Second of three parts
EXTREMELY unpredictable times brought about by the pandemic have stressed many sectors. The automobile industry is one of the hardest hit.
It may appear that the situation is bleak, but car makers have, in their corporate governances prepared for a crisis such as this. Prior risk assessment exercises are part of the planning landscape and preparing contingency plans for business survival is the norm. There would be opportunities once the time passes and companies who survive would emerge stronger.
In the first part of this article, clearly in the bleak local automobile industry scenario now are found, the post-coronavirus silver lining.
Experts believe that depending on how severely this pandemic impacts the car buyers, or until such time as a vaccine is found, a full recovery to pre-COVID levels will not happen. And even if a vaccine will be found to normalize might ‘take a while,’ says one expert.
‘A while’ means 18 to 36 months depending what kind of offerings manufacturers have to keep the market motivated along the way. Auto manufacturers will have to re-evaluate and figure out which segments to focus on to drive recovery and growth. All experts agree that banks and third party financial institutions, even non-traditional lenders will play major roles in sustaining the growth, stabilizing the industry and help it expand back to normal.
Malaya Business Insight continued to ask automotive experts, this time in commercial vehicle, sales and showroom training and dealership operations their opinions on how the industry will find that silver lining.
FROM BIG TO LIGHT
Isuzu Philippines’ IPC Sales Division Head Joseph Bautista believes that the commercial vehicle market can resurrect quickly but growth will come from light duty trucks.
“While there is considerable drop in big ticket truck purchases, there is growing interest in lightweight to light-duty trucks sales intended for “last mile” deliveries. People now opt to use logistic companies to take care of their business and even personal needs in order to avoid the hassle of going out during community quarantines,” Bautista said.
He also mentioned that in the case of his brand, their contingency was already ready but they need to move to alternative platforms faster. With less showroom visits for commercial vehicles their sales force is also looking towards digital.
“Our Truck Professionals called Isuzu Truck Elites are trained to work with clients thru other forms of communications including digital on providing solutions to their business needs. For now the truck scene may move to light trucks and I believe the trend will continue even after the lifting of the quarantines as people gets use to the cost, security and time advantages of logistic services,” Bautista conferred.
Isuzu is a strong player in the Government’s modern jeepney program, the progression of which was hijacked by the lockdown. Bautista is confident at that thus key driver is likely to bounce back with the renewed push of government post-ECQ.
“The government is now putting in place several measures to ensure safety of passengers including safe distancing and cashless payments. The stakeholders like manufacturers, banks and cooperatives will continue to support the program as it aims to provide safer, more-environment friendly, more convenient and more comfortable mode of public transportation,” Bautista explained.
Bautista believes that allowing dealers to operate partially during modified enhanced community quarantine is also a step towards the right direction, to help dealer operations are back on track as soon as possible. The dealers needs to provide support as soon as possible to customers in terms of providing vehicle maintenance and parts particularly to those customers who use their vehicles for front-liners and for transport of essential goods and services.
“Next will be for dealers to help customers in finding solutions to their needs by providing the right vehicles and services,” the Isuzu marketing chief concluded.
UNCERTAINTY BEARS CREATIVITY
“Dealers will have to have to be creative in finding ways to engage with the buying public. We expect for everyone to go the online route which will create interesting dynamics in how our sales teams will deal with such a crowded medium and yet differentiate themselves to stand out from the rest. We will have to continue to explore creative ways to reach out to potential customers,” Lee Junia, General Manager of Toyota Makati.
Junia is also know as the “Kaizen sensei” for his strong advocacy of continuous improvement, actually a manufacturing process in Toyota, that has seeped into many other disciplines.
“There is going to be a lot uncertainty in the automotive markets in the coming months. If the initial results of our retail operations is any indication of what lies ahead, we have a long way to go before we reach that road to full recovery from the impact of this COVID-19 pandemic. But then again, we are just a week into restarting operations and we have not seen a full reopening of businesses. Kaizen came into the picture as we prepared for the reopening of Toyota Makati,” Junia narrates.
Like all experts previous interviewed, Junia also believes in online platforms. But he puts some numbers as reference.
“Before ECQ, online inquiries accounted for 25% to 30% of our sales pipeline. Currently, it accounts for over 90% of our sales inquiries. The drop in showroom traffic is because people continue to stay home. Their priorities change as focus is on ensuring the safety and provision of the basic needs of the family. The creativity here lies in being proactive without being pushy. We continued to receive inquiries, requests for quotations and even auto loan applications for processing during the ECQ. The challenge is being able to act on such requests considering our admin team and that of the banks’ were effectively on lockdown,” Junia elaborated.
He then reflects on the role of the TNVS and the direction the government will take due to the shortage in public transport capacity because to social distancing guidelines. He looked back at the existing programs through the company’s in-house Toyota Financial Services that made it easy for interested operators to purchase a car under favorable terms and have a special after-sales service programs including dedicated Service Lanes for GRAB operators.
“This is in recognition of how important the TNVS sector plays in the safe transport of people and now more than ever, TNVS will be the primary choice of certain segments of the commuting public as the threat of the COVID-19 virus persists,” Junia adds.
However he is also cognizant of the duty of government in managing public transport to quash the second wave of infections prompted by transmission.
“It will really depend on government direction on how they want TNVS to play a role in this time of pandemic. Regardless, Toyota dealers are ready to assist TNVS operators to acquire the car they need to be able to serve the commuting public,” Junia said adding that dealers, especially those in the National Capital Region, where operating costs are much higher, will have to adjust, in terms of cost management. Dealers will have to find ways to significantly reduce operating expenses to stay in the black considering an anticipated lower volume.
Management of the post-lockdown showroom has two aspects. The hardware—the physical aspects which includes compliance to social distancing rules, and the software—training and learning for all dealer team members.
This training will involve both how to talk to customers and at the same time alleviate fears by reassuring them with the hardware. This moves on into the cars.
At Nissan Philippines, the practice of online learning is continuous and began a long time before the pandemic. Using a learning management system (LMS) sales and service people are trained and continuously updated.
“We updated the curriculum to include self-enrichment programs that make them more confident to sell. This way even in the midst of the pandemic they are still doing something valuable,” Cyrus Macasera, training and development office at Nissan Philippines Inc. and one of the leads of the Nissan Academy.
Macasera explained that sales people are taught to educate the car buyer to not overcome the fear of the pandemic, nor is drawing customers into the showroom but rather teaching them to shop online, find the best offer and look for a financing package that will help them be able to purchase their car of choice online. The updated LMS curriculum also includes ECQ-relevant topics and sales tips for the after lockdown scenario.
In part three next week, the discussion will revolve around the heavy vehicle sector, the motorcycle industry, insurance and car accessories segments.