With less than a month left for car shopping, its's all over but the counting. Sounds just like any of our elections. All bets are that end year total sales figures of the auto industry will hit the 185,000 mark, instead of the precedent steady 150,000 units/year since 1997. Perhaps, it is cause for mild surprise considering the sales opportunity lost during the 'Habagat' floods of August. Then Toyota's gain of more than 40% of the market, despite competition from numerous all-imported brands, is the bigger surprise. Yet, behind the figures are even more interesting twists and turns.
Shifting strategies and out of the box thinking characterizes the automotive year that was. Who would have thought of the following: a Suzuki executive car, pricey Hyundai models, a fun genuine sports car of a Toyota, Nissan's 3-cylinder sub compact, Isuzu 90% local components compliance for any upcoming locally made hybrid, Ford as a volume seller, Mazda Skyactiv, more hybrids like the Prius C despite the price, the Minica as Mirage, the rebirth of the 1.6-liter class Lancer, twin-scroll turbos across the BMW range, Schreyered Kia's, shorter but more spacious Honda's, US made luxury vehicles by Honda, owning a Ferrari without the need to pull too many strings.... BMW and newbie-returnee Peugeot are expanding dealer networks, just like Volvo, Subaru, Chevrolet, Kia and Audi. And Ayala has added Volkswagen to Honda and Isuzu as part of its foothold in the automotive industry. Optimism still rules even if luxury car sales can be best described as 'cautious' owing to the sleuthing Taxman cross investigating ownership registration and submitted income tax returns.
Teflon rubs off?
Spurred by PNoy magic or Panglossian beliefs, the 'Teflon' of President Aquino seems to rub off on automobile sales. Instead of the funk in the world economy, dipping car sales in the Eurozone, slowing car sales in the BRICs, the lingering Anti-Japan sentiments in China, local automotive sales are so encouraging that forecasts of breaching the 200,000 units/year in two years time seem believable. As some countries even rethink junking their international auto shows, both our MIAS and PIMS car shows were staged this year instead of alternating years. Even AVID wants to start its own show series. STV's Auto Focus needed the expanse of MOA to stage its annual People's Choice Awards. As car makers in other markets are cutting production because of weak demand, Philippine demand continues to crave, stymied by supply bottlenecks, tail end effects of the Tohoku or Great Eastern Japan Earthquake and Thai floods last year. Do we live in a different planet or what?
On a higher plane, we can appreciate our economy's resiliency for being in the ASEAN bloc. ASEAN's solid communitarian role to Japan and China's economy has made it a vital cog in global production and consumption. The profits of Korean, Japanese and American automotive brands in ASEAN have greatly benefitted parent company bottom line. On the other hand, brands that have limited exposure in this market are missing out on this global economic pillar. Even Volkswagen's much vaunted ambition to be global Number One will take longer to achieve for so long as it can't get a toe hold in ASEAN be it in pick-up manufacturing in Thailand or car making at Proton's high tech, high capacity factory in Malaysia.
Fortress Euro crumbles
Heavy reliance on one regional market is bad for long term stability. European car makers FIAT, Opel, PSA Peugeot-Citroen and Renault, having limited presence outside of the Eurozone, are closing plants and shedding workers. Soak the rich taxes and socialist labor policies in President Hollande's France is inciting a repeat of the exodus of capital that happened in Francois Mitterand's presidency. Higher luxury car taxes are shrinking sales in Italy. If it wasn't for the revitalized model line up of Chrysler, almost exclusively dependent on North American sales, FIAT would be in deeper trouble. Renault's bottom line, besides some strength in Russia, was saved by its Dacia economy brand, made and sold in emerging market countries. This prompted VW to plan a rival to Dacia while Nissan is dusting off the Datsun brand for similar purposes. Europe's poor performance also hampered Ford's global performance. Volkswagen's global market share grew largely because of burgeoning China, whose economy is slowing down too. The Anti-Japan wave that swept China in autumn may just make VW the world's number one car maker this year.
Luxury still thrives
Happily, the luxury car brands of Europe remain afloat, thanks to strong demand from the BRICs, principally China. Asian owned European brands like Geely's Volvo and Tata's Jaguar-Land Rover have prospered with enhanced new model R&D spending and customer appeal thanks to their parents' bigger financial war chest and largesse. With the Range Rover Evoque spurring 3-shift 24 hour manufacturing work in Halewood, England, Jaguar-Land Rover already makes money for Tata as Tata goes through growing pains with the Nano, its India only 'one lakh' car. Steady growth best describes sales performance Audi, BMW, Mercedes and the super car brands.
