The automotive industry, like all the rest, suffered through the pandemic. And while there are a few different factors directly affecting manufacturing, the market is seen to bounce back.
One possible contributor to this bouncing back is the Chinese carmakers. To date, there are more Chinese car brands than at any time in its automotive history. In terms of brand name alone, it outnumbers the Korean and Japanese brands together. Some European brands are assembled fully in China by alliances such as the SAIC-Volkswagen venture called the Shanghai Volkswagen Automotive Co., Ltd.
The quality leap, competitive pricing, more product features, a comparatively wider network distribution, improving brand image because of stronger local distributor tie-ups, and better awareness can directly help the automotive sector recover.
Recovery possible?
Though there is no scientific evidence or market study to show if Chinese brand vehicles are more acceptable to the Filipino market than it was 5 to 8 years ago, a simple parking lot survey will show that 2 in 10 cars is a Chinese brand–and depending on where one is, this varies from the most popular ones, the Geely Coolray to the MG SUV.
The impact of the Chinese car brands can be seen mostly on the streets. The data to prove they are actually creating sales (and therefore employment and business) cannot be done except via using the LTO registration database. There has yet to be a Chinese car importers group or these distributors should align with the CAMPI or with the AVID for reports. To date, only Sojitz Group (of the Geely brand) is a member of AVID and thus its sales numbers can be audited. If a forecast is made purely on this one brand, the conclusion is the China car brand market is very healthy in the Philippines.
It can also be easily speculated that because of the increase in the number of dealerships, the volume of importations needed to fill in showroom and floor stock inventories, as well as sales requirements by the principals back in China, sales are indeed generated.
What some industry experts say
In the media test drive of the Changan brand in Batangas early this January, one of the points that Changan Motors Philippines, Inc. (CMPI) President and CEO Ma. Fe Perez-Agudo mentioned in her welcome speech that she sees her brand will positively contribute to economic recovery and the growth of the industry.
“After testing these cars myself, I am convinced that they will be highly acceptable in the local market, not only because of pricing but because we are able to what makes a brand prosper, that is keeping in mind the customer. Customer service will be the differentiation,” Perez-Agudo said in the media gathering at the The Farm.
Aside from customer service the strength of the distributorship comes next.
“Fundamentally, all car companies are doing good business in China. Japanese, American, European brands all built state of the art factories in China, decades newer than their home plants. They are also in joint ventures with China makers thus product design and features did not have to be reinvented,” comments auto industry veteran and former BYD-Sino Motors marketing chief Gabriel Peren.
The propagation of the Chinese car business here is also comes, in a very substantial way, on the family lineage of many investors. Peren points to this fact when he said that Philippine automotive moguls are ethnic Chinese.
“They see great business potential. So while they are selling mainstream brand cars they opened up startup dealerships of China brands cars and commercial vehicles to make full use of their existing marketing resources and talents,” Peren, who was also an executive of Honda Cars Philippines for many years, illustrated the comparison well, given his experience in the field.
A quick history of Chinese car brands in the Philippines
Chinese car brands have been in the Philippines longer than most people know.
The first registered China brand vehicle is a Zhengzhou Auto in 2004. It was a copy of the Nissan Terrano purchased under a special importation permit. The build quality was a sham and it was brought into the country by a local car assembler for a parts sourcing study.
The same company imported a second car which was never registered, used as an engineering unit, and seemed to have disintegrated on its own.
In 2006, a company called Autoprominence brought in a Great Wall sport utility vehicle hat looked like a jumble of various brands and called it a Nexus Hover. It also introduced a Land Cruiser knock off called the All-Terrain. Nexus never got off the ground, just a few months after their February 2006 launch, partly because of bad press, the lack of a dedicated sales team and product issues, the brand seemed to have relented and closed down.
Before this, Chinese vehicles coming into the Philippines were mostly donations.
A bulk went to the Department of Agriculture (among them Yutong one-cylinder diesel tractors) and a few trucks went to the Philippine Army. The most numerous were passenger buses purchased under the then bus enhancement program meant to replace the dangerous “Japayuki” buses. Dong Feng was the number one bus brand then, mostly sold and distributed to the provinces by a local importer, saying its strongest point was the cheap price and the Isuzu engines and transmissions.
