release, “AVID Welcomes Ford,” wherein it declared that Ford Group Philippines, Inc. was recognized as an official AVID member in May this year.
Further, AVID stated in footnotes below its sales charts: “AVID 2015 Year-to-Date sales for the 1st semester grew by 15 percent against the same period last year due to the inclusion of Ford for this period …. PC (passenger car) segment grew by 10 percent year-to-date due to Ford’s gains from EcoSport. CV (commercial vehicles) segment grew by 20 percent year-to-date primarily due to Ford but it must be noted that PGA’s sales increased by 153 percent.”
At stake in this tug of war, if you can call it that, is the 10,427 vehicles sold by Ford in the first half.
CAMPI, with TMA, includes Ford’s 10,427 in its first half sales report while AVID claims 3,522 of that for its first half sales report since Ford sold 1,652 vehicles in May and 1,870 in June.
Thus, subtracting 3,522 from the 131,465 units CAMPI reported sold in the first half, CAMPI ends up with a lower total sales figure: 127,943 which is not exactly 21 percent over the 108,957 in the same period last year.
Top 10
But let’s not quibble. Whether Ford’s sales report is counted as part of CAMPI or as AVID’s, it all contributes to the first half performance of the industry.
If we are to combine the first half sales reports of CAMPI (131,465) and AVID (20,626), we get a grand total of 152,091 units sold, which is almost half of the industry’s target of 310,000 for the entire year.
Going forward, the industry expects car sales to surge higher during the Christmas season than the first semester.
Looking at the first half sales reports of both CAMPI and AVID, here are the top 10 performers: Toyota, 57,717 units sold; Mitsubishi Motors, 25,198; Hyundai, 10,689; Ford, 10,427; Isuzu, 10,169; Honda, 8,735; Nissan, 5,186; Kia, 4,898; Suzuki, 4,843; and Chevrolet, 3,991.
Nissan Philippines, Inc. (no. 7) asserts that it is growing faster than the industry, as shown by its 42 percent growth in the first six months (2015 vs 2014) and its 52 percent growth in the second quarter of 2015 versus the same period last year.
The recently reorganized Nissan brand in the Philippines achieved its highest first half sales results since 2001, thanks mainly to the new NP 300 Navara pickup truck (1,877 units sold) and the all-new Urvan (1,854 units sold.)
Toyota, 13th consecutive triple crown winner
Market leader Toyota anchors its 43.9 percent market share (per CAMPI accounting) on the consumer trust it has earned over the years and its dominance in all segments of the market except the pickup truck.
Toyota has all the bases covered, from mini subcompacts (Wigo) to multi-seat people carriers (HiAce) with a sports car in between (86).
The 57,717 units sold by Toyota in the first half consist of 23,804 passenger cars, with Vios as the best seller at 14,878 units sold, Wigo ranking second at 5,484, and Corolla Altis third at 2,236, plus 33,913 light commercial vehicles.
Of the 33,913 LCVs sold by Toyota in the first semester, the Fortuner was first with 8,744 units sold, Innova second with 8,028, and HiAce third with 7,706.
Overall, the top five Toyota nameplates in terms of first half sales are the Vios (14,878), Fortuner (8,744), Innova (8,028), HiAce (7,706), Wigo (5,484) and Avanza (3,597). Toyota manufactures the Vios and Innova locally.
By April 2015, Toyota had sold 1,000,488 vehicles since its start of operations, with the Vios, the best-selling vehicle in the country, at the forefront. Will Toyota Motor Philippines enroll the Vios in CARS? That deserves a separate story.
Mitsubishi Motors poised to expand production
Mitsubishi Motors Philippines Corporation (MMPC) posted total sales of 25,198 vehicles in the first half of 2015, way ahead of the third, fourth and fifth placer, mainly due to its strength in the LCV segment.
MMPC thereby gained 19.2 percent market share. This seems to indicate that LCVs sold more briskly than PCs in the first six months.