As local car sales from both AVID and CAMPI combined breach the 185,000/year mark, we find a vibrant market crowded with some 34 brands and counting. AVID's all imported products, a great majority of which are passenger cars, make up more than 20% of total motor vehicle sales. Paradoxically, Toyota's complete model line up led by the Vios and Innova - both made in Santa Rosa - hold 40% plus market penetration, at par with Toyota's long held 40% dominance of the Japan Domestic Market. As Ford ceased Philippine assembly and divested of its substantial stock ownership of Mazda, Japan, local distribution of Mazda vehicles have now been handed over to Malaysia's Berjaya conglomerate. The next Isuzu D-MAX and Honda City will no longer be assembled here so the trend is for imported completely built up units to far outnumber locally made models
The sub compact paradox
As contradictions continue in other segments, the sub compact category is no longer a City/Jazz vs. Vios/Yaris two-way fight. Its now a fiercely competitive crowd composed of the Mazda2, Ford Fiesta, Kia Rio, Hyundai Accent, the new Chevrolet Sonic and next year's Nissan's Thai made Almera with a unique 3 cylinder 1.2 liter engine as a new arrival. The Chinese brands offer cheaper sub-compacts and compact SUVs at an ASEAN compact price. And yet despite the enhanced competition, the Vios still reigns supreme.
And the compacts?
As sub compacts have grown in size to resemble mid eighties compacts, today's compacts have grown up too. What used to be known as the 1600cc class is now mostly powered by 1.8 liter engines. Again, its a free for all battle among the mainstream compacts Toyota Corolla, all new shorter but more spacious Honda Civic, all new singing and dancing Ford Focus, Mitsubishi Lancer, Hyundai Elantra, Chevrolet Cruze, all new Subaru Impreza and the Mexican made Nissan Sentra 200 [soon to be replaced by the more spacious Sylphy from Thailand]. The traditional 1.6 liter compact was until recently lorded it over by the outgoing Santa Rosa made Mazda3 but now that the new Japan sourced Mazda3 has arrived, Mitsubishi pulled a surprise by introducing a Cainta assembled 1.6 Lancer. The deciding factor for car enthusiasts in this segment is if the model has independent rear suspension or not [Elantra, Cruze, Sentra, Corolla]. Ford's top of the line Focus now have autobrake and park assist features that used to be found only on select top line luxury brands so expect the competition to follow that lead.
The hopeful mini compacts
The mini/micro/ultra compact segment, usually far junior in size than the sub compact segment continues to gain participants. Not counting the mini compacts from the Chinese brands Hama, Geely, Chana and Chery, the Suzuki Celerio and Alto, Hyundai i10 and Eon, Chevrolet Spark and Kia Picanto are now joined by the Thai sourced Mitsubishi Mirage. Honda and Nissan should be watching the sales performance of the Mirage as the Mirage competes in the Thai market EcoCar segment where the Honda Brio and Nissan March compete. Growth in this segment is always challenged by the keen pricing of quality mainstream branded used compact cars, that are 5 years and older and of course, the Chinese brands. Besides mini compact hatchbacks, Chery, Great Wall, Chana, Hama, Lifan, Foton and Jinbei offer their versions of the 'Wuling' micro-commercial vehicle, all based on the Suzuki micro-van of old.
Overall, LCVs - light commercial vehicles which embrace pick ups and vans, allied with the AUV and SUV segments- compose the majority of sales of the Philippine 'car' market. The more profitable side of the LCV segment are the lifestyle pick ups. Sourced from Thailand, these vehicles are as optioned endowed as a luxury car. The hot buy at the moment is the new Ford Ranger, whose market entry was delayed by the floods that hit Thailand last year. There's also the Mazda BT-50, which is a more expensive and overly designed version of the Ford Ranger. Until this year, Mitsubishi Strada and Nissan Navara have had the high output horsepower race largely to themselves. Toyota's Hilux now has its own variable geometry VN turbo 2.5-liter variant, while a newcomer, the pricey Chevrolet Colorado challenges the established foursome with its own high output engine. This leaves Isuzu soldiering on with its venerable iTEQ series engines for their upcoming D-MAX, a platform share with the Colorado. This is one category where the Korean brands are absent, though one can speculate if Kia made a pick up truck, designed by Herr Schreyer, it's bound to look good. VW's first ever pick up, the Argentina sourced Amarok, may prove a worthy rival but it would seem that VW is the only global vehicle manufacturer who has not yet seen the light in manufacturing pick ups in the Thailand, the world's supplier of such light trucks. In this segment, China's presence is already being felt with Foton and JMC versions based on the old Isuzu TFR while the Great Wall Wingle looks like the D-MAX apart from the nose cone.
