Due to the ongoing coronavirus pandemic, the global economy is in a downward spiral. And that includes the Philippines. Companies are shutting down. Employees are either getting laid off or receiving significant pay cuts. And landing a job is more challenging than ever before.
As a result, people in general have been extremely prudent with their spending. Without a visible end in sight for the current health crisis, many just want to hold on to their cash in preparation for what could possibly be a protracted financial drought. Just reading the news is enough to give us the sense we’re plummeting down a bottomless pit. We don’t know about you, but all we really want to find out is this: When is business returning to pre-lockdown levels?
Unfortunately, all the industry executives we asked couldn’t give us a clear timeline as to the automotive business’s return to good shape. That is, until Kia Philippines president Manny Aligada shared with our editorial team via Zoom what his company had gathered in its research.
First, the obvious: The country is officially in a recession. Consumer confidence is down, and the movement of cash is heavily impacted by job cuts and “shrinking remittances” from overseas Filipino workers. Aligada estimates that the economy as a whole won’t see a full recovery until the fourth quarter of next year.
Thankfully, things don’t look as grim for the car industry—at least according to Kia’s projections. While banks have been very cautious in approving loan applications (a huge factor in the 52% year-to-date drop in car sales from January to May), Aligada boldly predicts that the industry will start entering a “normalization” period by November this year. This means that sales volume will again hit about 35,000 units per month in the last two months of 2020.
Because of this strong rebound toward the end of the year, Aligada says total industry sales could wind up with a “best case” scenario of 275,000 units—35% off the industry’s original (read: pre-coronavirus) forecast of 420,000 units. That’s not a bad figure at all considering the circumstances…if it does happen, of course.
The above projections, claims Aligada, are not without basis. His sales and marketing team collated information from banks, government, media and private entities. Whether they will come to pass is another matter altogether.
But whatever the batting average of these forecasts ends up being, we’re just glad someone from the industry stepped forward to shine a ray of hope for everyone. This gives us something to look forward to and shoot for. In times like this, that’s more than enough.