MMPC offers only two nameplates—the Mirage hatchback and G4 sedan, and Lancer EX—in the PC segment, yet it sold 8,002 units of these, with the Mirage G4 sedan leading the way with 4,673 units, the Mirage hatchback second with 2,834 units sold, and the aging Lancer EX last with 495 units.
In the LCV segment, MMPC sold twice as many units as the PCs: a total of 16,629, led by 6,270 units of the Montero Sport, followed by 4,480 of the venerable L300, and 2,854 of the Adventure, an Asian utility vehicle.
Mitsubishi’s pickup, the Strada, was a close fourth: 2,495 units sold (737 of the outgoing model, 1,758 of the all-new model).
Mitsubishi heavy duty trucks accounted for 552 sales, while 15 units of its buses were sold in the first semester.
MMPC’s acquisition of the former Ford manufacturing facilities in Santa Rosa, Laguna last January can only mean that it has plans to expand production, perhaps introduce a new nameplate or two. The Ford plant reportedly has the capacity to build 50,000 vehicles a year.
At present, MMPC produces only the Adventure and L300 locally. All the others—the Mirage, ASX, Lancer EX, Fuzion, Montero Sport, Strada and Pajero—are imported CBU (completely built units).
Will MMPC’s headquarters in Japan invest big time in its new facilities in Santa Rosa, and to eventually participate in CARS?
Again, that’s another story that, together with Toyota, deserves a separate article on CARS.
Hyundai retains 3rd place, but barely
Year-to-date sales of HARI dipped to 10,689 units, or 8 percent less than the 11,651 units sold in the first half of 2014. As a result, Ford, which sold 10,427 vehicles in the first half of this year, is snapping at Hyundai’s heels.
Total PC sales of Hyundai declined 10 percent from 7,896 in the first semester of 2014 to 7,111 in the same period this year.
Subcompact PCs like the Accent registered the biggest sales with 6,763 units sold, still less compared to 7,254 subcompact units sold in the first half last year.
Hyundai’s total LCV sales slid in the first half by 5 percent YTD from 3,755 in the year-ago period down to 3,578 this year.
Only the passenger vans (presumably Starex) posted improved sales, with 1,456 in the first half compared to 1,438 in the year-ago period.
Compact SUVs (presumably the Tucson) dropped to 832 from 885, while midsize SUVs (probably the Santa Fe) plunged to 387 from 771.
Utility trucks (3 tons) contributed a positive report of 903 units sold, up from 661 in the same period last year.
(Note: HARI does not release the sales figures of each Hyundai nameplate, but bunches them in segments.)
Without a pickup truck to offer, Hyundai’s LCV sales lag behind brands that do. It’s the same thing with Hyundai’s sister company (in South Korea), Kia.
Hyundai PCs and LCVs have been overtaken by Ford Motor in terms of cutting-edge connectivity and infotainment features.
Nonetheless, Hyundai fans are anticipating the arrival later this year of the i20 Cross Sport and the all-new 2016 Tucson, which were displayed at the preview of the Hyundai Logistics Center in Calamba, Laguna last April.
Ford’s aggressive marketing pays off
If HARI doesn’t watch out, Ford Group Philippines, Inc. (FGPI) is primed to dislodge Hyundai from third place.
After shutting its assembly plant in Laguna in January 2013 due to high production costs (compared to Thailand) and the lack of economies of scale of the local parts supply base, Ford switched to the expansion of its marketing and sales network in the Philippines.
This was to ensure continued pricing and availability of Ford products and services nationwide.
Not surprisingly, FGPI is on course to open its 40th dealership before the end of 2015.
The decision to stop manufacturing in the Philippines and concentrate instead on marketing and sales proved to be smart. The American automaker is selling more vehicles in the country now than ever before, vending 10,427 units in the first half this year for a 7.9 percent market share, and only 262 units behind the total sales of Hyundai.