The beginning of the notoriety
In 2007, Chery Motors introduced the QQ. Thus began the notoriety, but also the awareness and growth of Chinese cars in the Philippines.
Chery had yearly inventories of about 2,000 cars and sold almost all of these. 80 percent were QQs, mostly those with the failing AMT (automatic-manual transmissions) which caused headaches for owners and for the service crew at Chery when the Chinese headquarters began to run out of replacement parts.
Almost simultaneous to Chery, two other Chinese car brands opened up–Chana, by Focus Ventures Inc and Lifan, distributed by a company called Ravianan Motors. Chana survived two distributors until its latest resurrection under Changan Motors Philippines, Inc.
There were three other players in the commercial vehicle sector–Foton, distributed by the Subic-based United Asia Automotive Group, Inc. (UAAGI), JAC sold by the JAC Automobile International Philippine Inc. and JMC (Jiangling Motors Corp.) which were assembled in the Philippines by Star Motors in Sta. Rosa. Both of these brands came in at around the same time. Foton after 5 years would also start assembling trucks in Clark, Pampanga.
Early failures
Lack of parts and a slow or even non-existent servicing component was the first nail in the pioneer brand’s coffin. This was especially true for cars than for trucks. A lot of the vehicles suffered breakdowns early on. One explanation shared by many of the brands was the inability of the local distributor to pick cars and watch the quality of the vehicles coming into port.
“It was common for Chinese carmakers to just send over cars on an “as-is” basis. Back then when orders were made most distributors had little or no say in rejecting cars delivered that were either old or had some paint or external defects in handling,” says a former sales manager of Iseway Motors, the first distributor of Chery in the Philippines.
“We were committed to service and parts but were struggling with balancing the UIO (units in operation) and the level of parts required by our Chinese principals. So initially there was a small stock of “common parts” and then parts are ordered when needed. This made it either too expensive or took too long to arrive here,” a former service head of Lifan narrated. The short-lived brand brought in one sedan model, intended as a taxi which became popular in urban centers in the province.
Another cause of failure was the level of customer service.
“It just felt like after you buy the car, which is cheap in the first place, at first things are good. The salesperson calls you, there are parts and then after a year, you won’t hear anything anymore from the dealer. Then you’ll find out it closed already,” P. Gan, a businessman from Binondo who owned several Chinese brand cars and trucks shared. He said that in the beginning, it seemed promising, but it was not sustainable. He is still confident that the cars will come back.
Going international
International sales started for most Chinese brands around 2002. Just about a year after China’s entry into the World Trade Organization (WTO). This development accelerated their automobile market at a faster pace. By then the local Chinese brands already Between 2002 and 2007, China’s national automobile market grew by an average 21 percent, or one million vehicles year-on-year with about 5 percent of the vehicles produced going overseas.
“Chinese carmakers were pushed to go overseas, bringing out models designed for their domestic market. That posed problems because roads in China are generally good, the climate was not so hot and the market in the early stages of the introduction to the international market,” explains the former sales manager.
In the Philippines, the free trade regulations began to take place around 2017, almost the same time that Chinese automotive brands become proliferate.
Chinese brands increase
BAIC, in the Philippines is the Bayan Auto Industrial Group which is China is known as “Beiqi” or the state-owned Beijing Automotive Industrial Corporation. This brand is known for its line-up of commercial vehicles–its top end M60 SUV is priced below P1 million. In 2014, the company made 2.5 million vehicles ranking it as ranked fifth in its domestic market. Currently, it has 20 dealers nationwide and a line up of 4 SUVs and 6 commercial vehicles.
BYD (Build-Your-Dreams) had two coming-outs. The first one was with Sino Motors (a Yuchengco and LKG Marketing Group tie-up) in 2009. That tie-up fizzled because of internal changes with the principal company in China. The second debut was in 2012, this time under the Solar Transport and Automotive Resources Corporation (STAR Corp.) The first dealership was set up in Mandaluyong. At first, it brought in a small sampling of gasoline-powered BYD cars and SUVs but later focused on hybrid and full-electric vehicles. BYD in China is the country’s number one electric vehicle assembler. Billionaire Warren Buffet invested in the company and is known for its batteries and electric buses. They were also the seventh best-selling Chinese car brand in 2017.
