SGAP: Crisis Management or Management Crisis?
November 28, 2019, may seem like just another box on the calendar from almost 4 years ago, but I think it’s an important turning point in our auto industry. That’s the day we knew everything had changed because that was the first time any of us in the press got to drive the brand new Geely Coolray.
The car was exemplary and impressive in every way, oozing with curb appeal, exuding impeccable quality, easily motivated when you push the throttle, and it was priced so perfectly. Is this really what China is capable of now?
The brand succeeded at the hands of a Japanese distributor: Sojitz G Auto Philippines (SGAP). They had just come from a divorce with Mitsubishi Motors Philippines Corporation (MMPC) and were eager to make it big on their own. They gambled on Geely, and they did it just in time. Geely’s new generation models recalibrated -nay, revolutionized- how we think about and what we can expect from Chinese cars.
Just a few weeks shy of Geely’s fourth anniversary with SGAP, the brand is in crisis. A series of claims made on social media has ignited a wildfire. Several customers have posted their experiences with the brand, starting with a Coolray fuel pump issue that saw a car sit at a dealer lot waiting for parts, all while remnants of a lunch supposedly were left in the car by the service staff. And then now there’s a claim of an Emgrand that was sold brand new, but the owner says there are signs that it was more second-hand.
Needless to say, these lit up the social media feeds as Geely has already been in rough waters over after-sales issues; specifically the availability of parts at their dealerships. Many expressed disgust at the brand, the dealer, and even at the motives of the customers. Some advised caution and patience and to give Geely time to sort it out. Some piled on the issue, and even fanned the flames of the strange Japanese car vs. Chinese car debate. And while this not-so-Royal Rumble was happening, Geely was as quiet as an abandoned house. I’m sure my friends in the PR industry are studying with the title: Geely - How Not To Manage A Crisis.
How did they get to this point? We can do a commentary on all the goings on social media, but the truth is, those are just indicators. Everything we see are symptoms of a deeper problem.
The heart of the matter isn’t after-sales, China vs. Japan, regional politics (WPS), or even a packet of French fries left in said Coolray, but rather management. Not crisis management, but rather a management crisis that goes all the way to the top of SGAP. For that, we have to tell a story that isn’t really told outside of a certain circle.
Being a Japanese company, Sojitz subscribes to the practice of having 3-year terms (thereabouts) for their chief executives. That’s something standard with a lot of car brands that are national sales companies (NSC) or subsidiaries of the brand abroad; meaning it’s not an independent local importer, but part of the larger organization. That’s true of Toyota, Mitsubishi, Nissan, Suzuki, Honda, Isuzu and Ford. As with any government administration, each change of leader could mean a change in leadership style, direction, management style, or maybe even result in more of the same.
In the case of Geely in the Philippines, the changeover that happened last year resulted in the change from one president to another, and the two presidents couldn’t be more different. The predecessor (who now runs Fuso) is the consummate salesman; meaning he is a people person. The successor is a numbers-oriented person; profitability is king.
This sharp change in management approach is what caused Geely’s biggest problem: internal discontent. The predecessor built good friendships and working relationships with those around him. He listened to the ideas of his subordinates and told them to go for it. In Tagalog: marunong makisama. That’s what a great salesman does, but it costs money to do it that way.
The successor focused on profitability by reducing spending in every which way. That’s not a bad thing; every executive is responsible to shareholders, and a good bottom line is the biggest indicator of that. However, a brand executive has to balance spending and revenue. The belt was tightened so much at Geely Philippines to the point that the brand wasn’t moving on anything to boost its image; no big events, no big marketing push, not even a campaign on social media. And in that time, their competitor brands from China were getting aggressive with their marketing thrusts and pricing.
There was a disquiet in SGAP, to the point that many were already “quiet quitting”; that I know for a fact. The initiative and passion of the pioneers of SGAP were sharply eroded in a year, and what followed next was a steady stream of people leaving SGAP all the way up to the second in command whom we in the industry respect very much. That’s when it became an exodus. A lot of the people who started with SGAP in 2019 went to SAIC, GAC, and Chery among others. If you visit Chery’s events and activities moving forward, you’ll see what could have been for Geely.
Now what does that mean for customers? Well, as Geely Philippines was undergoing this internal crisis, customer after-sales issues were piling up. There are many reports online, like of a customer with a broken sunroof who was told they would wait months -maybe even a year- for a replacement. A friend of a friend of mine complained that the Geely dealer did not have collision parts on hand for his Okavango and that his car sat for months at a dealer. We don’t even have to go far: one of our staffers who drives an Azkarra was turned back by the dealer for an oil change because they didn’t have the original oil in stock.
There was a brewing crisis. And even if members of the new SGAP team have experience in crisis management, PR, after-sales, and the like, it’s not going to be easy to manage those things while the ink on your contract isn’t even dry yet and you’re still learning the name of the other new person sitting next to you. The keg was gradually filling up with powder, and all it took was the right spark.
This isn’t the first time that it happened for an auto brand here in the Philippines. There have been several instances before, a chief executive arrived to take charge, but instead of lighting up the sales boards, they lit up an internal fire that triggered the departure of key people and oversaw a period of decline or stagnation in the brand. That happened with the Philippine automotive operations of Honda from 2007-2011 and Mitsubishi from 2017-2021.
It seems to be a recurring issue for some (not all) expats who were appointed as automotive company heads here in the Philippines to disregard the local executives. That is not a great practice, as a good and experienced Filipino executive, manager, or even rank and file employee will give good insights as to what is going on and how to handle any situation here.
Is it too late for SGAP? Honestly, I don’t think so. Sojitz needs to do something. It needs to be big and it needs to be fast. It’s been a few days already since the issue exploded, but SGAP still hasn’t come out with any kind of official statement. No, the statement from a third-party gossip account does not count. We’re at a point where SGAP needs to own up to the problem, and Sojitz needs to make big changes.
While focusing on the P&L is extremely important, an automobile purchase in the Philippines is not a plus/minus decision that can be put on a spreadsheet. The customers of Geely swam against the strong what’s-the-resale-on-one-of-those current and took pride in their choice. They believe they made the good choice with a good car, and I agree. And for it to be shattered so publicly isn’t going to sit well. Even the people who left are frustrated at how this has turned out. In the words of an SGAP pioneer to me: All the work, down the drain.
Somewhere along the way, someone forgot that while the brand builds the car, it’s the people who truly make the brand.