For commercial use also
The other part of the LCV market are are cab-chassis LCVs with FX or aluminum van bodies mounted on the rear which are for genuine commercial of multi-passenger transport. The most popular is still the Mitsubishi L-300 FB, which hit the market in the mid Eighties. Competition comes from Suzuki APV, Hyundai H-100, Kia K 2700, Isuzu NHR flexi truck plus cab chassis versions of single cab Isuzu D-MAX, Mitsubishi Strada, Toyota Hilux and the old Ford Ranger. Garage-Terminal public transport single proprietorships usually choose the inexpensive 80s era Nissan Urvan but with keen financing schemes, Toyota's Hi-Ace Commuter is making inroads in this UV Express price buyer market while the Grandia has taken over the Starex's soccer mom market. Further growth in this segment is not going to be drastic considering the keen pricing of quality reconditioned used Isuzu NKR trucks from Japan and brand new light trucks from China, which, incidentally are derivatives of Isuzu NKR. The Chinese brands are not lacking here too with vans from JMC, Jinbei and Foton based on the old Starex, old Hi-Ace and the JDM Toyota Granvia respectively.
Executive class gets more exclusive
Though greatly diminished in numbers by the SUV segment, the Executive car market welcomed the entry of the Kishashi, from the mini car and motorcycle maker Suzuki. Again, despite the availability of rivals, the new Toyota Camry still rules over the Honda Accord, Hyundai Sonata, Nissan Teana, etc. Notwithstanding this, Kia is optimistic with its own entry, the Kia Optima. Peugeot's 508 now joins Volvo, Audi, BMW and Jaguar in offering European CEO transport.
Awash with SUVs
SUVs now have as many variants and sizes as the family sedan market and may have, for all intents and purposes, supplanted the compact car segment as the family man's default brand new ride. There is considerable overlap between class sizes of compact, mid size, intermediate and full size SUVs. Perhaps the oldest SUV in the market is the Ford Escape, which ends Santa Rosa production by the end of 2012. Diesel powered SUVs are far more popular than gasoline powered versions. SUVs that come in only gasoline power will naturally be handicapped. By far the most popular is the Montero Sport which now has a V6 gas version. Chasing it was the former darling of the midsize SUV master class, the Toyota Fortuner. Kia Sorento and the latest Hyundai Santa Fe are even pricier than these two popular Japanese branded Thai imports. 2012 saw new model launches for the Honda CR-V, Mitsubishi Outlander, Mazda CX5 with the outstanding SkyActiv direct injection engine, Ford Explorer Limited, Nissan Juke, etc. for the mainstream class. Luxury brands have SUVs in all segment sizes. Chevrolet also introduced the Thai made Fortuner class Trailblazer based on the Colorado to augment its 7-seat compact Captiva diesel. The roster is rounded off with, hold your breath, Subaru Forester - with an upcoming nearly same sized outside but supersized inside - Kia Sportage, Hyundai Tucson, Toyota RAV4, Nissan X-trail, Nissan Murano, Mazda CX9, Subaru Tribeca, Hyundai Veracruz, Kia Mojave, Chevrolet Suburban, Ford Expedition, and Mitsubishi Pajero. The premium compact SUV sector, with its MINI Countryman, Q3, Q5, X1, X3, GLK, XC-60, Freelander and Evoque is now joined by Peugeot's 3008.
Honda is ready with its Insight and CR-Z hybrid models if Legislation favoring tax breaks for hybrids prove to be an incentive for more sales. If such legislation also favors local manufacture of hybrid models, Isuzu is ready to source hybrid parts and develop models as 90% of the parts of its evergreen Crosswind is local. Suzuki is also considering hybrids but is cautious. Legislated incentives or not, Toyota is committed to hybrids as it already introduced the Prius C compact hatch to augment the Prius. Lexus most expensive limousine uses hybrid power, just as its entry level CT200 hatch. The RX SUV is quite popular in hybrid guise. The other luxury brands, BMW, Mercedes and Porsche also have hybrid compacts, limousines and SUVs but do not stock them. Newbie-returnee Peugeot touts its unique diesel-hybrid take on hybrids.
Niche brands like Volvo, MINI and Subaru continue to keep custom, an abject lesson not only to specialty but not luxury or premium marques but to also large conglomerates made up of several brands like, Volkswagen. Besides introducing the cult favorite new Impreza, XV Crossover and BRZ, Motor Image announced that it will be handling Changan motor vehicles from China. Autohub's MINI franchise on the other hand continued to update the MINI family with the latest coupe and roadster. Volvo has launched the latest V40 to augment the S60 and as always, it wouldn't be a Volvo without City Safe and the latest automatic driving safeguards. Volvo also introduced Polestar, its home grown tuner modifier. Volkswagen, a volume producer here in the 60's to 80's, has numerous fans eagerly waiting for what lies ahead now that it is in the stable hands of the Ayala Group. The surprise this year is that Toyota's 86 is well regarded by the enthusiasts who populate the niche market.