Changan Motor Philippines Inc. currently distributes 2 models, the CS35 and CS75. In China, the company made over 3 million vehicles last year. Unlike many Chinese brands that depend on technical ties ups and technology exchanges, Changan designs, develops, manufactures, and sells passenger cars itself. It has sold under the Changan brand and commercial vehicles sold under the Chana brand. It has technology and assembly tie-ups with Suzuki, Ford, Mazda, and PSA Peugeot Citroí«n. The brand ranks 4th in China. In the Philippines, it is run by the same team that brought success to the Korean brand Hyundai.
Chery Auto Philippines is now under the United Asia Automotive Group, Inc. (UAAGI). The brand was revitalized thrice in the Philippines. The first launch in 2007 was through a Chinese-Filipino consortium, Iseway Motors. Two years later, after failing in servicing vehicles it sold, it hired executives from Nissan and Mitsubishi and service managers from Ford under a new company Chery Motors Philippines, Inc. After successfully moving inventory of nearly 5,000 vehicles, the company was re-franchised to another management group, after a failed bid to offer it to Columbian Motors. In November 2019, UAAGI took over and launched 4 SUVs simultaneous to opening 14 dealerships.
Dongfeng Motor Corporation is a Wuhan-based, Chinese state-owned automaker. Its cooperation with Nissan also allowed it to share technologies and manufacturing abilities for Nissan cars in China. Considered to be the second-largest Chinese vehicle maker, by production volume, making over 4.4 million vehicles by the end of 2019. It owns Venucia and AEOLUS as in house brands. It has mergers with Cummins, Honda, Nissan, Infiniti, Renault, Kia, and the Taiwanese carmaker Yulon. In the Philippines it has a dealership in Roxas Blvd. but it distributes its trucks and an occasional SUV or pick-up nationwide.
Foton is known best as a truck, commercial vehicle assembler, and heavy equipment distributor. In the Philippines the brand started in 2005 as an all-truck brand but in 2012 it started bringing in small SUVs. It has 27 dealers nationwide and it uses its reliability card to sell mostly passenger transporters. In the recent past (from 2010 to 2013) Foton sold almost 100 percent of the Philippine Charity Sweepstakes Office’s requirements for ambulances. It later brought in the TransVan, Traveller, and Toano vans. For the pickup market, it has the Thunder. For the midsize SUV market the Toplander is available in a 7-seater trim. It has a technical sourcing agreement Cummins diesel engines.
GAC* (Guangzhou Automobile Group), positions itself as a luxury brand in the Philippines. The brand has an exclusive distributorship with Legado Motors, Inc. (LMI), which is owned by businessman Chavit Singson and managed by a team headed by Wilbert Lim. GAC Motor Philippines has a huge dealership in Ortigas, with a full-service center and parts warehouse. The brand, which hails from Guangdong province sells 5 cars with a new model, the GN6 coming this year. GAC in China is a strong domestic model and only in the recent past been selling their cars in the Asian region. It is also more known for their foreign joint-venture with Fiat, Honda, Isuzu, Mitsubishi, and Toyota. GAC Motor has a total of eight dealerships located in Pasig City, Alabang, Las Piá¾—as, Greenhills San Juan, Pampanga, Tarlac, Cebu and Davao. GAC celebrated its second year in the Philippines last November.
Geely is distributed in the Philippines by the Sojitz G Auto Philippines Corporation acquiring the distributorship rights for the brand previously assigned to AutoChina Inc. In the past, it distributed the small and cute Panda, and another vehicle, the Emgrand EC7 compact sedan. SGAP succeeded where AutoChina did not–expanding the dealership network and sourcing a highly marketable lineup of vehicles including the CoolRay and the Azkarra. Geely bought Volvo in 2010 and is now the biggest privately owned automobile maker in China. Geely currently has 7 dealerships all over the country and another 21 are planned for 2021. They are the only China brand distributor currently part of the AVID.
