Metro Manila has been under an Enhanced Community Quarantine (ECQ) for more than a month now, a measure initiated due to the ongoing deadly threat of the COVID-19 pandemic. Businesses has been closed down, job security has suddenly shattered for a lot of Filipinos, and the country’s economy has come to a screeching halt.
With uncertain times ahead, a lot of businesses are now reeling from the effects of the ECQ. Public transportation has been stopped, and mobility along the Metro has been regulated by the national government and local government units. Hotels, restaurants, and malls are now feeling the pinch, along with your average wage earners. With the lockdown created by the COVID-19 pandemic, how is the auto industry coping?
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Overseas, the industry is in dire straits. In March alone, three car manufacturing firms in Detroit, were shutdown, and according to a report by Wired, auto sales in America dropped by 80 percent in March. Around the world, industry events are now being cancelled. The Geneva Motor Show, one of the biggest auto shows in the world, has been called off, and Europe has begun factory closures last month as well.
According to HS Markit Ltd, an analytics and solutions company, car sales in Europe will fall by 24.6 percent in 2020, while the US market will dive by 26.7 percent. HS Markit also forecasts that globally, auto sales will drop by 22 percent, driven by extended showroom shutdowns, car manufacturing closures, and the realignment of consumer priorities to more essential goods.
ANCX got in touch with Willy Tee Ten, president of Autohub Group of Companies, about how matters stand here in the Philippines. The Autohub Group distributes brands such as Mini, Rolls Royce, Lotus, and Piaggio. The group also has dealerships featuring brands like Ford, Nissan, Hyundai, and Foton. Tee Ten is also the president of the Philippine Automotive Dealers Association (PADA).
Shifting business practices
How is the auto industry doing in this risky time, where almost everything has been put to a halt? “As of now, we can not operate since we’re not in the Essential Category. We tried to appeal, but of course safety is the priority. We need to flatten the curve,” Tee Ten says. “The less people on the road, the better for all of us. We’re waiting for the lockdown to be lifted. In the meantime, online access for our clients is the best thing to do.”
We also got a chance to ask Ford Philippines president and managing director PK Umashankar about the ongoing pandemic crisis. “The local auto industry is in a very challenging time in the face of the Covid-19 pandemic. Most automotive dealerships have closed, including sales and service facilities, to protect their employees as well as their customers from the spread of the virus,” he says. “Vehicle manufacturing has likewise been suspended in the interest of people’s health and safety.” Consumer demand has also been affected since customers are spending more for essentials like food and medicines.
Local businesses are stumbling over the effects of the ECQ, with different problems manifesting daily. Market instability is at an all-time high, remarked the two industry leaders, owing to an almost zero income since the lockdown, rental charges having to be paid, employees' salaries to be given, and bank loans are piling up.
Tee Ten also shares how, like a lot of other companies, they had to lay off some workers. He also explained that they needed to cut down on their rental expenses, to talk to the banks regarding company finances, and more importantly, to shift their business practices to a work from home arrangement.
Globally, Umashankar gives us a glimpse how the auto industry is responding to the pandemic. “To maximize cash and preserve financial flexibility through and beyond the pandemic, Ford is lowering operating costs, reducing capital expenditures and deferring portions of executive salaries. We have also recently borrowed more than USD 15 billion from existing lines of credit, and this month issued USD 8 billion in unsecured bonds. We also suspended our regular quarterly dividend and antidilutive share repurchase program,” he says.
Tee Ten and his company also implemented work from home protocols, but that is just 20 percent of their total work force. “We’ve given them a portion of their 13th month pay too, as mandated by the government,” he says. “We cannot decide yet what to do until this lockdown ends, but we might have to lose some of our people, sad to say. I don’t think the pandemic effects will end this year, that is why we’re preparing for the New Norm.”
For Ford Philippines’ part, the company has lent out Ford Transit vans and Ford Ranger pickups to help transport people to and from various medical facilities around the country. Umashankar shares that Ford has also delivered different essential goods to frontliners like alcohol, surgical face masks, and latex gloves. Notably, the company has started an employee donation match initiative that will benefit underprivileged families in Gawad Kalinga communities in the Visayas.
Ford employees and their on-site contractors have been required to work from home since March 16. All employees have also been provided the necessary work tools such as laptops with VPN connection and mobile phones for field personnel and senior managers and executives, according to Umashankar.
No looking back
At Ford, Umashankar explains, dealerships will soon open for business with a heightened sanitary and disinfection measures in the showrooms. New and enhanced tools, processes and policies will also be implemented across the Ford dealer network. The new measures, Umashankar says, are designed to mitigate potential risks and provide peace of mind to any customer visiting a dealer.
Virtual showrooms and online test drive appointments might be the norm after the pandemic, as noted by the two. Visits to the former will be offered for customers who do not want to venture in a crowded space, while app-based ticketing and scheduling for test drives might soon be the norm for car shoppers. VR technology might also come into play, where buyers can tour their favorite showroom in a game-like 3-D environment, while Skype or Zoom conferences with their sales agent will negate the need for physical meetings.
Tee Ten says that there is no looking back and he is preparing his team for the worst. “We should adapt to these changes and the New Norm is going to be the norm. All digital initiatives. Forms will be paperless, and meetings and appointments with agents will be contactless. Less physical work force,” he elaborates. There will be social distancing and multitasking for the employees as well as work from home arrangements, zoom meetings, and digital launches. Things will not go back to the way it was before: “We have to embrace the changes caused by this pandemic,” Tee Ten says simply.
He describes how people are now afraid to visit car showrooms, do test drives, and even attend launches and car events. He laments how their company will be content if they even reach 50 percent of their sales from last year. “We just need to establish ourselves as an automotive company that has adapted to the new norm. No other choice but to think ahead and outside of the box,” he says.