The race for more
You can tell that Eurobrands would like to erase the stigma of Peugeot's here today gone tomorrow. At launch, Eurobrands already proclaimed 8 dealerships to open in a few months bringing a grand total of 12 into the 1st quarter of 2013. Model choice and options 'loading' is typical for Alvarez Group companies [Colombian Auto- Kia, ACC-BMW, Eurobrands-Peugeot]; the kind that their car enthusiast buyers would prefer. Peugeot is targeting the premium market with their exclusive hybrid-diesel technology with an executive car, sports coupe, compact crossover and the 5008, one of the most comfortable MPVs one could ever rent when touring Europe.
While Felix Ang waits for CATS Motors allocation of the new B and M class Mercedes, CATS has taken on the Harley Davidson distributorship. Meantime, CATS Chrysler-Jeep-Dodge showrooms continue to draw car enthusiasts seeking to find 'individualist' purchases. Besides the staple Town and Country and Wrangler, the latest Challenger, Charger, Grand Cherokee and Durango continue to draw fans.
BMW is spreading its wings by adding more dealers beyond Luzon. Supply of its 'volume' 3-Series is now catching up with demand. Twin-scroll turbos are being adapted across the line as 1-series, 5-series and 7 series now have them as part of BMW's Joy through Efficiency Dynamics philosophy. Unlike the X1, supplies of the X3 is hampered by production bottlenecks at the factory. For the discerning who prefer exclusivity, ACC BMW is also the franchisee of 'M' factory modified super BMWs, in all sizes. The drop top 3 and 6 series were also introduced this year.
Pinnacle of exclusive
Besides an across the range upgrade of all its models and the introduction of the latest 'S' performance variants, PGA Audi's big thing in 2012 was the diminutive A1. Now the MINI and the BMW 1-Series have a worthy challenger. Just like PGA Porsche, PGA Lamborghini has already established a steady though even more exclusive clientele. It remains to be seen if PGA Bentley will be even more exclusive. Meantime, PGA Porsche continues with the roll-out of the new line of Porsche's family, highlighted this year with the latest Boxster.
Anxiety be gone
Willie Soong's Maserati and Ferrari distributorship ushers in a more predictable and legitimate manner of owning Italian supercars. Though some Maseratis are available from stock, Ferrari's are always subject to long waiting lists but as Ferrari's official distributor, waiting for a cherished model is no longer fraught with anxiety. On the other side of the showroom floor, Jaguar Land Rover fans will attest that the availability and currency of J-LR models have even been enhanced ever since Tata practically recapitalized Jaguar LR. LR fans just can't seem to get enough of the Range Rover Evoque.
Raise the tariff walls again?
On the manufacturing side, local parts manufacturers have latched on to pro-alternative energy legislation to lobby to make local manufacture of parts for EVs [electric vehicles] viable. But some of the proposed methods are a throwback to the old protectionist days demanding tariffs to be raised to 30% on imported parts and parts of imported cars that can be made locally. This goes against the grain of free trade agreements our country has been signing left right and center. Moreover, tariff walls, like government subsidies, serve only to protect industries that did not have a fighting chance in the first place, for whatever reason, be it economies of scale, China or planned obsolescence. Still, the E-trike or electric tricycle has a good chance for start up though time will tell if the sales volumes make it sustainable.
Expect more CBU imports to fill the showrooms and the streets, unless our government agencies can match or improve the incentives given by Thailand, local assembly will continue to decline. It's not just the incentives that the DTI gives, but mainly the incentives that the DoF can afford [nil] and the Constitution's limits on foreign ownership of companies and property that says to foreign investors 'go elsewhere'. Our government preaches that it wants foreign investment, makes a big deal of every visiting foreign dignitary or every Presidential trip abroad, but our laws and regulations practically and continually oppose or make it even harder for foreign direct investment to gain a foothold. Still, lots on new national highways will built for the betterment of countryside development but congestion in Metro Manila will not be alleviated this coming year as rail and road infrastructure projects to address those concerns are already three years late from the time the new administration took over and in the pursuit of corrupt deals, tried to reinvent the wheel, so to speak. Seamless travel on the NLEx to SCTEx is still a pipe dream as government has stalled private sector initiative. Travel to the North by May 2013 might improve slightly by the partial opening of Stage 1 of the TPLEx, which is only a single carriageway toll expressway from SCTEx's Tarlac terminus up to somewhere between Victoria and Gerona, Tarlac. Though the motoring nation is now used to the ups and downs of deregulated oil prices, the spoiler this coming year is whether the incoming Mayor and/or City council will still kick out the Pandacan oil depot for the sake of yet another commercial development zone which, selfishly sacrifices regional oil distribution and price stability for the sake of narrow hometown interests, which are even risky. Still, all signs point to a robust local auto industry this 2013, despite the worldwide decline in demand, BRICs included. Why the rosy picture? Because it is an election year. So watch those sales of Expeditions, Suburbans, Innovas, Grandias, L300s and MPVs fly!