Great Wall, went under no less than 5 different distributors in the Philippines. The biggest one was with a company called Statemotor Corp. which claimed to have assembly operations in the Philippines to produce a pickup called the Twingle and other GW Haval SUVs. At one time, the franchise was distributed in Luzon, Visayas, and Mindanao, but that still failed to get the number needed for the brand to expand. Great Wall main distributorship and assembly does not exist anymore. However, based on online ads the brand seems to still be selling vehicles. The last attempt to bring it back was in 2019 through a North Luzon distributorship. That deal did not happen. The many turnovers of dealerships caused owners of vehicles like the GW Coolbear to now have orphaned vehicles in terms of service and parts. In China, however, it is the eighth biggest manufacturer in 2017 and the largest manufacturer of SUVs. Great Wall sells vehicles under the Haval brand.
JAC is now sold by the LICA-management held Triesenburg Auto Corp. (TAC). The company was established on March 14, 2016. TAC, which distributes the JAC X200 Xporter MPVan, and the Sunray luxury big van. The brand also has a separate medium and heavy-duty truck distributor, JAC Motors Philippines (based in Abad Santos, Manila). Presently the JAC-TAC distributorship has a total of three dealers with 3 more coming in 2021. It has a line up of SUVs, the sub-compact S4, S2, the full-sized S7 7-seater, and one pick-up, the T8 4×2.
Jiangling Motors Co., Ltd. (JMC), whose main partnership is with Ford and Isuzu is a key player in the automotive industry in China. In the Philippines, it was under the management of the Star Motors Group since 2006. It officially opened as JMC Philippines in 2009 and assembled trucks and the Hunter pick-up at the Star Motors Plant in Sta. Rosa. In 2019 a new company, Global AutoDistribution Inc (GAI) officially became its distributor, and vehicles are imported completely built-up, an advantage gained due to the China-Philippine trade agreements. GAI is under the AutoCentral Group of Companies. It has a total of 10 dealerships 3 are in Metro Manila. The rest spread across major urban centers in the Visayas and Mindanao regions. Aside from medium and heavy-duty trucks, JMC has a pickup called the Vigus.
Maxus is known for its light trucks and transporter, made popular in Britain as the LDV brand. It is made also by the SAIC Group. Early in 2019 it was launched in the Philippines under the Ayala-owned AC Motors Group. Maxus has been quite aggressive in its model introductions Currently, it has 8 dealers and sells a line-up that includes 2 vans, 2 pick-ups and 2 SUVs. It has 8 dealerships nationwide.
MG is a British icon, known for its sports convertible and fast long hood cars. In the UK, the brand started producing SUVs when it was bought out by Shanghai Automotive Industrial Corporation (SAIC) China’s largest vehicle manufacturer and automobile exporter. In the Philippines, MG vehicles are imported and distributed by the Covenant Car Company, Inc. (TCCCI), a part of the Universal Motors Group and the same company that used to handle Chevrolet here. It has 29 dealers nationwide and sells 4 models–3 SUVs and 1 subcompact sedan. Its SUVs show great promise and have become ubiquitous especially in the regional urban centers such as Batangas, Cebu, and Bacolod. It also sells very well in Metro Manila.
There are other brands distributed through a network of direct sellers. These are mostly heavy trucks from the China National Heavy Duty Truck Group Co. Ltd. (CNHTC) known internationally as the Sinotruk Group and buses from Golden Dragon King Long and Yutong.
The quality issue
The involvement of the big distributors in the China car race is the panacea that may solve most of the woes encountered by the brands in the past. It will also be the salve that will assure buyers of the completion of the purchase cycle–parts availability and good service and maintenance.
Ultimately all this coming together, after the pandemic may spell success for these now considered “alternative” car brands to seep into the mainstream, just like Hyundai and Kia did when it ran side by side and even overtook the well-known brands when it was building up worth in the fidgety car market.
*Erratum in the print and corrected in the online issue:
“Owned by businessman Wilbur Lim, the brand…”
Should read:
“The brand has an exclusive distributorship with Legado Motors, Inc. (LMI), which is owned by businessman Chavit Singson and managed by a team headed by Wilbert Lim.”
