Philippine Motoring Year-end Industry Report Card - Part Two
Second of three parts
by Tito F. Hermoso
Banking, Credit and Finance
Lucky not to have a sub-prime market and big funds sloshing around in investment banks, the ruddy good health of the financial sector helped prod the ruddy good health of the automotive sector. Thanks go to the culling of weak banks and property developers during the 1997 Asian Financial Crisis. This time local banks opened the taps to consumer finance creating auto sales bonanzas like the BPI Auto Madness and BDO Wheels and Deals. Finance spread to 2-wheelers, encouraging long suffering commuters to move to the freedom of self-drive personal motoring.
What was a good idea of bundling comprehensive motoring insurance polices from Insurance Commission accredited Non-life car insurance companies, turned into a PR fiasco as the other insurance companies left out of the accreditation process caused a groundswell of protests and accusations of monopoly bullying. This worthwhile idea remains stalled. By far the most popular and contentious phrase in the insurance policy this year was "Acts of God" in relation to the extensive flood damage typhoons Ondoy and Pepeng inflicted on the Middle Class's fleet of precious cars.
Oil and fuels
Improvements in oil formulation have allowed many car companies to extend their service intervals. Widespread distribution of E-10 Bioethanol have led to some doubts about their suitability for our cars. Manufacturers vaguely assured the public on E-10's compatibility by reminding car owners only to trust the official service centers and original parts. As for old cars, they were generally reaching the end of the economic life of their parts so if there was going to be any damage due to E-10, it would have been inevitable anyway so blaming E-10 on the death of an engine part may not be empirically convincing.
The timely arrival of veteran media practitioner Toby Nebrida, breathed a different kind of life to Chevron/Caltex public image. Chevron was the first oil major to quit refinery operations in the country, which led pundits to speculate that the tax free import of finished or intermediate stage process fuels made investment in large scale high tech refineries infeasible because it just duplicates the smooth running giant refineries in Singapore. Then there was the 3% excise tax that worked as a disincentive, dissuading other big companies, like Total from investing in local refining capacity. Chevron is also undergoing a major shake up of its dealers, converting some forecourts to COCO [company-owned company-operated] vis-a-vis the trend to CODO [company owned dealer operated].
Senator Juan Ponce Enrile led the Senate to review the pricing policy on Natural Gas as its scarcity in the local market is causing the private sector to ask uncomfortable questions. With the barely tapped Malampaya gas fields within our territory, the country should have been extending the pipeline network and expanding the distribution forecourts as NG is a clean source of energy.
No further proof of the success of the Oil Deregulation Act can beat the way independents oil retailers outdo the big oil majors in dropping prices even lower than what the big companies post. Naturally, the consuming public, spoiled for choice, would also cry when the same free market principles went the other way round as international oil prices cause a spike in fuel prices resulting in shortages due to clumsy government attempts like E.O. 839. For most of the year, the nimble of the independents were even able to field specialty fuels like Hi-test unleaded for racing and E-85 Bioethanol. One of the bigger independents, Seaoil, even became a motorsports sponsor when Petron pulled out its long time support for motorsports.
The biggest hit to sports, motorsports, events and advertising industry was the Petron's cost cutting. Unusual for an ex-government owned company, the Saudi Aramco run Petron of before used to be a nimble and savvy marketing equal of any of the foreign firms. Petron had a far savvier brand and street image than most of the larger and monopolistic Asian Oil majors - Pertamina, Petronas, PTT and even CNOC of China. At least Petron has not yet reached too far in cost cutting at the loss of the strong image of its forecourts and Treats convenience stores.
Shell continued on its theme of being a brand consumers trust. And it had to take Shell to do the right thing, against public pressure, and seek redress in the courts, taking up the cudgels for the small businesses against big bully government's price fixing E.O. 839. Shell waved the flag for free markets and fair play. Instead of being pilloried for being a big bully, Shell should be thanked for being pro-small business, a sector that the Left never seemed to speak for.
The country's bio-fuel industry is starting to catch up with huge refineries being established as even the dominant local producer, Chemrez is only to happy to accelerate and expand the adoption of environment cleansing fuel additives like ethanol, as much of it remains imported from Brazil.
As of now, the issue to kick out the oil depot in Pandacan is still with the highest magistrates of the land. It was not a politically favorable move, but Mayor Alfredo Lim of Manila and his city council should be thanked for taking the broader side of the debate in favor of national economic stability instead of the narrow interests of single issue advocacy's. There's money to be found to increase the fire zone buffer between the oil tank farms and the residents, who, incidentally settled in the immediate area decades ago, because of the employment opportunities of the oil depot.
Instead of harassing oil companies with guilty-until-proven-innocent audits, as proposed by some businessmen who wouldn't dare agree to the same intrusions for their own business, the government should work with the oil companies in introducing cleaner fuels that are up to Euro IV standard, beyond just mixing bioethanol and biodiesel.
Classic multi-stage cross country rallies were the first to suffer as these motorsports events are expensive to stage. Instead, whatever branch of the rallye sport is left to a diminished number of club and mall promo slalom tours and parking lot rally cross. Circuit racing was also reduced but most running series manage to eke a minimum field of participants and keep to the promised racing calendar.
Perhaps known to a few, the automotive industry is a strong sponsor to sports other than motorsports. Surprisingly, most support for competitive sports didn't suffer too badly from the budget cutting axe. As some sponsors dropped out, a few new ones spotted an opportunity and went for it. Recently, a relatively new tire brand - Starfire, distributed by Sammy Luison of Concept One - filled in the rubber boots of the previous sponsor and came away with enhanced respect from veteran racers who were used to more expensive brands. Goodyear, on the other hand, continued its steady support for racing and drifting even after it closed its 40 year old manufacturing facility.
The best news for most racing fans was the opening of the partially finished Clark Speedway operated by Johnny Tan, which is quite a fun and compact course. Moreover, it has easy access to airport, hotel and restaurant amenities. Being next to the SCTEx, it is a pleasant drive away from the Metro, excepting the LRT-1 construction zone at Balintawak. Johnny Tan's larger and more sophisticated BRC [Batangas Racing Circuit] in Rosario is still quite a drive away despite the easier access through the STAR's new San Jose-Ibaan exit. The traffic slow downs occur at the Skyway Stage 2 construction making BRC a longer journey vis-a-vis Clark. Also 5-star facilities in BRC are not really close by.
Drifting continues to gain a wide audience. Its an easy to watch spectacle and it has the least barriers to entry whether participant, sponsor or spectator. Though technically not a sport as there is no "race" against the clock, it is a visually exciting and doesn't take much to understand. Goodyear was also able to sponsor a drift team to Thailand this year.