Aside from out-advertising the competition via big, full-color placements in newspapers, FGPI won customers by choosing the right products to sell in the Philippines.
First was the Ranger, now the best-selling pickup truck in the country. In the first half of 2015, FGPI sold 4,327 units of the Ranger, which is imported CBU from Thailand.
The second Ford best-seller is the EcoSport, with 4,133 units sold, followed by the Fiesta, with 714 units leaving Ford showrooms in the first six months this year.
The Explorer, a midsize SUV powered by an EcoBoost engine, also sold well—524 units, to be exact.
The outgoing model of the Everest, an SUV based on the Ranger platform, sold only 306 units, but that number is expected to soar when the all-new 2016 model arrives in Ford showrooms this November.
FGPI tries to cover all bases by also offering the all-new Escape, a compact SUV (150 units sold), the Focus, a compact PC (139 sold), the Mustang sports car a.k.a. pony car (129 sold), and the large, full-size Expedition (five units sold).
Many Ford models are equipped with the award-winning, fuel-efficient EcoBoost engine. Sync, the voice-activated multimedia system that comes as standard equipment in all new Ford vehicles, helps to clinch sales, especially among millennials.
It appears that Asian brands have some catching up to do in connectivity and infotainment technology.
Mu-X lifts Isuzu into the magic 5
Isuzu has long been known for the D-Max pickup truck. Aside from the D-Max, Isuzu Philippines Corporation (IPC) offered only two other vehicles: the midsize Alterra SUV, built on the D-Max platform; and the Crosswind, a diesel-powered compact AUV.
Everything changed when the mu-X SUV entered the picture to replace the slow-selling Alterra. The mu-X was an instant success as soon as it was launched in 2014.
The mu-X played a major role in lifting Isuzu into the magic five, thus gaining 7.7 percent market share for Isuzu during the first half of 2015.
Selling only three models, all of which are LCVs, IPC nevertheless scored 10,169 sales in the first semester with the mu-X leading the way with 4,819 units sold.
IPC’s second best seller, surprisingly enough, is the venerable Crosswind AUV with 1,961 units sold.
The 2015 D-Max with Isuzu’s new 2.5-liter CRDI engine came in third with 1,412 units.
IPC also sold a total of 1,977 heavy duty trucks and buses to round off its first half total sales.
More LCVs and subcompact PCs
By CAMPI’s reckoning, 78,667 LCVs were sold in the first half compared to 52,778 PCs. This indicates that an LCV—whether a multipurpose vehicle like the Innova, or an SUV like the Montero Sport—is the preferred choice of consumers
Given the Filipino custom of bringing the family along on trips, the generally poor condition of Philippine roads, erratic weather patterns resulting in floods and traffic gridlock, no wonder people find a seven-seater LCV more practical than a five-seater PC.
As CAMPI president Rommel Gutierrez pointed out, “LCVs not only accommodate bigger family size, but also provide opportunity for the overseas Filipino worker’s (OFW) family to engage in small business.”
Gutierrez said that while OFW families favor LCVs, the market for subcompact vehicles is also growing.
“The BPO (business process outsourcing), pharmaceutical and personal care industries that provide car plans, construction and mining, oil haulers, and the public utility industry which needs to comply with the LTFRB’s (Land Transportation Franchising and Regulatory Board) re-fleeting program, are just some of the key sectors that contribute to the auto industry’s growth,” he noted.
Indeed, as AVID president Fe Agudo avers, “The automotive industry remains upbeat as it ushers in the motorization phase in the country. As such, the industry is poised for double-digit growth in the third quarter of 2015, year-on-year. AVID is expected to leverage on the rewards of a booming industry and a wide array of product offers in the succeeding months.”
Bottom line, if only the members of CAMPI and AVID would resolve their differences and team up, a unified, stronger Philippine automotive industry would emerge to compete more effectively in the Southeast Asian region.
At this point, however, with the CARS program about to be implemented, that seems to be an impossible, impractical dream.